Economic survey 2024-25 highlights decline in unemployment, surge in formal sector jobs

India’s unemployment rate has shown a substantial decrease in recent years, according to the Economic Survey 2024-25 presented by Union Finance Minister Nirmala Sitharaman in Parliament on Friday.

The country’s unemployment rate (UR) for individuals aged 15 and above has steadily fallen from 6 percent in 2017-18 to 3.2 percent in 2023-24, indicating a positive transformation in the labour market.

The Economic Survey attributes this decline to India’s strong post-pandemic recovery and the increased formalization of the job market.

As highlighted in the Periodic Labour Force Survey (PLFS), both the labour force participation rate and the worker population ratio have shown significant growth, suggesting a more dynamic workforce and a reduction in unemployment across various demographic groups.

Beyond the decrease in unemployment, the survey highlights a significant increase in formal sector employment. The net additions to the Employees’ Provident Fund Organization (EPFO) subscriptions more than doubled, rising from 61 lakh in FY19 to 131 lakh in FY24.

This surge marks the formalization of the job market, with youth emerging as the primary beneficiaries. Nearly 61 percent of net payroll additions have come from workers under the age of 29, signaling a shift towards organized sector jobs for younger generations.

Self-employment has also increased, with the proportion of self-employed workers growing from 52.2 percent in 2017-18 to 58.4 percent in 2023-24. This shift reflects a rise in entrepreneurial activity and a preference for flexible work arrangements.

The growth in self-employment is also reflected in the decrease in casual workers, which dropped from 24.9 percent to 19.8 percent, signaling a transition toward more structured forms of employment.

The Economic Survey advocates for an environment that supports business growth, job creation, and economic development through labor regulations. It recommends flexible working hours and the removal of overtime restrictions, suggesting that these changes would create more opportunities for workers and enhance their earnings potential.

The survey also identifies promising sectors for future job creation, particularly the digital economy and renewable energy industries. These sectors are expected to generate a range of job opportunities, especially for women, which will further drive their financial independence and empowerment.

A greater focus on these industries is anticipated to contribute to a diverse and sustainable job market.

Additionally, the Economic Survey reports that the female labour force participation rate (FLFPR) has seen significant growth, increasing from 23.3 percent in 2017-18 to 41.7 percent in 2023-24. This demonstrates the growing participation of women in the workforce, both in rural and urban areas.