India’s Labour Market Undergoes Structural Shift, Unemployment Falls: Economic Survey 2025–26

New Delhi, Jan 29 (KNN) India’s labour market is undergoing a major structural transformation driven by digitalisation, the green energy transition and the rise of gig and platform work, with recent government initiatives contributing to declining unemployment, higher participation and wider welfare coverage, the Economic Survey 2025–26 said.
 
Tabled in Parliament by Finance Minister Nirmala Sitharaman on Thursday, the Survey said the post-pandemic phase marked a shift from the quantity of jobs to the quality of employment, reflecting a more inclusive and sustainable labour market approach aimed at fully leveraging India’s demographic dividend.
 
Structural reforms, GST rationalisation, deregulation and state-level labour reforms have supported rising labour force participation and employment growth across industry and services, the Survey noted.
 
Employment Trends Show Broad-Based Gains
 
India’s female labour force participation rose sharply from 23.3 percent in 2017–18 to 41.7 percent in 2023–24, while unemployment fell from 5.6 percent to 3.2 percent. 
 
PLFS data for H1 FY26 shows improving labour market conditions, with 56.2 crore people employed in Q2 FY26 and 8.7 lakh new jobs added over the previous quarter. 
 
Rural jobs are largely in agriculture and self-employment, with higher female participation, while urban employment is dominated by services and regular salaried work.
 
Manufacturing and Unincorporated Sector Add Jobs
 
The organised manufacturing sector remained resilient, with ASI data showing a 6 percent rise in employment in FY24, adding over 10 lakh jobs and over 57 lakh jobs in the past decade. 
 
Meanwhile, the unincorporated non-agricultural sector employs 12.9 crore people across 7.9 crore units, with self-employment rising to 60 percent, women accounting for 28.7 percent of workers, and enterprise internet use climbing to 39 percent in Q2 FY26.
 
Formalisation and Welfare Expansion
 
The Survey flagged the e-Shram portal as central to formalising informal work, with over 31 crore unorganised workers registered by January 2026, including 54 percent women, enabling access to welfare, skilling and jobs. 
 
It also highlighted the National Career Service portal, which has facilitated employment through 5.9 crore job seekers, 53 lakh employers and nearly 8 crore vacancies, supported by integration with Skill India and e-Migrate systems.
 
The four Labour Codes, notified in November 2025, consolidate 29 central laws to balance flexibility with worker protection and social security. The Survey said their implementation marks the first step in labour market transformation, requiring private sector investment in systems, workforce models and digital readiness.
 
Gig Economy Expands Rapidly
 
The gig workforce grew from 77 lakh in FY21 to 1.2 crore in FY25, driven by widespread smartphone adoption and digital payments. Gig workers now account for over 2 percent of the workforce, with non-agricultural gig jobs projected to reach 6.7 percent of employment by 2029–30, contributing Rs 2.35 lakh crore to GDP. The Labour Codes formally recognise gig and platform workers, extending social security and benefit portability.
 
Time Use Survey 2024 data highlights the dual burden faced by women, with 41 percent of women aged 15–59 engaged in caregiving, compared to 21.4 percent of men. Women spend significantly more time on unpaid work, reinforcing the need for flexible work arrangements.
 
Rural Employment: From MGNREGS to VB-GRAMG
 
MGNREGS has supported rural incomes since 2005, with women accounting for 58.1 percent participation in FY25 and widespread digital wage payments, but structural and governance gaps led to a revamp. 
 
The Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (Gramin) Act, 2025 replaces it to align rural employment with the Viksit Bharat 2047 vision, introducing weekly wages, decentralised planning, stronger digital oversight, and a more sustainable funding model. The Survey said the new framework enhances accountability, asset creation and modernises rural employment.
 
(KNN Bureau)