India’s labour market in the second quarter (July–September/Q2) of 2025-26 (FY26) showed resilience, with the jobless rate easing even as more people entered the workforce. However, a rise in youth unemployment and a fall in the share of salaried workers remain areas of concern.
The latest Periodic Labour Force Survey (PLFS) data, released on Monday by the National Statistics Office (NSO) for both rural and urban areas, showed that the unemployment rate for people aged 15 years and above (in current weekly status, or CWS, terms) fell to 5.2 per cent in Q2FY26 from 5.4 per cent in the first quarter (April-June/Q1).
Under CWS, a person is considered unemployed if they did not work even for one hour on any day during the reference week but were seeking or available for work for at least one hour on any day during that week.
Data showed that the unemployment rate in rural areas fell to 4.4 per cent from 4.8 per cent, while the rate in urban areas inched up to 6.9 per cent from 6.8 per cent.
The labour force participation rate — the share of people working or seeking work — rose slightly to 55.1 per cent in Q2 from 55 per cent in Q1.
This uptick was driven by higher female participation in both rural and urban labour markets.
However, youth unemployment (ages 15–29) increased to 14.8 per cent from 14.6 per cent in the previous quarter, with joblessness among young women rising to 17 per cent from 16 per cent.
This age group typically represents first-time job seekers, making this indicator a key metric of labour market robustness.
In terms of employment quality, the share of self-employed workers — including unpaid household workers and own-account workers — rose to 55.8 per cent in Q2 from 54.4 per cent in Q1.
Meanwhile, the share of regular salaried workers slipped to 25.4 per cent from 25.2 per cent over the same period.
Sector-wise, the share of workers engaged in agriculture rose to 42.4 per cent from 39.5 per cent, while those in the secondary sector declined to 24.2 per cent from 26.6 per cent.
The NSO revamped the PLFS sampling methodology in January to produce monthly and quarterly estimates of key employment indicators for both rural and urban areas using the CWS method at the all-India level.
This report is the second in the series to provide quarterly data under the new design.
A key methodological change is the rotational panel sampling design, where each selected household is visited four times — first with an initial schedule, followed by three revisits in subsequent months — covering both rural and urban households.
The labour markets lost momentum in September as the unemployment rate rose marginally to 5.2 per cent from 5.1 per cent in August, as the unemployment rate experienced a sharper rise in rural areas on account of the sowing season getting over.
The headline unemployment rate for people of age 15 years and above in the current weekly status (CWS) terms for rural areas rose to 4.6 per cent in September from 4.3 per cent in August - highest since June.
For the urban areas, it went marginally up to 6.8 per cent during the month from 6.7 per cent in August, according to the monthly periodic labour force survey (PLFS) data, released by the National Statistics Office (NSO) on Wednesday.
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