Statsguru: May Day brings focus on future uncertainties for workers

As the world marks Labour Day on May 1, it’s time to reflect on the state of employment in India — who is working, in what kind of jobs, and under what conditions. While the country has seen changes in labour force participation rate (LFPR) and some movement across sectors, the underlying story is one of slow transformation and continuing vulnerability for much of the workforce.

 

Between 2014 and 2023, the distribution of employment across sectors has shown steady patterns, with only subtle shifts. Agriculture continues to dominate as the largest employer, consistently absorbing 43-45 per cent of the workforce. The services sector has inched up modestly, with a share of 31-34 per cent. The share of industry has remained largely flat at 24-26 per cent. These figures point to a structural rigidity in India’s labour market, where the hoped-for transformation — from low-productivity agriculture to higher-productivity industry and services — has yet to materialise. In nearly a decade, the structure of employment has barely changed, reflecting the economy’s inability to generate sufficient non-farm jobs to absorb the growing labour force (Chart 1). 

 

This instability is also reflected in the overwhelming informality of jobs. In 2024, 88.4 per cent of total employment was informal. Within agriculture, informality stood at 98.7 per cent, while services and industry recorded 85.1 per cent and 77.3 per cent, respectively. These persistently high rates indicate that despite economic growth, the quality of employment remains poor — most jobs still lack contracts, security, or access to benefits (Chart 2). 

 

Even reports such as the Annual Survey of Unincorporated Sector Enterprises (ASUSE), which tracks the unorganised sector, confirm the fragile nature of work in India. Between 2010-11 and 2022-23, the number of Own Account Enterprises (OAEs) — those run solely by their owners without hired workers — increased by 6.5 million to 55.3 million. In contrast, Hired Worker Enterprises (HWEs), which typically offer better pay, stability, and productivity, rose by only 850,000 units in the same period. It’s clear that employment is increasingly being driven by solo-run units with limited capacity to scale, invest, or provide stable livelihoods.

 

The social protection framework also remains limited in its reach. As of 2022, less than half (48.8 per cent) of the population was covered by at least one form of social protection. The safety net for vulnerable categories is even thinner: Only 8.3 per cent of employed persons were covered in the event of work injury, and none of the unemployed were receiving unemployment benefits. These figures underscore how millions of workers, especially those in informal or unorganised roles, remain outside the ambit of even the most basic protections (Chart 3). 

 

When compared globally, India’s public expenditure on social protection (excluding health care) remains among the lowest — just 4 per cent of gross domestic product (GDP) in 2021. In contrast, countries like France (24.8 per cent), the US (16.8 per cent), and Brazil (17 per cent) invest significantly more in ensuring basic security for their populations. This underinvestment suggests a long road ahead to build a truly inclusive safety net for India’s vast and diverse workforce (Chart 4). 

 

LFPR has seen a notable upward trend, particularly among women. In rural areas, female LFPR rose from just 24.6 per cent in 2017-18 to 47.6 per cent in 2023-24. Urban female participation also improved significantly from 20.4 per cent to 28 per cent during the same period. Overall, the all-India female LFPR has increased from 23.3 per cent to 41.7 per cent — a remarkable shift in just six years. While male participation has remained relatively stable, this rise in women's participation is shaping new employment dynamics (Chart 5). 

 

But this surge tells a more complicated story when viewed through the lens of job quality. Helping their families run household enterprises or operating small businesses is driving the increase in female labour force participation. More than two of every three working women have been categorised as “self-employed” in the latest July-June 2023-24 Periodic Labour Force Survey (PLFS).

 

This economic strain is further underlined by the fact that average wages adjusted for inflation for women have sharply declined, even as participation has gone up. Real incomes for self-employed women dropped by 32.2 per cent between 2017-18 and 2023-24. So, while more women are entering the workforce, they are disproportionately entering into low-income, insecure, and informal forms of work — highlighting that participation alone does not equate to progress.

 

Even when we turn to earnings for salaried women, the picture remains grim. Between 2017-18 and 2023-24, real wages for regular salaried women dropped by 12.5 per cent, and for self-employed women by 32.2 per cent. Male earnings also saw a decline across categories, with self-employed men witnessing a 9.1 per cent drop. The only group that saw a modest increase was casual workers — up 24.2 per cent for women and 19.2 per cent for men — but their starting base was so low that even after the jump, daily earnings remain minimal. These numbers drive home a stark point: Employment today may be rising in quantity, but falling in quality (Chart 6).