India’s labour market sheds post-pandemic scars

India’s unemployment rate, by at least one prominent measure, ticked upwards in 2024, the first time in four years in what might in fact be a positive development in the world’s most populous nation. The unexpected rise marks a crucial transition away from unpaid labour that surged during the pandemic, government data revealed on Wednesday.

The National Statistics Office (NSO) released its Period Labour Force Survey (PLFS) data for calendar year 2024, showing the headline unemployment rate edged up from 3.1% to 3.2% compared to 2023 – the first such increase in four years of comparable data.

This primarily to a welcome reduction in unpaid labour, which had surged following the Covid-19 pandemic. The share of workers engaged in unpaid work dropped to 18.1% in 2024 from 19.4% in 2023, though still above post-pandemic low of 17.4% recorded in 2022.

Weekly employment statistics paint an even more encouraging picture, with the unemployment rate falling from 5% to 4.9% between 2023 and 2024, alongside a reduction in unpaid workers from 17.9% to 17%.

Both measurement approaches also reveal declining agricultural employment, suggesting recovery in non-farm sectors – significant because agriculture often masks disguised unemployment in the Indian economy.

This analysis of unit-level PLFS data corroborates the qualitative improvements observed in two quarterly PLFS urban surveys up to December 2024.

However, the report contains one concerning statistic: women’s labour force participation declined in 2024, driven entirely by rural women withdrawing from the workforce.

Given that rural women constituted the majority of new unpaid workers since the pandemic, decline might actually reflect a positive correction rather than a setback in women’s employment progress.