Understanding India’s (Un)employment Problem

There’s a visual from my trip to Cuba that I have not been able to shake off. I wish I had a picture for it. It was of a woman, in paint-spattered overalls, confidently walking down a street with a band of 4-5 men. She was a construction worker on her lunch break in Habana Vieja, Havana’s old quarter.

It is common to find women on construction sites in India, just as it is in India. So what was it about spotting a woman construction worker in Cuba that stunned me? What is the difference between the sari-clad woman carrying a pile of bricks on her head, and the confident, curly-haired Afro-Cuban woman in paint-stained overalls?

India has an unemployment problem. Much has been talked about it. A lot of political capital has been preserved by not taking the bull by its horn, and many political battles have been won by blame shifting and piggyback-ing on the infamous, forever-threatening unemployment rate.

But what is India’s unemployment problem, how severe, and how deep does it go?

TLDR: The problem is big. We need to look at it as less of an unemployment problem, and more as an employment problem.

Here are some facts:

  1. Out of India’s 1.3 billion, only ~430 million are employed

  2. 60% of India’s population is outside of the labour force. Compare that to ~40% of most other countries.

  3. There are 2.05 dependents for every employed Indian

  4. India’s female labour force participation rate is abysmally low at 6.7% in urban India and 10.1% in rural India

Anyone over the age of 15 is considered employable. Labour Force Participation Rate (LFPR) is the fraction of the employable population that is working or looking for a job. As per CMIE’s latest report on employment numbers, India has 1.087 billion people over the age of 15 years, and only about 431 million that are employed or looking to be employed, computing to an LFPR of 39.71%

Furthermore, India’s labour force has stagnated at ~430-440 million for some years now, even as the population increases, causing the LFPR to drop from 44-45% to the current 39%. At the same time, 30-40 million are unemployed, i.e. looking for jobs but not finding them. This number too has remained consistent in the last 5-6 years, indicating that a large number of people in the employable age are likely choosing to sit out. This means a mammoth 61% of India’s population is not even looking for a job. A sizeable part of this 61% are women. The female labour force participation rate in urban India is a dismal 6.7%, and 10.1% in rural India.

The above figures clearly indicate that India isn’t creating enough jobs for the people that enter the employable age category every year. Furthermore, many are choosing to forego employment while depending on the employed few, out of the dejection that stems from a discouraging job market. Worse still, most Indian women find it so difficult to find jobs in India that they believe it is not even worth offering their services in the market. Combine that with a society that discourages women from working, and the low Female LFPR stands explained.

Not only does India have to create jobs, it also needs to create good quality jobs that offer stability, adequate remuneration, savings, and a chance at future economic security. That’s the difference I saw between the female construction worker in Cuba*, and those in India. The construction worker in Cuba walked with confidence that comes from safety, equal pay and equal working conditions. Indian women construction workers choose their work out of desperation and dire conditions, and not out of a valid choice that emerge from healthy jobs and working environments.

India faces an employment problem, not an unemployment problem. It must create jobs that encourage its citizens, especially women, to come to a workplace that assures safety, security and stability.

*Cuba’s politics and economic conditions are another discussion, but the country might be a rare example of a country that ensures equality for all, at the expense of economic growth


I’m presently on a break from tourism consulting to devote time to the family manufacturing business, as well as a graduate certificate program in public policy at the Takshashila Institution. The certificate program is serving as the perfect playground for my interest in public policy. This post is part of the public engagement required to earn credits for the program.