India’s Unemployment Eases, But Youth and Women Still Struggle

India’s unemployment rate eased to 4.9% in February, according to the latest bulletin of the Periodic Labour Force Survey. The decline from January’s 5% is modest, but directionally positive. Still, the headline number offers only a partial picture. Beneath it lies a labour market that is uneven, shaped by geography, age and gender.

The improvement was driven largely by urban India. The unemployment rate in cities fell to 6.6% in February from 7% a month earlier. Rural unemployment, meanwhile, remained unchanged at 4.2%.

This divergence has been visible for several months now. Since April 2025, when the PLFS began publishing monthly unemployment estimates, rural joblessness has gradually cooled. Urban labour markets, however, have proved more volatile. The unemployment rate has moved up and down through the year but has consistently stayed above 6.5%. The contrast reflects the different nature of employment opportunities across India. (See Chart 1).

February also brought a modest improvement in female unemployment. The rate for women declined to 5.1% from 5.6% in January. Male unemployment, by contrast, remained unchanged at 4.8%. As a result, the gender gap that widened noticeably last month narrowed again.

(Note: Unless mentioned otherwise, all numbers pertain to those aged 15 years+). 

Chart 1 

Yet these figures need to be interpreted with caution. India’s female labour force participation remains among the lowest in the world. A fall in unemployment does not necessarily mean employment opportunities for women are expanding. In many cases, women may leave the labour force altogether when jobs are scarce rather than continue searching for work.

Youth Pressure
The sharper concern lies with younger workers. Unemployment among those aged 15–29 has remained firmly in double digits since April 2025. February brought little relief. The unemployment rate for this group stood at 14.8%.

The rural and urban divide is pronounced here as well. Youth unemployment was estimated at 13.1% in rural areas but rose to 18.3% in urban India. Rural youth often find some form of work, even if informal or seasonal. In cities, by contrast, employment opportunities are more closely tied to formal sector hiring, which tends to move more slowly.

Urban young women remain the most vulnerable segment of the labour market. Their unemployment rate fell from 26.4% in January to 24.9% in February. As a result, the overall unemployment rate for urban women aged 15+ also eased by 1.1 percentage points to 8.7%, down from 9.8% in January. The improvement is notable, but the underlying picture is not encouraging. Roughly one in four young women in urban areas who are seeking work are still unable to find it.

Chart 2 

Meanwhile, labour force participation data reinforce the picture of imbalance. The labour force participation rate (LFPR), which measures the share of people either working or actively seeking employment, remained unchanged at 55.9% in February.

For men, participation stood at 77.5%, broadly comparable with global levels, which averaged around 73% in 2025. For women, however, the rate was just 35.3%, far below the global average of about 49%. The gap underscores a deeper structural weakness in India’s labour market. While unemployment may not appear especially high, a large share of the population, particularly women, remains outside the workforce.

For a country that frequently highlights its demographic dividend, such figures are troubling. Persistent unemployment at the start of working life can have long-term consequences, from delayed careers to weaker income growth and reduced participation in the formal labour market later on.

Chart 3

A note on the unemployment rate: how it is calculated and what these figures mean.

The unemployment estimates themselves are derived from a large national household survey conducted by the Ministry of Statistics and Programme Implementation (MoSPI). The February bulletin draws on responses from 3,74,879 individuals across 89,333 households.

The PLFS calculates unemployment using the current weekly status method, which takes the last seven days as the reference period. Under this approach, a person is considered unemployed if they did not work even for one hour during the reference week but were seeking or available for work.

Unlike inflation, there is no universally accepted “ideal” unemployment rate. Economists generally view a modest level of joblessness as natural for a functioning economy, often placing it in the range of 3–5%. By that measure, India’s overall unemployment rate appears manageable.

Yet averages can obscure deeper realities. Urban unemployment remains elevated, youth joblessness continues to be stubbornly high, and women remain significantly underrepresented in the labour market.