What Happened
- India's unemployment rate declined to 4.8% in October-December 2025, down from 5.2% in the previous quarter (July-September 2025), according to the Ministry of Statistics and Programme Implementation's Periodic Labour Force Survey (PLFS).
- However, the share of salaried jobs fell to 24.9% from 25.4% in July-September 2025 and 25.5% in April-June 2025, declining across all segments — rural males, rural females, urban males, and urban females.
- Self-employment rose to 56.3% from 55.8%, while casual labour remained unchanged at 18.9%.
- The share of agriculture sector jobs rose to 43.2% from 42.4%, with corresponding declines in both secondary (manufacturing) and tertiary (services) sector employment.
- The Labour Force Participation Rate (LFPR) increased to 55.8% from 55.1% in the previous quarter.
Static Topic Bridges
Periodic Labour Force Survey (PLFS)
The PLFS is conducted by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI). It was launched in April 2017 to address the need for high-frequency labour market data, replacing the earlier quinquennial Employment-Unemployment Surveys (EUS) conducted by the National Sample Survey Office (NSSO).
- The PLFS uses a rotational panel design: each selected household is visited four times in four consecutive months
- From January 2025, the PLFS methodology was revamped to provide quarterly estimates for both rural and urban areas (earlier quarterly bulletins covered only urban areas)
- The October-December 2025 report is the third quarterly report under this revamped methodology
- Key indicators measured: Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), Unemployment Rate (UR), and distribution across employment status categories
- The survey uses the Current Weekly Status (CWS) approach, where activity status is measured for the seven days preceding the survey date
- Annual reports provide estimates in both Usual Status (principal + subsidiary) and CWS frameworks
Connection to this news: This latest quarterly bulletin is among the first to provide comprehensive all-India estimates (rural + urban) on a quarterly basis under the revamped PLFS methodology, making the data more policy-relevant but also requiring caution when comparing with earlier urban-only quarterly data.
Employment Categories — Salaried, Self-Employed, and Casual Labour
Indian employment statistics classify workers into three broad categories by status of employment. Understanding these categories is essential for interpreting labour market quality, not just quantity. Salaried/regular wage employment involves a fixed employer-employee relationship with periodic wages. Self-employment includes own-account workers, employers, and unpaid family workers. Casual labour involves irregular employment on a day-to-day or periodic basis.
- Salaried employment is considered the highest quality of the three categories because it typically provides social security benefits (EPF, ESI, gratuity), income stability, and written contracts
- India's employment distribution (Oct-Dec 2025): self-employed 56.3%, salaried 24.9%, casual 18.9%
- The dominance of self-employment is a structural feature of India's labour market — a large share of "self-employed" includes disguised unemployment and subsistence work
- The ILO classifies "vulnerable employment" as own-account work and contributing family work — a high share indicates poor job quality
- The share of regular/salaried work in India has generally trended upward from about 18% in 2004-05 to about 25% in recent years, but the current decline reverses this trend
Connection to this news: The decline in salaried employment and simultaneous rise in self-employment and agricultural jobs suggests that while headline unemployment is falling, the quality of employment is deteriorating — more workers are moving into informal, self-employed, and farm-based work rather than formal salaried positions.
Structural Transformation and Lewis Model of Development
The Lewis Dual Sector Model (1954) posits that economic development involves the transfer of surplus labour from the traditional agricultural sector to the modern industrial sector. In the Indian context, this structural transformation has been incomplete — the share of agriculture in GDP has fallen to approximately 15-18%, but agriculture still employs about 42-46% of the workforce, indicating extremely low agricultural productivity per worker.
- India's sectoral GDP share (approximate): Agriculture 15-18%, Industry 25-27%, Services 55-58%
- India's sectoral employment share (Oct-Dec 2025): Agriculture 43.2%, Secondary 20-21%, Tertiary (Services) 35-36%
- The gap between GDP share and employment share in agriculture indicates disguised unemployment and low productivity
- India's unique trajectory: it largely "skipped" the manufacturing stage, with services driving GDP growth (unlike East Asian economies)
- The Make in India and PLI (Production-Linked Incentive) schemes aim to boost manufacturing's share in GDP to 25%
Connection to this news: The rise in agricultural employment share (from 42.4% to 43.2%) in the latest quarter represents a reversal of the desired structural transformation trajectory, suggesting that the secondary and tertiary sectors are not generating sufficient employment to absorb labour moving out of agriculture.
Key Facts & Data
- Unemployment rate: 4.8% (Oct-Dec 2025), down from 5.2% (Jul-Sep 2025)
- LFPR: 55.8% (Oct-Dec 2025), up from 55.1% (Jul-Sep 2025)
- Salaried employment share: 24.9% (Oct-Dec 2025), down from 25.4% (Jul-Sep 2025) and 25.5% (Apr-Jun 2025)
- Self-employment share: 56.3% (Oct-Dec 2025), up from 55.8% (Jul-Sep 2025)
- Agriculture sector employment: 43.2% (Oct-Dec 2025), up from 42.4% (Jul-Sep 2025)
- Urban salaried jobs account for almost half of all urban employment
- Urban agricultural employment: rose to 6.7% from 6.3%