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Context:

The Periodic Labour Force Survey (PLFS) conducted by the Labour Bureau for the July-September 2025 quarter show unemployment rate among persons aged 15 years and above in rural areas declined from 4.8% to 4.4% at the same time urban unemployment rate had “edged up slightly”, with rates increasing from 6.1% to 6.2% for males, and from 8.9% to 9.0% for females.

What is Unemployment?

Unemployment is a term used to describe the situation when people who are capable of working and are actively looking for a job are unable to find one. 

Types of Unemployment:

• Frictional: Temporary, when people are between jobs or entering the workforce.
• Structural: Caused by changes in the economy or job market (e.g., technology replacing jobs).
• Cyclical: Caused by economic downturns (e.g., recession).
• Seasonal: Occurs at certain times of the year (e.g., farming or tourism jobs). 

Key Findings:

• Youth (age 15‑29) unemployment in urban areas rose: for young men to 2% and for young women to 25.3%. Urban youth unemployment overall reached about 18.4%, up from 17.9%. (Source: DD India).
• In urban areas, regular wage/salaried employment share improved modestly: from 4% → 49.8% of urban employment. (Source: DD India).
• Overall urban unemployment rate (age 15+) recorded at 9% in this period. (Source: The Hindu)

Reasons for rise in Urban Joblessness:

• Structural mismatch between skills & jobs: Many urban job‑seekers, especially youth and graduates, lack the skills demanded by the changing economy. For example, only about 7% of India’s labour force has received formal skill training.
• Job creation not keeping pace with workforce growth (jobless growth): India’s working‑age population is growing rapidly, but employment growth is slower. The Periodic Labour Force Survey (PLFS) says labour force participation rate in urban areas was modestly rising (50.6% → 50.7%). So, more people are seeking jobs, but employment hasn’t kept pace.
• A large portion of urban employment is informal: jobs without contracts, benefits, or stability. This means many workers are in precarious positions and vulnerable to becoming unemployed.
• Technological change, changing sectoral composition: Many urban jobs in intermediate/low‑skill services or manufacturing are vulnerable to automation or changes in global supply‑chains.

Government Measures:

• Deen Dayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY‑NULM): Reduce poverty and vulnerability of urban poor households by enabling access to skilled wage employment and self‑employment.
• Pradhan Mantri Mudra Yojana (PMMY): Provide collateral‑free loans up to ₹10 lakh for non‑corporate, non‑farm small/micro enterprises, encouraging self‑employment.
• Employment Linked Incentive (ELI) Scheme: Announced in Budget 2024‑25, this has special focus on manufacturing plus hiring incentives. First‑time employees get one month’s wage (up to ₹15,000); employers get incentives for added employment (e.g., up to ₹3,000/month for two years).
• Prime Minister Street Vendor’s Atma Nirbhar Nidhi (PM SVANidhi): Working capital loans to urban street vendors to restart or expand business (especially after COVID‑19 impact).

How to deal with Urban Joblessness?

• Enhancing Employability: Invest in education and skill development aligned with current and future market demands. 

• Promoting Inclusive Economic Growth: Encourage labour-intensive sectors like manufacturing, services, and urban infrastructure projects. The latest official survey (July‑Sept 2025) of Periodic Labour Force shows urban unemployment at 9% while rural is 4.4% — indicating non‑farm/urban job creation is under pressure. 

• Formalization of Employment: Shift informal jobs to the formal sector by improving labour protections and incentives for employers. In Rajasthan, a framework was developed to support 6 million informal urban workers through a proposed “Urban Employment Guarantee Scheme” for informal workers in cities. 

• Leveraging Technology and Innovation: Use digital platforms and AI-enabled job matching to connect workers to opportunities efficiently. For e.g. Platform‑based firms in urban India (e.g., gig work) initially created opportunities, but many workers later lost access or found conditions deteriorating. 

• Addressing Demographic and Social Barriers: Increase female workforce participation and opportunities for youth. Remove social, cultural, and infrastructural barriers that prevent certain groups from accessing urban jobs. 

Conclusion:

Urban unemployment in India is a complex challenge shaped by structural shifts, demographic pressures, and skill mismatches. While rural employment is stabilizing, cities face rising joblessness, especially among youth and women. Addressing this requires a holistic approach: enhancing skills, promoting formal and inclusive employment, supporting entrepreneurship, leveraging technology, and integrating urban planning with job creation. With targeted policies and continuous monitoring, India can transform its urban workforce into a productive and resilient engine of growth.

Source: The Hindu