Introduction:
India’s employment landscape has always been a critical area of focus for policymakers, economists, and the public. With a population exceeding 1.4 billion, the challenge has always been to create enough jobs to absorb the growing workforce. Recently, a statement by the World Bank made headlines: “Employment in India has grown faster than its working-age population.”
This raises several important questions:
- Is this claim true?
- Has it genuinely impacted India’s unemployment rate?
- Is the Indian economy finally creating enough jobs?
In this blog post, we will deeply analyze the World Bank’s statement, evaluate ground realities, and discuss whether India’s unemployment situation is improving.
Understanding the World Bank’s Statement
The World Bank, in its 2024 India Development Update, observed that:
“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 said.
Specifically, it noted:
- Labor force participation has improved.
- Female labor force participation has risen significantly.
- Urban unemployment is at its lowest point in several years.
- Job creation was notably strong in services, construction, and other sectors.
The report attributes this positive trend to:
- Economic recovery after COVID-19.
- Government initiatives like PM Gati Shakti, PLI schemes, and focus on infrastructure.
- A revival of informal sector employment post-pandemic shocks.
On the surface, this statement suggests good news — India is creating more jobs relative to the number of people entering the workforce. But does this truly translate into a drop in unemployment rates?
Employment In India Grown Faster Than Working-Age Population: World Bank | Is It True? Impact on Indian Unemployment Rate
Checking the Ground Reality: Is It Completely True?
While the World Bank’s observations are based on statistical data, there are important factors to consider:
1. Nature of Jobs Created
Many new jobs in India are being created in the informal sector — areas like construction, delivery services, small retail, etc. These jobs are often:
- Low-paying
- Lacking social security benefits
- Lacking long-term career growth
According to the CMIE (Centre for Monitoring Indian Economy) and other labor reports, a major portion of job growth has been in the informal economy rather than in formal, high-quality employment.
2. Underemployment is Still a Concern
Even though people are employed, many are underemployed — meaning:
- They are working in jobs that don’t match their qualifications.
- They work fewer hours than they would prefer.
- They are doing low-skill, low-wage work despite having high qualifications.
Example: A graduate working as a delivery agent. Technically employed, but underutilized.
3. Labor Force Participation Rate (LFPR) Increase
India’s LFPR, especially among women, has shown an increase:
- From around 23% in 2017-18 to around 37% in 2024.
However, quality of employment remains a concern. A jump in LFPR doesn’t automatically mean better job conditions.
Impact on India’s Unemployment Rate
Now, let’s address the critical part:
Has the unemployment rate decreased because of this employment growth?
1. Yes, Unemployment Rate Has Decreased
Data shows that India’s unemployment rate has dropped:
- The national unemployment rate stood at around 7.8% in 2024, compared to 8.5% in 2023, according to CMIE.
- Urban unemployment has fallen to 6.6% in Q1 FY24/25, the lowest since 2017-18, as per World Bank data.
- Rural unemployment has also fallen, aided by an increase in agricultural and construction jobs.
2. Urban vs Rural Divide
- Urban unemployment reduction is notable because urban jobs tend to be more formal and higher-paying.
- Rural economy has absorbed a lot of labor, but mainly in agriculture and low-skill construction, indicating a need for better rural job creation.
3. Gig Economy’s Role
Platforms like Swiggy, Zomato, Ola, Uber, and Urban Company have absorbed a huge number of workers.
While these gig jobs have helped reduce unemployment figures, they also come with:
- No job security
- No retirement benefits
- Unpredictable income
Thus, while they help reduce headline unemployment numbers, the quality of employment remains an issue.
Challenges That Still Remain
Despite the good news, India’s employment challenge is far from over. Some critical concerns are:
1. Job Quality and Income Levels
- Low-income jobs are becoming common.
- Middle-class aspirations are not fully met by current job creation trends.
- Formal sector job creation (corporate, manufacturing, IT, etc.) is still slower than needed.
2. Youth Unemployment
- Youth (15-24 years) unemployment remains high at around 23-24%.
- Educated youth are still struggling to find jobs matching their skills.
3. Regional Inequality
- States like Maharashtra, Gujarat, and Karnataka are better at creating jobs.
- States like Bihar, Jharkhand, and Odisha continue to face higher unemployment and low job quality.
Government Measures to Boost Employment
Recognizing these challenges, the Indian Government has launched several initiatives:
- PLI (Production Linked Incentive) schemes for boosting manufacturing and jobs.
- Startup India and Standup India to promote entrepreneurship.
- Skill India Mission to bridge the skill gap between education and industry requirements.
- PM Vishwakarma Yojana to support artisans and traditional craftsmen.
If implemented effectively, these programs could push India toward more formal, high-paying, and sustainable employment.
Conclusion
The World Bank’s statement that employment in India has grown faster than the working-age population is largely true, especially when looking at overall numbers and labor force participation rates.
Employment growth outpacing working-age population since 2021-22 is a positive sign.
Also, a significant drop in urban unemployment to 6.6% — the lowest since 2017-18 — strengthens the belief that India’s labor market is recovering.
However, the story is not all rosy:
- Many new jobs are informal and low-paying.
- Underemployment and youth unemployment remain pressing issues.
- The quality of jobs created needs significant improvement to meet the aspirations of India’s massive young workforce.
Impact on Unemployment Rate:
- Yes, India’s unemployment rate has decreased, but a lot of employment growth is in the gig and informal sectors.
Going forward, India must focus on:
- Creating high-quality, formal sector jobs
- Upskilling youth for the future economy
- Strengthening social security for informal workers
Only then can India truly celebrate not just more jobs, but better jobs for its people.
Quick Summary Table:
| Parameter | Current Status (2024) |
|---|---|
| Employment growth | Faster than working-age population since 2021-22 |
| Urban unemployment rate | 6.6% (Q1 FY24/25, lowest since 2017-18) |
| Unemployment rate overall | Decreasing (around 7.8%) |
| Informal sector jobs | Major contributor |
| Female labor force participation | Improved significantly |
| Challenges | Job quality, underemployment, youth unemployment |
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