January Jobless Rate Ticks Up, Women Hit Harder

India’s unemployment rate edged up in January, but the headline number masks a more uneven reality. Overall joblessness rose to 5% from 4.8% in December. Yet women, especially young women, bore a disproportionate share of the increase, pushing the gender gap in unemployment to its widest level since April 2025, when monthly data became available.

Unemployment for women was at 5.6% in January, a 70-basis-point jump in just one month. For men, the unemployment rate increased marginally from 4.7% to 4.8%. In urban areas, the unemployment rate climbed to 7% from 6.7% in December. In rural areas, it rose to 4.2% from 3.9%. (Note: Unless otherwise mentioned, all numbers pertain to those aged 15 years+).

Gender & Regional Divide

Younger women, aged 15–29 years, faced particularly sharp stress. In rural areas, unemployment in this group jumped from 12.7% to 14.2%. In urban areas, it climbed from 24.9% to 26.4%, both increases of 1.5 percentage points. For women aged 15 years and above, unemployment rose by 70 basis points in both rural and urban regions. Urban women were roughly twice as likely to be unemployed as their rural counterparts. While unemployment also rose for men, the increase was far smaller. (See Chart 2)

The increase in unemployment was accompanied by a marginal decline in the overall labour force participation rate  — i.e. the share of people who are either working or looking for work at a given time. As of January 2026, 55.9% of Indians were part of the labour force, down from 56.1% a month ago. The decrease, which marked a departure of consistent improvement for seven successive months since June 2025, was mainly driven by rural areas.

In a press note accompanying the release, the statistics ministry attributed the rise in unemployment and the dip in participation largely to seasonal factors, including post-harvest slack and winter slowdowns in sectors such as construction, allied agriculture, transport and small trade. It also noted that the female unemployment rate remains within the range observed between April and December 2025, suggesting a short-term increase rather than structural weakening.

Monthly data should indeed be read with caution, especially in the absence of longer time series and deeper disaggregation. Yet a 1.5 percentage point month-on-month rise in unemployment among young women, a segment that already faces structurally elevated joblessness, is difficult to overlook.

How is the unemployment rate calculated?
These figures come from the PLFS, a large national household survey run by the Ministry of Statistics and Programme Implementation. The January 2025 estimates draw on responses from 3,74,158 individuals across 89,312 households, using the current weekly status method to identify those actively seeking work, with the last seven days are the reference period. 

The survey considers a person as unemployed in a week if they did not work even for one hour on any day during the reference week but sought or were available for work at least for one hour on any day during the reference week. 

A person who is looking but is unable to find work is considered unemployed. They are different from those who are neither working nor looking for work (such individuals are considered to be out of the labour force).

Unlike inflation, there is no officially defined “ideal” unemployment rate. Some level of unemployment—often termed natural unemployment—is considered inevitable, even healthy, in a functioning economy. Many estimates place this in the 3–5% range. By that yardstick, India’s aggregate unemployment rate does not look alarming.