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FY24 unemployment rate unchanged at 3.2%

By, New Delhi
Sep 24, 2024 08:26 AM IST

This marks the first time the headline unemployment rate has not decreased year-on-year since the PLFS series began in 2017-18, yet it remains the lowest recorded in the series

India’s annual unemployment rate remained unchanged at 3.2% in 2023-24, mirroring the previous year’s figure, despite an increase in the number of people working or looking for a job, according to the latest annual Periodic Labour Force Survey (PLFS) report released on Monday.

FY24 unemployment rate unchanged at 3.2%
FY24 unemployment rate unchanged at 3.2%

This marks the first time the headline unemployment rate has not decreased year-on-year since the PLFS series began in 2017-18, yet it remains the lowest recorded in the series.

The National Sample Survey Office’s (NSSO) report revealed significant shifts in the labour market, despite the static unemployment rate. Most notably, labour force participation saw its largest increase since the survey’s inception.

The LFPR, defined as the proportion of the population either working or seeking employment, reached 45.1% in 2023-24. This 2.7 percentage point increase from the previous year represents the most substantial rise in the survey’s history. The LFPR has shown consistent growth each year, with the exception of 2021-22.

The combination of a steady unemployment rate and surging labour force participation indicates that job creation largely kept pace with the influx of new workers into the job market. However, concerns persist about the quality of employment available.

The report highlighted a marginal improvement in some job quality indicators. The proportion of salaried or regular wage workers — typically the highest-paid category in the PLFS — increased by 0.8 percentage points to 21.7%. While this marks the highest level since 2019-20, when it was 22.9%, it is much behind the pre-pandemic figure of 23.8% in 2018-19. Part of the 2019-20 PLFS was also conducted in the pandemic, as the PLFS follows a July-June calendar.

Counterbalancing this positive trend, the share of unpaid family workers, a subcategory of self-employed, rose by 1.1 percentage points to 19.4% — the highest in the PLFS series. This shift primarily came at the expense of casual workers, whose share declined by two percentage points to 19.8%, continuing a downward trend observed throughout the PLFS rounds.

To be sure, the share of casual workers has fallen in every PLFS round. On the other hand, the share of own-account self-employed workers and employers remained steady at 39% in 2023-24.

Sector-wise employment distribution revealed further complexities in the job market. The agricultural sector’s share of employment increased for the second consecutive year, rising by 30 basis points to 46.1%. This represents the highest level since 2020-21, when it stood at 46.5%.

The services sector also experienced growth, with its share in employment increasing by 80 basis points to 29.7%, the highest since 2019-20 when it was 30.8%. This growth was primarily driven by the trade, hotels, transport, storage, and communication industries, which saw a 40 basis points (one basis point is one-hundredth of a percentage point) increase in their employment share.

However, these gains came largely at the expense of the construction industry, which experienced a 1.1 percentage point decrease in its share of total employment.

The PLFS, conducted by the NSSO, has been tracking India’s labour market trends since 2017-18.

“On the face of it, a rise in the labour force and workforce participation rate and a decline in the unemployment rate seem like good news. However, disaggregated data paints a disconcerting picture. The composition of employment has regressed significantly in the last six years. The only category that has seen a rise in its share is unpaid family labour. Women comprise a bulk of unpaid family labour, and the rise has been primarily in agriculture. The rising burden of unpaid labour on women in the agricultural sector is a serious concern that is not adequate policy attention,” said Ishan Anand, assistant professor at IIT Delhi.

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