India’s labour market demonstrated resilience in the final quarter of 2025, with the unemployment rate falling to 4.8% in October-December, according to data released Tuesday by the National Statistics Office (NSO). This represents a sequential decline in joblessness throughout the financial year, signaling continued, albeit modest, improvement in employment conditions.
The unemployment rate for individuals aged 15 years and above decreased to 4% in rural areas during the quarter, down from 4.4% in the July-September period. Urban unemployment also saw a decline, falling to 6.7% from 6.9% over the same timeframe. These figures are calculated based on the current weekly status (CWS) approach, classifying individuals as unemployed if they did not work for even one hour during the reference week but were actively seeking or available for work.
The labour force participation rate (LFPR), a key indicator of the proportion of the population actively engaged in the labour market, rose to 55.8% in the October-December quarter, up from 55.1% in the previous quarter. This increase was largely driven by greater participation from women in both rural and urban areas, suggesting a broadening of economic opportunities for female workers.
Unemployment among youth aged 15-29 also showed improvement, decreasing to 14.3% from 14.8% in the preceding quarter. Notably, joblessness among young women fell to 16.6% from 17%, while the rate for young men decreased to 13.5% from 14.1%. This cohort, often comprising first-time job seekers, is considered a crucial barometer of overall labour market health, and the decline suggests positive momentum in entry-level employment.
However, the composition of employment reveals a continuing trend towards self-employment. The share of self-employed workers, encompassing unpaid household workers and own-account workers, increased to 56.3% in the October-December quarter, up from 55.8% in the previous quarter. Conversely, the proportion of regular salaried workers declined slightly, falling to 24.9% from 25.4% during the same period. This shift highlights the ongoing prevalence of informal employment in the Indian economy and raises questions about the quality and security of jobs being created.
Sectorally, employment in agriculture experienced an increase, rising to 43.2% from 42.4%. Meanwhile, the share of workers in the secondary sector (manufacturing, construction, etc.) edged down to 24% from 24.2%. This suggests a continued reliance on agriculture as a primary source of employment, despite government efforts to promote manufacturing and industrial growth.
The NSO’s data release follows a revamp of the Periodic Labour Force Survey (PLFS) sampling methodology in January 2025, designed to generate more frequent and detailed estimates of key employment indicators. The current release represents the third set of quarterly data produced under the revised design, utilizing a rotational panel sampling approach. This methodology involves surveying selected households four times – initially, and then three subsequent revisits – across both rural and urban areas, aiming to improve the accuracy and reliability of the data.
The recent decline in the unemployment rate, coupled with increased labour force participation, provides a cautiously optimistic outlook for the Indian economy. However, the continued dominance of self-employment and the relatively small share of regular salaried jobs warrant attention. The shift towards self-employment, while providing income opportunities, often lacks the benefits and security associated with formal sector employment, such as social security and healthcare.
The data also indicates a need for continued focus on creating quality employment opportunities, particularly in the manufacturing and services sectors. While agriculture remains a significant employer, diversifying the economy and fostering growth in higher-productivity sectors is crucial for sustained economic development and improved living standards. The decline in youth unemployment is a positive sign, but sustained efforts are needed to ensure that young people have access to the skills and opportunities necessary to thrive in a rapidly changing labour market.
Looking ahead, monitoring the trends in labour force participation, employment composition, and sectoral shifts will be critical for assessing the health and resilience of the Indian economy. The PLFS data, with its improved methodology and increased frequency, will continue to provide valuable insights into the evolving dynamics of the labour market and inform policy decisions aimed at promoting inclusive and sustainable growth.
Recent data from January 15, 2026, indicates that the unemployment rate rose marginally to 4.8% in December 2025, up from 4.7% in November 2025. This slight increase, while not indicative of a major shift, warrants continued monitoring. The rural unemployment rate remained stable at 3.9%, while the urban rate increased to 6.7% from 6.5% in the previous month.
data released on February 10, 2026, shows that India’s unemployment rate declined to 6.7% in October-December 2025. The urban unemployment rate decreased to 6.7% from 6.9% in the previous quarter, while the rural rate fell to 4% from 4.4%. These figures suggest a fluctuating, but generally improving, employment landscape.
