Employed, but on What Terms? Why India's Falling Unemployment Rate Cannot Measure a Decent Job

A Rate That Cannot See the Terms of Work

Unemployment fell from 6.1% to 3.2% between 2017-18 and 2023-24. Women's labour force participation climbed from 23.3% to 41.7%. Both are real changes in the data. But consider who can sit inside them: a garment worker with no contract, a construction labourer with no paid leave and a woman helping on her family's farm without a wage of her own.

The survey counts all three as employed. That is the central limit of the headline and it follows from how the rate is built.

How Unpaid Work Lowers Unemployment

The unemployment rate divides those looking for work by the labour force. The Periodic Labour Force Survey classifies a helper in a household enterprise as self-employed, even if she receives no wage. Suppose she starts helping on the family plot.

Participation rises and the employed count rises. If she previously wanted paid work and could not find it, unemployment falls too. Yet the household's income may not change at all. Verified assessments note that a significant part of the increase in employment since 2017-18, especially among women, has been in this category.

So a better headline can partly reflect work that brings no independent income.

What the Index Adds and Its Limits Anukriti Negi, Santosh Kumar Dash and Priyabrata

Sahoo try to measure what the rate leaves out. Their Decent Work Index, which is their own estimate and not official data, combines employment status, employment opportunity and social security. By their calculation, it rose from 0.247 to 0.302.

Manufacturing moved from 0.324 to 0.411, while agriculture, the largest employer, remained lowest, moving from 0.211 to 0.267. They read this as progress from an alarmingly low level. Readers should treat the numbers as indicative, since no separately published methodology could be found.

The stronger point does not depend on the exact decimals: the index asks a question that the headline rate never asks. The official record is not entirely gloomy. Regular wage work reached 23.6% of employment in PLFS 2025, up from 22.4% a year earlier.

The Employees' Provident Fund Organisation reported 1.09 crore net payroll additions in FY24, although that figure can include existing workers moving into coverage. Change is under way, but the headline rate cannot tell us how much of it reaches workers like the garment employee.

Flexibility Needs a Partner

Business wants room to adjust and the Labour Codes give some: the threshold for needing government permission to lay off, retrench or close rose from 100 to 300 workers. They also promise appointment letters for all employees, gratuity for fixed-term workers after one year and social security coverage for gig workers.

Critics cited by the authors argue that compliance has eased for business while protections may have shrunk as contract work grows. The workable bargain is portable protection. If a firm's flexibility makes jobs less permanent, a worker's provident fund and insurance should move with her from job to job.

Registration on e-Shram, with over 30 crore entries, is not the same as protection.