NEW DELHI: The Indian labor market has almost completely overcome the quantitative and qualitative scars caused by the Covid-19 pandemic, the National Bureau of Statistics released on Friday, showing the 2025 Periodic Labor Force Survey (PLFS) released by the National Bureau of Statistics on Friday. But the timing is rather strange: it is a lagging indicator of the moment when India faces the largest oil shock in the history of capitalism – a shock that is bound to leave new scars even as old scars are closed.
However, this uncertainty should not obscure what the data actually show.
The headline unemployment rate in 2025 is 3.1%, but that number has not been the real story in India’s labor market since the pandemic. It has moved within a narrow range of 3.1% to 3.2% in each annual round of PLFS since 2022-2023 – a plateau that followed a sharp decline from the 6.1% recorded when the survey was first launched in 2017-2018. The pandemic’s impact on employment, when it occurred, was only evident in the quarterly data, which tracks whether someone worked at least an hour in the previous week, a shorter bar than the annual survey’s threshold of at least a month in the previous year.
The decline in unemployment rates has not been at the expense of people withdrawing from the labor force. The labor force participation rate (LFPR) — the share of the population who is working or actively looking for work — has held steady at about 45% since calendar year 2023, reaching 44.9% in 2025, up slightly from 44.7% in 2024. Both numbers represent a significant improvement over the pre-pandemic baseline: the labor force participation rate was below 40% in 2017-18. And 2018-2019. PLFS tours have not been affected by the pandemic.
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The deepest signs of the epidemic were elsewhere. Two distortions have marked its scars: the reverse flow of workers from non-agricultural to agricultural employment, and the increase in unpaid work. The share of workers in agriculture rose from 42.5% in 2018-2019 to 45.6% in 2019-2020 – a period that captured the strictest phase of the national lockdown, announced in March 2020, because the agricultural sector employment plan then followed an annual cycle from July to June. Agricultural employment peaked at 46.5% in 2020-2021, and has only gradually declined, reaching just 43% in 2025 – almost returning to pre-pandemic levels. The share of unpaid workers in family enterprises, mostly in agriculture, registered its largest annual decline in 2025, falling from 18.2% to 15.6%, after peaking at 19.5% in 2023. However, the figure remains above the pre-pandemic baseline of 13.3% in 2018-19, suggesting that the recovery here is real but incomplete.
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The share of wage earners increased overall, as expected. The most important finding is that growth is highest among wage earners – the best-compensated group that the survey tracks. Its share rose by 1.2 percentage points through 2024, reaching 23.6% in 2025, within striking distance of the pre-pandemic high of 23.8% in 2018-2019.
Statistical caveat applies. The 2025 PLFS is the first major reform of the survey since its inception: it carries a much larger sample, is designed to support monthly data releases that began in April 2025, and has shifted its annual reference cycle from July-June to January-December. Experts said these changes do not affect comparisons across successive rounds, as HT reported in May 2025.
