Employment in India is expanding at a faster pace than the country’s working-age population, according to the latest World Bank report, which underscores a notable shift in labour market dynamics since the 2021–22 fiscal year.
The report highlights that employment growth has consistently outpaced population growth in the working-age segment over the past three years, accompanied by rising workforce participation among women and a decline in urban unemployment levels.
“Employment growth has outpaced the working-age population since 2021–22. Employment rates, especially among women, are rising, and urban unemployment fell to 6.6 per cent in Q1 FY24/25, the lowest since 2017–18,” the World Bank report stated.
The first quarter of the current fiscal year witnessed urban unemployment drop to 6.6 per cent, marking its lowest point since 2017–18. Analysts have described this as a sign of broad-based employment recovery in post-pandemic India, though the report cautions against premature celebration.
Among the more noteworthy developments is the changing pattern of workforce mobility. For the first time since 2018–19, there has been a discernible increase in male migration from rural to urban areas in pursuit of employment. Conversely, more rural women are entering the labour force, particularly in agricultural roles, reflecting a shift in traditional gender roles within rural economies.
A rise in self-employment is also emerging as a key theme, especially among rural workers and women. The trend suggests a growing inclination towards entrepreneurial activities in the absence of adequate formal job opportunities.
Nevertheless, the World Bank has flagged persistent concerns, particularly regarding youth employment. Youth unemployment remains high at 13.3 per cent, with the situation grimmer among educated youth. “Only 23 per cent of non-farm paid jobs are formal, and most agricultural employment remains informal,” the report added.
Additionally, the report reveals that 29 per cent of those who have completed higher education are still job-seeking, pointing to a disconnect between educational attainment and job market absorption.
Though female workforce participation is on the rise—with the female employment rate now at 31 per cent—the gap between men and women in paid employment remains striking. “Despite a female employment rate of 31 per cent, gender disparities remain, with 234 million more men in paid work,” the report stated.
Addressing regional and economic disparities, the report said that five of India’s most populous states—Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh—continue to house a significant proportion of the country’s poorest.
In 2011–12, these states accounted for 65 per cent of India’s extremely poor. While some progress has been made in reducing poverty, the World Bank said that as of 2022–23, these five states still accounted for 54 per cent of the country’s extreme poor and 51 per cent of those living in multidimensional poverty.
The report calls for targeted policy interventions to improve labour market outcomes, boost formal employment, and reduce gender disparities. Analysts suggest that sustained economic reforms and increased investments in skill development are essential to ensure the inclusivity and sustainability of India’s employment growth trajectory.
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