Unemployment and the way work is measured

India's official unemployment rate looks low by international standards, and that fact misleads many readers. The Periodic Labour Force Survey (PLFS), run by the National Statistical Office, reported an unemployment rate of 3.2 per cent for people aged 15 and above in 2023-24, on the usual status basis, down from 6.0 per cent in 2017-18. The overall labour force participation rate rose from 49.8 per cent to 60.1 per cent over the same period, and the worker population ratio rose from 46.8 per cent to 58.2 per cent. These are real improvements, but they do not mean that good jobs are plentiful.

The reason is definitional. The usual status counts a person as employed if they worked for a substantial part of the year, even in low-paid, irregular or unpaid family work. Current weekly status, which asks about the previous week, and current daily status, which counts person-days, give different pictures, and since January 2025 the PLFS has also published monthly estimates on the weekly basis. Youth unemployment, at 10.2 per cent for ages 15-29 in 2023-24, was far above the overall rate, and urban youth unemployment was higher still. A low headline rate alongside high youth joblessness is the normal pattern in a labour-surplus economy.

Two other concepts matter more than the headline rate for India. Disguised unemployment means more people work on a farm or in a family shop than the work requires, so removing them would not reduce output. Underemployment means people work fewer hours or below their skills. Both are widespread in agriculture and informal services, and both explain why the employment problem feels worse than 3.2 per cent suggests: the issue is not only finding any work, but finding productive, secure, adequately paid work.

Measurement debates are therefore policy debates. If the headline rate is low, governments can claim success; if youth unemployment and informal, low-productivity work are counted, the challenge looks larger. The right approach is to read several indicators together — participation, worker ratio, youth unemployment, wages, and the share of regular salaried jobs — rather than treating any single rate as the verdict on the jobs market.