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  • Economic Survey 2024-25: Urban Unemployment Rate For People Aged 15 & Above Improved To 6.4% From 6.6% In 2024

Economic Survey 2024-25: Urban Unemployment Rate For People Aged 15 & Above Improved To 6.4% From 6.6% In 2024

On a macro scale, the country's all-India annual unemployment rate has drastically decreased from 6% during the period 2017-18 to a mere 3.2% during the period 2023-24.

Economic Survey 2024-25: Urban Unemployment Rate For People Aged 15 & Above Improved To 6.4% From 6.6% In 2024


India’s rate of urban unemployment among individuals aged 15 and above decreased further to 6.4% in Q2 FY25 from 6.6% in Q2 FY24, the latest PLFS reports. Improvement here is along the lines of labor market conditions through increasing economic activity, formalization of employment, and workforce upskilling.

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Key Labour Market Trends

Improvements in the urban unemployment rate were mirrored by a rising Labour Force Participation Rate from 49.3% to 50.4% and by an improvement in the Worker population ratio from 46% to 47.2% within the same period. All of these suggest a higher population actually seeking employment.

On a macro scale, the country’s all-India annual unemployment rate has drastically decreased from 6% during the period 2017-18 to a mere 3.2% during the period 2023-24, reflecting the overall improvement of the job market.

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Factors Responsible for Growth in Employment

The Indian economy is seen to be under steady post-pandemic recovery with strong employment generation in the sectors:

  1. Manufacturing: Higher industrial production and government-backed incentives such as the Production-Linked Incentive (PLI) schemes have led to higher employment in this sector. Digital Economy & IT Services: Rapid digitalization, growth in e-commerce, and technology-driven services have opened up more employment opportunities, especially in urban areas. Renewable Energy: With India’s focus on green energy, new jobs have emerged in the solar and wind energy sectors.
  2. Skill Development and Education of Workforce: Programs such as Skill India, PMKVY (Pradhan Mantri Kaushal Vikas Yojana), and vocational training initiatives have helped upskill the workforce. Such programs are linking job seekers to the industry requirements and thus making them more employable.
  3. Growth in Formal Employment: The growth in formal employment has been one of the most important factors for the reduction of unemployment. Important trends include:
  4. Increasing EPFO Subscriptions: Net additions to EPFO subscriptions have more than doubled from 61 lakh in FY19 to 131 lakh in FY24, which indicates that more jobs are being created formally.
  5. Increasing payroll reporting: More and more employers are bringing workers into formal wage structures, improving job security and benefits.
  6. Increasing Female Workforce Participation: The Female Labour Force Participation Rate (FLFPR) is up substantially over the period, from 23.3 percent in 2017-18 to 41.7 percent in 202324. Several factors explain this surge:
  7. Government Programs: Mudra Yojana, StandUp India, and the National Rural Livelihood Mission (NRLM) have brought credit and entrepreneurship within women’s reach much more easily than it was available otherwise.
  8. Self-Employment Growth: An increasing number of women are involved in entrepreneurship, gig work, and homebased businesses, and this trend seems to be largely concentrated in cities.

Even though the unemployment rate in the urban economy improves, the remaining structural challenges have been:

Youth Unemployment: Many graduates fail to find an appropriate job suited to their expertise and qualifications.

High Informal Sector Employment: A large portion of India’s workforce remains in informal jobs without social security and stable income. Sectoral Shifts & Job Mismatch: While the creation of jobs has increased, the shift from low-productivity sectors like agriculture to high-productivity industries like manufacturing and services remains slow.

Future Outlook: Sustaining Employment Growth

Continue Expanding Skill Development Programs: Additional investment in vocational training and in digital literacy with a focus to prepare the employees for the coming industries.

Incentivize private sector jobs: Provide favorable labor laws reform, a financial package, and further ease of doing business to provide incentives for creation of private jobs.

Strengthening Women’s Workforce Inclusion: Improving workplace flexibility, safety, and access to leadership roles for women.

Urban unemployment is declining, and labor force participation is increasing, which indicates that India’s job market is moving toward a more stable and inclusive growth path, reflecting the country’s broader economic resilience.

ALSO READ: Infrastructure Capex Gains Momentum Post-Elections, Says Economic Survey 2025


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