During July-September 2024, there was an improvement in employment metrics for both sexes. (Representative image/file)
According to the latest government data, India’s unemployment rate (UR) in urban areas fell to a historic low of 6.4% for persons aged 15 years and above during the July-September 2024 quarter. This represents a significant improvement from 6.6% in the same period last year, reflecting the continued strengthening of the country’s labor market.
The Labor Force Participation Rate (LFPR), which measures the proportion of people earning or actively looking for work in relation to the total population, also shows encouraging signs, according to the latest quarterly Labor Force Survey. It rose to 50.4% in the July-September 2024 quarter, from 49.3% a year earlier, indicating a wider inclusion of individuals in the workforce. The Worker Population Ratio (WPR), representing the percentage of employed persons in the total population, increased to 47.2% from 46.0% during the same period last year.
Gender-Specific Benefits in the Workforce
Improvement in employment metrics was observed in both sexes. Among men aged 15 years and above, the UR declined from 6.0% in July-September 2023 to 5.7% in the corresponding period of 2024. For women, the UR decreased marginally from 8.6% to 8.4%, while their LFPR showed a significant increase. 24.0% to 25.5%. Male participation in the labor force increased from 73.8% to 75.0%, underscoring a broader trend of increasing employee engagement.
Employment quality: shift towards formal jobs and services
A reduction in unemployment is complemented by an improvement in the quality of jobs. The share of regular wage or salaried employment rose to 49.4% in the July-September 2024 quarter from 48.3% a year ago, indicating a shift away from informal employment, said Sandeep Vampti, an economist and member of the Bharatiya Janata Party.
Field data further highlight this qualitative change. “The tertiary sector’s share of jobs increased to 62.3% during the July-September 2024 quarter from 61.5% a year ago, while the share of the agriculture sector declined,” Vampati noted. The share of the secondary sector remained stable with mining and quarrying. This transition reflects an increasing emphasis on service-based employment.
‘Policy reforms driving change’
Vampati attributed these positive trends to the impact of reforms and schemes designed to stimulate economic activity. “As a result of the Modi government’s reforms, policies and plans, the Indian economy is well oiled, and economic growth and labor markets are reinforcing each other,” the economist said.
The alignment of economic growth with job creation is evident in the steady improvement in labor force metrics. For instance, according to the data, the youth unemployment rate, a crucial measure, has also improved, indicating better opportunities for India’s youth population.
Strengthening the labor market
Recent data from the Ministry of Finance shows a record-low unemployment rate and an overall increase in labor force participation, which states, “Urban unemployment rate (UR) among persons aged 15 years and above declined to 6.6% during July-September 2023. 6.4% during July-September 2024.”
According to an official statement, the ministry focused on strengthening the labor market for women, with an increase in WPR among women as well as an increase in women’s LFPR from 24.0% to 25.5% year-on-year.
“The three indicators most monitored by policymakers and economists – Labor Force Participation Rate (LFPR), Worker Population Ratio (WPR) and Unemployment Rate (UR) – have shown improvement compared to a year ago and a quarter ago. This improvement is also seen in terms of gender,” said Vempathi.