According to a recent World Bank report, employment in the country has expanded at a quicker rate than the working-age population since the 2021-22 fiscal year. One of the most notable aspects of this development is the increase in the number of women joining the workforce, signaling a positive shift in employment dynamics.
“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 stated. This surge in employment rates, particularly among women, represents a crucial advancement for the economy, showing both increased job opportunities and better workforce participation among previously underrepresented groups.
The report further pointed out a significant drop in urban unemployment levels. During the first quarter of the 2024-25 fiscal year, the urban unemployment rate fell to 6.6 percent, marking the lowest figure recorded since 2017-18. This decrease in urban unemployment suggests an overall strengthening of the urban job market, with more individuals securing employment compared to previous years.
Another major trend highlighted in the report is the shifting patterns of worker migration. For the first time since the 2018-19 financial year, a noticeable number of men are migrating from rural areas to urban centers in search of better employment opportunities. This shift indicates a growing demand for urban jobs and perhaps better economic prospects in cities compared to rural regions.
Simultaneously, the report observed an increase in rural women taking up employment, particularly within the agriculture sector. More rural women are now entering the workforce through agricultural jobs, pointing to an important change in traditional employment patterns across India. This development could have broad implications for rural economies and gender roles in agricultural work.
Despite these positive trends, the report also flagged some ongoing concerns. Youth unemployment remains a significant challenge, standing at 13.3 percent. The situation is even more concerning for those who have completed higher education, as 29 percent of them are still seeking employment opportunities. This highlights a persistent mismatch between educational attainment and job availability or suitability, creating barriers for young, educated individuals trying to enter the workforce.
The World Bank report stated, “Only 23 per cent of non-farm paid jobs are formal, and most agricultural employment remains informal.” This lack of formal employment opportunities indicates that many workers still do not have access to stable jobs with benefits such as health insurance, pension plans, and job security. Informal employment continues to dominate both the agricultural sector and the non-farm labor market, presenting a major challenge for labor market reforms and the overall economy.
Additionally, the report noted a significant rise in self-employment, particularly among rural workers and women. A growing number of individuals are choosing to become self-employed rather than working in traditional wage-paying jobs. This shift towards self-employment could be seen as a sign of entrepreneurial spirit but might also reflect a scarcity of formal job opportunities, forcing many to create their own means of livelihood.
While the improvement in female workforce participation is encouraging, the report pointed out that substantial gender disparities persist. The female employment rate has now reached 31 percent, a noteworthy milestone. However, there remains a wide gap between men and women in paid employment. As the report emphasized, “Despite a female employment rate of 31 per cent, gender disparities remain, with 234 million more men in paid work.”
This significant gap underscores the challenges still facing women in the labor market, including access to quality jobs, fair wages, and career advancement opportunities. Bridging this divide will require focused policy interventions and societal changes to ensure that women can participate equally in the economy.
Turning its focus to poverty, the World Bank report examined the distribution of extreme poverty across India’s most populous states. In the year 2011-12, five states–Uttar Pradesh, Maharashtra, Bihar, West Bengal, and Madhya Pradesh–accounted for 65 percent of India’s extremely poor population. These states have historically struggled with higher poverty rates due to a combination of factors such as lower industrialization, poor infrastructure, and limited access to quality education and healthcare.
Over time, these states have made notable contributions toward reducing poverty levels. However, the report revealed that as of 2022-23, these same five states still housed a significant portion of the country’s poor population. Specifically, they accounted for 54 percent of India’s extreme poor and 51 percent of the multidimensional poor. Multidimensional poverty considers various factors beyond income, including education, health, and living standards, giving a more comprehensive view of poverty.
These findings indicate that while progress has been made in reducing poverty, major challenges remain, particularly in the most populous regions. The concentration of poverty in a few states suggests the need for targeted poverty alleviation programs and greater investments in human capital development in these areas.
The World Bank report paints a complex picture of India’s labor and poverty landscape. On the one hand, there are clear signs of progress: employment is growing faster than the working-age population, more women are participating in the workforce, urban unemployment has reached a historic low, and migration trends suggest new economic opportunities are emerging. On the other hand, significant obstacles persist, including youth unemployment, high rates of informal employment, stark gender disparities, and the continued concentration of poverty in certain states.
Addressing these challenges will require comprehensive policy efforts focused on creating more formal employment opportunities, especially for young people and women. Initiatives aimed at skill development, education reform, support for entrepreneurship, and gender equality in the workplace could help bridge the existing gaps.
Moreover, efforts to reduce poverty must go beyond short-term welfare schemes and aim for long-term solutions such as improving access to quality education, healthcare, and sustainable livelihood opportunities. Special attention must be given to the most affected states to ensure that progress is both inclusive and widespread.
The findings of the World Bank report highlight that while India has made considerable strides in improving its employment landscape and reducing poverty, there is still much work to be done to ensure equitable growth and opportunity for all citizens. The progress achieved so far lays a strong foundation, but sustained effort and targeted policy interventions are critical to overcoming the remaining barriers and achieving inclusive economic growth.