The Economic Survey 2025, presented by Union Finance Minister Nirmala Sitharaman, highlights significant improvements in India’s labour market, driven by economic recovery and greater formalisation of the workforce in the post-pandemic era.
The unemployment rate has seen a sharp decline, dropping to 3.2% in 2023-24 from 6% in 2017-18. Additionally, net additions to the Employees’ Provident Fund Organisation (EPFO) have more than doubled, reaching 131 lakh in FY24 compared to 61 lakh in 2018-19. Notably, 61% of these additions are from individuals under the age of 29, reflecting strong youth participation in the formal economy.
The survey also notes a rise in self-employment, which now accounts for 58.4% of the total workforce in 2023-24, up from 52.2% in 2017-18. A particularly encouraging trend is the near doubling of female labour force participation, which has surged from 23.3% in 2017-18 to 41.7% in 2023-24.
However, the report warns that sustaining this momentum will require the creation of 75.8 lakh jobs annually until 2030 to accommodate India’s growing working-age population. It underscores the need for wage growth to keep pace with corporate profitability, which reached a 15-year high in FY24. “To secure long-term economic stability, a fair and reasonable distribution of income between capital and labour is imperative,” the survey states.
To boost employment, the survey recommends that corporates adopt flexible working hours and remove restrictions on overtime to enhance earning potential. It identifies the digital economy and renewable energy sectors as key areas for future job creation, particularly for women.
The survey also raises concerns about the vulnerability of low-value-added IT services to automation, emphasizing the urgent need to revamp institutions to prepare the workforce for medium- and high-skilled jobs. “India has a window of opportunity as the AI industry is still in its infancy. This period should be leveraged for extensive workforce upskilling,” the report suggests.
While AI adoption will require time and significant infrastructure scaling, the survey stresses the importance of proactive measures to ensure India’s workforce remains competitive in the evolving global economy.