NEW DELHI: India’s unemployment rate (UR) spiked to 4.7% in October from a nine-year low of 4% in September, largely because of higher joblessness among rural people and women, according to the Centre for Monitoring Indian Economy (CMIE). While actual employment fell by half a million to 449.5 million in October, which is hardly unusual during the period, what’s more worrying is the employment rate (ER) over recent months falling to levels never seen since the Covid-induced trough.
The CMIE’s consumer pyramids household survey revealed that the ER fell from 39.4% in September to 39.3% in October; the ER was 39.7% in January 2020, before the pandemic ravaged the economy and the labour market.
The slowing of the labour force expansion—people actively seeking jobs– also seems to continue despite a trend-consistent 3 million expansion in October. To be sure, while the size of India’s labour force increased by 13-17 million in the first ten months of the last three years (2023-2025), in the corresponding period of 2026 was only 9 million. “Going by past trends, the labour force is expected to shrink in November and then rise substantially in December. This is unlikely to change the current trend of the labour force increases slowing down,” Mahesh Vyas, MD & CEO, CMIE wrote.
Separately, the Periodic Labour Force Survey (PLFS) data released by the statistics ministry on Tuesday showed the unemployment rate, measured on a current weekly status basis for people aged 15 years and above, slipped to 5.1% in July-Septemver as compared to 5.4% during the April-June quarter. This is somewhat consistent with the UR computed by the CMIE, though its sampling designs, survey waves, frequency, and methodologies differ from PLFS. According to CMIE, the UR stood at 6% in July, 6.1% in August and 4% in September.
CMIE data also showed that joblessness among women remained elevated at 12.7% in October after slipping to 11.7% in September, the lowest since September 2022. Besides, rural unemployment rose to 4.7% in October after slipping to 3.4% in September.
The number of unemployed people actively seeking work shrank by nearly 11 million to 18.7 million in September, suggesting that many may have dropped out of the labour market after failing to find jobs. However, it rose marginally to 22.2 million in October, lower than 35 million during the same month last year.
Madan Sabnavis, chief economist, Bank of Baroda, says that labour migration to farms led to lower count. “This is harvest time and hence this can be expected. Even the rural unemployment scheme has lower offtake.”
The fall in unemployment rate under PLFS was driven by lower joblessness in rural areas. Unemployment, meanwhile, rose in urban areas from the April-June quarter driven by an 18-quargter high unemployment among the youth. Youth unemployment—for those aged between 15 and 29 years—eased to 15.3% in July-September from 15.9% a quarter ago, the statistics ministry said.
According to PLFS, while joblessness among the youth in rural areas fell to 13.6% in July-September from 14.7% a quarter ago, it jumped in urban areas. Youth unemployment in urban areas increased to 18.9% in the reporting quarter from 18.2% in April-June. This was the highest since January-March 2022. The rural unemployment rate fell to 4.3% in July-September from 4.8% in April-June, while the urban unemployment rate inched up to a 1-year high of 6.8% from 6.7% in April-June.
On average, 579 million persons aged 15 years and above were employed in the country during the September quarter, of which 405 million were males and 174 million were females.
Joblessness was lower among both males and females in the September quarter. The female unemployment rate fell to 5.2% in July-September from 5.7% a quarter ago, while for men it eased to 5.0% from 5.3% in April-June.
As unemployment eased in July-September, the labour force participation rate (LFPR)–the percentage of persons working or seeking or available for work—rose.
The labour force participation rate (LFPR), as per PLFS, rose to 55.5% in the July-September quarter from 54.6% a quarter ago. The LFPR was higher in rural areas at 58.1%, compared with 50.4% in urban areas. The female labour force participation rate rose to 34.7% in the second quarter of FY27 from 33.2% in April-June.
The worker population ratio–the percentage of employed persons in the population–rose to 52.7% in July-September from 51.7% in April-June.
The share of regular wage and salaried employees in rural areas eased to 15.6% in July-September from 16.1% during April-June. In urban areas, it increased to 49.6% in July-September from 49.3% in the previous quarter. The share of self-employed people in the overall workforce rose to 55.8% in the Septemberquarter from 54.8% in the June quarter.
The share of the rural workforce employed in the agricultural sector rose to 56.7% in the September quarter from 52.9% in April–June. Tertiary sector continued to be the largest employer in urban India, accounting for 62.0% of workers during July–September, unchanged from April–June.
Source: The Financial Express
