’Youth unemployment declines from 17.8% in 2017-18 to 10% in 2022-23’

The first Economic Survey tabled by the Modi government 3.0 in Parliament on July 22 revealed that the Indian economy needs to add 7.85 million employment opportunities annually in the non-farm sector until 2030.

The survey suggested that the youth unemployment rate has decreased from 17.8% in 2017-18 to 10% in 2022-23, accompanied by a rise in youth participation in the labour force. However, only 4.4% of the young workforce is skilled.

"The unemployment rate has decreased through the years, accompanied by increased participation among youth and females. It is good to see that rural India has played a significant role in boosting female participation, contributing to a notable increase in women transitioning to self-employment," said Rumki Majumdar, Economist, Deloitte India.

The decline in the annual youth unemployment rate accompanied by greater youth participation in the labour force indicates better utilization of this dynamic resource, the survey read. Employment recovery is noticeable in both urban and rural areas, even under the stringent current weekly status (CWS) criteria.

"Indian labour market indicators have improved in the last six years, as per the Periodic Labour Force Survey data, with the unemployment rate declining to 3.2% in 2022-23. Rising youth and female participation in the workforce presents an opportunity to tap the demographic and gender dividend," the survey highlighted.

Quarterly PLFS reports offer a more current view of urban employment. As of March 2024, the urban unemployment rate for individuals aged 15 and above had dropped to 6.7 %, down from 6.8% in the same quarter the previous year. This improvement is also evident in the increasing Worker Population Ratio (WPR) and Labour Force Participation Rate (LFPR).

India’s workforce was estimated at nearly 565 million in 2022-23. Employment is distributed with over 45% in agriculture, 11.4% in manufacturing, 28.9% in services, and 13% in construction. Agriculture plays a crucial role in employment, particularly for women, presenting both challenges and opportunities.

The survey indicates that 57.3%of the workforce is self-employed, while 18.3% are unpaid family workers. Casual labour accounts for 21.8%, and regular wage or salaried workers make up 20.9% of the workforce.

Notably, there has been a significant increase in female self-employment, especially in rural areas, leading to a sharp rise in the female LFPR over the past six years.

The survey further noted that although Artificial Intelligence has emerged across sectors, the job market has to adapt to the changes, and "collective welfare is key". The key role of agro-processing and care economy in bringing more women into the workforce is also underscored.

The decrease in the youth unemployment rate and greater youth engagement in the labour force are seen as clear positive signals as India’s demographic dividend is crucial for maintaining high growth and enhancing global competitiveness.

This positive trend is reinforced by formal employment data from the Employees’ Provident Fund Organisation (EPFO), which indicates a consistent rise in new EPF subscribers aged 18-28 since the pandemic. The yearly net payroll additions to the EPFO more than doubled from 6.1 million in FY19 to 13 million in FY24.

The survey added that the flexible workforce, those who get employed by staffing firms and work on contracts on vendors' payrolls, has grown at a CAGR of 13.2% in the decade ending 2023. However, it remains low compared to Europe and Asia Pacific, where the contract workforce is 2.2% of the total workforce versus 1% in India.