Improving job quality: India needs to generate more productive employment

Revamped PLFS offers sharper labour data, but reveals a deeper concern-India's workforce remains trapped in low-quality jobs with weak wage growth

The recent changes in the way the Periodic Labour Force Survey (PLFS) is conducted mark — in India’s statistical system — a long overdue upgrade. By shifting to monthly estimates, extending coverage to rural areas, enlarging the sample size, and aligning annual reporting with the calendar year, the revised framework promises more timely and credible insights into the state of employment in the country. The numbers, as reported in the 2025 Annual Report, however, tell a more sobering story. On headline indicators, the labour market appears stable. The labour force participation rate (LFPR) for those aged 15 and above is around 59 per cent, up from about 56 per cent in 2022. The worker-population ratio has also edged up to roughly 57 per cent. Unemployment, at just over 3 per cent on the “usual-status” measure, remains low by international standards. Even the new monthly series suggests little volatility in employment conditions across categories. 

However, a closer look at employment composition reveals that a majority of India’s workforce remains self-employed — over 56 per cent in 2025, only marginally lower than the figure for the previous year. Regular salaried employment has inched up, but not enough to signal a meaningful shift. Casual labour, which accounts for about a fifth of employment, has seen little change. In other words, the structure of employment remains dominated by typically low-paying forms of work. Gender disparities continue to weigh heavily on the labour market. Female participation has risen over the past few years, with the LFPR for women improving noticeably since 2022. Yet the gap with men remains wide. Male participation is close to 80 per cent, while female participation is around 40 per cent. The divide is even sharper in urban areas, where barely one in four women is in the labour force. Nor is rising participation necessarily a sign of better opportunities. In rural areas, where female participation is higher, the increase may reflect distress rather than empowerment. 

The annual PLFS report, unlike the monthly or quarterly editions, also provides data on wages, which clearly points to weak growth. Although nominal earnings have risen in recent years, the pace of increase remains modest. Casual workers, particularly in rural areas, have seen only limited gains in daily wages, reinforcing their vulnerability. Regular salaried workers have recorded relatively strong growth in earnings, but even here, the growth is much slower in real terms. Earnings from self-employment have grown, especially in urban areas, but remain low in rural India and uneven across genders. Taken together, the broad picture is one of stagnant or declining real incomes for a large part of the labour market. 

This divergence between employment indicators and earnings is critical. Low unemployment in India often reflects the compulsion to work rather than the availability of productive jobs. High participation, especially in rural areas, thus coexists with low and unstable incomes. Without looking at wages and job quality, the labour market can appear healthier than it is. While the revamped PLFS is a welcome step, the focus should now be on improving job quality. India needs to create more productive jobs, which will help support demand and growth over the medium to long term.