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Employment and unemployment: concepts, measurement and types

Poverty and unemployment · Part 2 / 2 · Fact-checked on 25 October 2026 · how we check

Written with AI from the sources listed at the bottom of this page, then fact-checked by a separate AI.

The labour force, LFPR, WPR and the unemployment rate; usual status (ps+ss), current weekly and current daily status; the Periodic Labour Force Survey from 2017 and its 2025 redesign with monthly and rural quarterly estimates; PLFS trends to 2023-24 including women's participation; open, disguised, seasonal, frictional, structural, cyclical and educated unemployment and underemployment; the unorganised sector and the e-Shram portal.

Part 1 asked how many Indians are poor; Parts 2 and 3 ask how many of those who want work can find it, and what the state does when they cannot. This part deals with measurement. It explains how surveys sort people into the employed, the unemployed and those outside the labour force, the three ways of fixing a person's activity status, and the Periodic Labour Force Survey that now supplies India's job numbers every month. It then sorts unemployment into its types, because each type has a different cause and needs a different remedy, and ends with the informal workforce, where most Indians earn their living. Part 3 turns to policy: the rural employment guarantee, the labour codes and the main employment schemes.

Surveys divide people into three groups. Those who work are employed; those without work who are seeking or available for it are unemployed; together they make up the labour force. Everyone else, such as full-time students, people attending only to domestic duties and the retired, is outside it. The labour force participation rate (LFPR) is the labour force as a share of the population; the worker population ratio (WPR) is the employed as a share of the population; and the unemployment rate is the unemployed as a share of the labour force, not of the whole population. Suppose a village has 100 adults: 55 work, 5 are looking for work and 40 study or stay at home. Its LFPR is 60 per cent, its WPR 55 per cent and its unemployment rate 5 out of 60, about 8.3 per cent. A falling rate can hide trouble: if discouraged job-seekers stop looking, they leave the labour force and the rate drops though no new jobs appear.

Whether someone counts as employed depends on the period the survey asks about, and three are used. Under usual status the reference period is the 365 days before the survey. A person's principal status is the activity, working, seeking work or neither, that took the major part of that year. Many people, however, spend most of the year at home or in study yet do some paid or farm work for a few weeks. To count them, a person who did economic work for 30 days or more in the year is also treated as a worker in a subsidiary capacity. The combined measure, principal plus subsidiary status, is written ps+ss and is the one used for the headline annual figures. Because it looks across a whole year, it captures chronic, long-term joblessness rather than short breaks in work.

Current weekly status (CWS) shortens the window to the seven days before the survey. A person who worked for at least one hour on any day of that week is counted as employed; one who did not work even for an hour but sought or was available for work is unemployed. CWS therefore catches shorter spells of joblessness that a yearly view smooths over. Current daily status (CDS) goes further and records activity for each day of the reference week, in half-day units, so its result is a count of person-days rather than persons. Suppose a farm worker finds work on only three days of a week and looks for work on the other four: by CWS he is employed, but by CDS those four days count as days of unemployment. That is why the usual status rate is generally the lowest of the three and the daily status rate the highest; the table compares them.

For decades India's main source on jobs was the employment and unemployment survey of the National Sample Survey, held about once every five years in large rounds; the last of these covered 2011-12. Gaps of five years left policy without fresh numbers, so the National Statistics Office began the Periodic Labour Force Survey (PLFS) in April 2017. It was built to give two kinds of results. Annual estimates, on both usual status and CWS, cover rural and urban India; the first report covered July 2017 to June 2018. Quarterly estimates, on CWS only, covered urban areas, where the same households were revisited each quarter so that change could be tracked. The PLFS thus moved job statistics from a snapshot taken twice a decade to a regular series, and its annual reports became the standard source for the ratios defined above.

From January 2025 the PLFS was redesigned with a much larger sample, about 2.7 lakh households a year. It now publishes monthly CWS estimates of the LFPR, WPR and unemployment rate for India as a whole, quarterly estimates for rural as well as urban areas, and annual estimates as before. The annual reports up to 2023-24 show a marked change. For persons aged 15 and above on usual status, the LFPR rose from 49.8 per cent in 2017-18 to 60.1 per cent in 2023-24, the WPR from 46.8 to 58.2 per cent, and the unemployment rate fell from 6.0 to 3.2 per cent (PLFS, MoSPI, 2024). The largest shift was among women, whose LFPR went up from 23.3 to 41.7 per cent over the same years, mostly in rural areas. Female participation still lags far behind the male rate, and whether the new work is well paid is a separate question from whether it is counted.

Unemployment comes in several kinds. Open unemployment is the plain case: people able and willing to work find none and are counted as unemployed. In disguised unemployment people seem employed but are not really needed. Suppose a family farm needs four workers and seven relatives work on it: three could leave with no fall in output, because their marginal product is close to zero. Economists long saw this as the typical form in Indian agriculture, where too many people share too little land, and it does not show up in surveys, since everyone on the farm reports working. Seasonal unemployment follows the calendar: in rain-fed villages there is little work between the harvest and the next sowing, and many people migrate for a few months to towns or to farms elsewhere in search of work.

Other types arise from how labour markets work. Frictional unemployment is the short gap while people move between jobs or search for their first one, and it exists even in a healthy economy. Structural unemployment is a lasting mismatch between the skills or locations of workers and the jobs on offer, as when machines replace an old craft or new industries need skills few workers have. Cyclical unemployment rises when demand falls in a downturn and eases in recovery. Educated unemployment describes young graduates who cannot find work suited to their training and may wait for it rather than take any job. Underemployment covers people who work, but fewer hours than they want, or at tasks well below their ability. In India open unemployment is modest, but underemployment and low-paid work are widespread, so the unemployment rate alone understates the problem; the second table sums up the types.

The organised sector covers registered enterprises such as factories, government bodies and larger firms, where work usually comes with a contract, regular pay and social security. The unorganised sector covers the rest: small unregistered units, own-account work, farm labour, street vending, domestic work and much of construction. Most Indian workers are informally employed, without a written contract, paid leave or social security, and this includes many hired through contractors inside organised firms. Because no employer keeps their records, such workers are hard for welfare schemes to find. To build a national database, the Ministry of Labour and Employment launched the e-Shram portal on 26 August 2021: unorganised workers aged 16 to 59 register with Aadhaar and receive a Universal Account Number, so that benefits can reach them directly. Registrations passed 30 crore by December 2024 (PIB, 2024). The Code on Social Security, 2020, taught in Part 3, later named gig and platform workers in labour law.

These ideas fit together. The labour force concepts give the ratios, the three activity statuses decide who is counted as working, and the PLFS supplies the numbers on each measure, now every month. Any figure must therefore be read with its measure, its age group and its year: a usual status rate for persons aged 15 and above is not comparable with a weekly rate for one urban quarter. The types of unemployment explain why no single remedy fits: guaranteed manual work suits seasonal and disguised unemployment in villages, skilling addresses structural mismatch, and support for demand eases cyclical unemployment. The size of the informal workforce explains why social security has been so hard to deliver. Part 3 takes up these remedies: the rural employment guarantee and its 2025 replacement, the labour codes and the employment schemes.

Exam traps

• The unemployment rate is the unemployed as a share of the labour force, not of the population. LFPR and WPR are shares of the population.
• Usual status uses a 365-day reference period: ps = major part of the year; ss = economic work for 30 days or more. CWS uses 7 days, with one hour of work on any day enough to count as employed.
• CDS counts person-days in half-day units, not persons. Of the three, the usual status rate is generally the lowest and the CDS rate the highest.
• The PLFS began in 2017 (first annual report July 2017 – June 2018). Before the 2025 redesign its quarterly CWS estimates covered urban areas only; monthly CWS estimates and rural quarterly estimates began from 2025.
• PLFS 2023-24 (usual status, age 15+): LFPR 60.1 per cent, WPR 58.2 per cent, unemployment rate 3.2 per cent; female LFPR 41.7 per cent, up from 23.3 per cent in 2017-18.
• Disguised unemployment does not show up in the unemployment rate, because those affected report that they are working; their marginal product is close to zero.
• Frictional unemployment exists even at full employment; structural unemployment is a long-term mismatch of skills or location, while cyclical unemployment follows the business cycle.
• e-Shram (26 August 2021, Ministry of Labour and Employment) is for unorganised workers aged 16 to 59 and gives a Universal Account Number linked to Aadhaar.

Recap

• Labour force = employed + unemployed (seeking or available for work); students, homemakers and the retired are outside it.
• LFPR = labour force ÷ population; WPR = employed ÷ population; unemployment rate = unemployed ÷ labour force.
• Usual status (365 days): principal status by major time, subsidiary status for 30 days or more of work; ps+ss is the headline annual measure.
• CWS (7 days, one hour on any day) catches short spells; CDS (each day, half-day units) counts person-days and gives the highest rate.
• The PLFS (NSO, from 2017) replaced the five-yearly surveys; since January 2025 it gives monthly CWS and rural plus urban quarterly estimates from a larger sample.
• PLFS 2017-18 to 2023-24 (usual status, 15+): LFPR 49.8 to 60.1 per cent, unemployment rate 6.0 to 3.2 per cent, female LFPR 23.3 to 41.7 per cent.
• Types: open, disguised, seasonal, frictional, structural, cyclical, educated unemployment and underemployment; India has modest open unemployment but much underemployment.
• Most workers are informal; e-Shram (2021) registers unorganised workers aged 16 to 59 with a Universal Account Number.

Practice questions

Sources

• National Statistics Office, MoSPI: Periodic Labour Force Survey, Annual Report July 2023 – June 2024 and press note (September 2024), with concepts and definitions; Changes in PLFS from January 2025 (2024) — https://www.mospi.gov.in
• Press Information Bureau, Ministry of Labour and Employment: releases on the e-Shram portal (2021, December 2024) — https://pib.gov.in
• The Code on Social Security, 2020 — https://www.indiacode.nic.in
• Economic Survey, chapters on employment, jobs and skilling (recent editions) — https://www.indiabudget.gov.in/economicsurvey/