INDIA'S LABOUR MARKET
1. Context
Every year, about 7-10 million young Indians enter the labour market. They are better educated than any generation before them — the average years of formal schooling for those aged 15 and above has reached 10 years nationally — and with hopes and expectations to match.The recently released Periodic Labour Force Survey (PLFS) 2025 report offers some key insights.
2. Recent trends in Employment
- India’s labour market indicators remain strong, with the Labour Force Participation Rate recorded at 59%, the Workforce Participation Rate at 57%, and unemployment at only 3%.
- Youth unemployment has shown a downward trend since 2024 in both rural and urban regions. In addition, successive Monthly PLFS reports during 2025 highlight a steady rise in women’s workforce participation.
- Rural female LFPR continued to improve through September 2025, reaching the highest level observed since May, indicating a consistent positive trend across multiple survey cycles.
- Employment quality has likewise improved over time. The proportion of workers engaged in regular salaried jobs increased from 22% to 24%, benefiting both men and women. At the same time, the share of self-employed workers declined from 58% to 56%.
- Since salaried employment generally offers greater income stability and social security benefits, this transition represents one of the most significant developments reflected in the 2025 labour data.
- Income patterns further support these improvements, especially for women workers. Earnings among women in regular salaried jobs rose by 7%, slightly higher than the 6% increase recorded for men.
- In self-employment, women’s earnings increased by 9% compared to 8% for men. Similarly, women engaged in casual labour witnessed a 5% rise in wages, whereas male wages in this category remained largely stagnant.
- Despite these gains, gender disparities in earnings continue to persist. Available data suggests that women receive nearly 76% of male earnings in salaried occupations, about 69% in casual work, and only 36% in self-employment.
- Although significant gaps remain, the growing movement toward salaried employment is gradually generating more meaningful economic benefits for women.
- Economic transformation is also reshaping employment patterns. Agriculture now accounts for 43% of total employment, while manufacturing and services contribute roughly 12% and 13%, respectively.
- Increasing numbers of young workers, especially women, are joining manufacturing and service industries.
- Moreover, occupational segregation based on caste and gender is less pronounced among younger generations than older ones, reflecting the long-term impact of improved educational access and greater social mobility, which are now contributing to more inclusive labour market outcomes
3. Gaps in Skills and Job Creation
- A major concern continues to be the transition from education to employment. India has greatly increased access to higher education, enabling students from a wider range of economic backgrounds to pursue tertiary studies.
- However, important gaps still persist. Between 2004 and 2023, nearly 5 million graduates entered the labour market every year, yet only around 2.8 million were able to obtain employment of any form.
- Insufficient access to structured skill development remains another obstacle. Merely 4% of people in the 15–59 age group have undergone formal vocational or technical training.
- At the same time, labour force participation among trained individuals is considerably higher — about 83% for men and 51% for women — highlighting the strong connection between skill acquisition and employment opportunities. This demonstrates the need to expand and strengthen skill-training initiatives on a much larger scale.
- Ensuring long-term participation of women in the workforce is another critical issue. While men outside the labour force mostly identified education as the reason for non-participation, women largely pointed to childcare and domestic responsibilities.
- This reflects deeper structural inequalities arising from the unequal burden of unpaid household work.
- For example, self-employed urban men work nearly 17.5 hours more per week than women, while among regular salaried employees the gap stands at roughly 7.9 hours weekly, illustrating the disproportionate dual burden of paid and unpaid labour carried by women.
- A further concern relates to the NEET population — youth who are neither in education, employment, nor training. Approximately one-fourth of individuals aged 15–29 belong to this category.
- Since they are excluded from official unemployment statistics, the scale of the issue often remains understated. If not addressed promptly, prolonged disengagement may push many young people into long-term detachment from the labour market
4. What is the Periodic Labour Force Survey (PLFS)?
- The Periodic Labour Force Survey (PLFS) is India’s main survey for understanding the condition of employment and unemployment in the country. It is conducted by the National Statistical Office under the Ministry of Statistics and Programme Implementation.
- The survey was introduced in 2017 to provide regular and reliable information about the labour market, replacing the earlier employment surveys conducted by the National Sample Survey Office.
- The need for PLFS arose because India’s economy and labour market were changing rapidly, but employment data was not available frequently enough.
- Policymakers required updated information to understand how many people were working, how many were unemployed, and how labour patterns were changing across rural and urban areas.
- To address this gap, PLFS was designed to provide both annual and quarterly estimates on employment-related indicators.
- The survey studies the participation of people in economic activities. It measures how many individuals are employed, how many are actively searching for work, and how many remain outside the labour force.
- Through this, it calculates important indicators such as the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR). These indicators help in assessing the overall health of the economy and the availability of jobs.
- PLFS also provides detailed insights into the nature of employment in India. It classifies workers into categories such as self-employed persons, regular salaried employees, and casual labourers.
- This distinction is important because different forms of employment offer different levels of income security, social protection, and job stability. For example, regular salaried employment is generally considered more secure than casual labour.
- Another important feature of PLFS is that it captures differences across gender, age groups, education levels, and regions.
- It highlights issues such as women’s participation in the workforce, youth unemployment, rural–urban disparities, and shifts in employment from agriculture to manufacturing and services. Because of this, the survey has become an essential tool for analysing structural changes in the Indian economy.
- The survey uses different approaches to measure employment status. The “Usual Status” method examines a person’s employment situation over a longer reference period, while the “Current Weekly Status” method looks at whether a person worked for at least one hour during the previous seven days. These methods help provide a broader and more accurate picture of employment conditions.
- Today, PLFS serves as the most important official source of labour market data in India. Governments, economists, researchers, and policymakers rely on it to formulate employment policies, assess economic performance, design welfare programmes, and evaluate the impact of reforms on workers and livelihoods
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Female Labour Force Participation (FLFP)
Female Labour Force Participation (FLFP) refers to the proportion of women in the working-age population who are either employed or actively seeking employment. In simple terms, it measures how many women are participating in economic activities within a country. It is usually expressed through the Female Labour Force Participation Rate (FLFPR), which indicates the percentage of women who are part of the labour force compared to the total female population within a specified age group. Women who are working in jobs, self-employment, farming, business activities, or even looking for work are included in the labour force. However, women who are neither working nor searching for employment are considered outside the labour force. Female labour force participation is considered an important indicator of economic development, gender equality, and social progress. A higher participation rate generally reflects better access to education, employment opportunities, skill development, mobility, and financial independence for women. It also contributes to higher household incomes, poverty reduction, and overall economic growth. In India, female labour force participation has traditionally remained lower than that of men due to several social, cultural, and economic factors. Many women are engaged in unpaid domestic work such as childcare, cooking, and household responsibilities, which are not counted as economic activities in official surveys. Other factors such as lack of safe transportation, limited access to formal jobs, wage inequality, social norms, and interruptions caused by marriage or motherhood also affect women’s participation in the workforce. |
5. Way Forward
The PLFS 2025 findings indicate that India’s labour market is showing signs of positive progress. Nevertheless, converting these improvements into sustained, productivity-driven economic growth will require focused policy measures. This includes expanding industry-oriented skill development programmes, promoting women’s participation in the workforce through gender-sensitive policies, and creating stronger access to secure employment supported by broader social protection systems and greater emphasis on green industries. In addition, specialised initiatives such as apprenticeship programmes will play an important role in bringing NEET youth back into productive economic activity
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For Prelims: Periodic Labour Force Survey, National Sample Survey Office, labour force participation rate, worker population ratio
For Mains:
1. Examine the changing nature of employment in India, as reflected in the increasing share of self-employment and the declining proportion of regular salaried jobs. Discuss the implications of this shift for the quality and sustainability of employment. (250 Words)
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Previous Year Questions 1. Given below are two statements, one is labeled as Assertion (A) and the other as Reason (R). (UPPSC 2019)
Assertion (A): The labour force participation rate is falling sharply in recent years for females in India.
Reason (R): The decline in labour force participation rate is due to improved family income and an increase in education.
Select the correct answer from the codes given below:
Codes:
A. Both (A) and (R) are true and (R) is the correct explanation of (A)
B. Both (A) and (R) are true and (R) is not the correct explanation of (A)
C. (A) is true, but (R) is false
D. (A) is false, but (R) is true
2. Which of the following statements about the employment situation in India according to the periodic Labour Force Survey 2017-18 is/are correct? (UPSC CAPF 2020)
1. Construction sector gave employment to nearly one-tenth of the urban male workforce in India
2. Nearly one-fourth of urban female workers in India were working in the manufacturing sector
3. One-fourth of rural female workers in India were engaged in the agriculture sector
Select the correct answer using the code given below:
A. 2 only B. 1 and 2 only C. 1 and 3 only D. 1, 2 and 3
3. Disguised unemployment generally means (UPSC 2013)
(a) large number of people remain unemployed
4. Assertion (A): Workers - population ratio in India is low in contrast to that in developed countries. Reason (R): Rapid growth of population, low female worker population rate and omission of unpaid family workers lead to low worker-population ratio. Choose the correct answer: (Telangana Police SI Mains 2018) A. (A) is true, but (R) is false.
B. (A) is false, but (R) is true.
C. Both (A) and (R) are true, but (R) is not a correct explanation of (A).
D. Both (A) and (R) are true, but (R) is the correct explanation of (A).
Answers: 1-C, 2-B, 3-C, 4-D Mains1. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (UPSC 2023) |
Source: The Hindu
