Why India’s job crunch is on a longer spell

Unemployment is a multifaceted challenge that affects individuals across various demographic groups, including gender, age, and the length of their job search. A comprehensive understanding of unemployment spells – the period during which individuals remain unemployed while actively seeking employment – is vital for effective policymaking, economic analysis, and workforce planning. This can be attained by analysing the percentage of the population within distinct timeframes, based on how long individuals have been unemployed. By comparing data from two periods from the NSSO’s Periodic Labour Force Survey (PLFS), 2020-21 and 2023-24, the shifting unemployment patterns can be better understood. These changes provide us with a clearer picture of labour force participation, economic recovery, and the specific obstacles different demographic groups encounter.

A key finding among males is the notable rise in long-term unemployment. In 2020-21, a significant portion of unemployed men (37.5%) were in the 6-12 months and 15.4% in the less than or equal to 6 months unemployment category. By 2023-24, this number decreased to 25.9% and 12.2%, suggesting that a significant share of previously short-term unemployed males is now experiencing longer job search durations. Specifically, the percentage of males in the 1-2-year unemployment category rose sharply from 23.9% to 30.9%. This shift indicates that many men are facing difficulty in securing jobs beyond the initial months of unemployment, and similar trends are visible in both the 2-3 year and over 3-year categories.

Shifts in the labour market – such as automation and changes in demand for certain industries – have likely resulted in longer job search times for men. Additionally, the post-COVID restructuring of industries has altered the types of skills employers seek, leaving a segment of the male workforce either underemployed or struggling to adapt to new sectors. 

While females still experience shorter unemployment spells than their male counterparts in the 6-12 month and the less than or equal to 6 months unemployment category, the 2023-24 data reveals a clear trend toward longer job searches. In 2020-21, 35.4% of unemployed women had been seeking work for 6-12 months. By 2023-24, this figure dropped to 21%. However, the percentage of women unemployed for more than two years increased substantially, from 10.7% in 2020-21 to 16.3% in 2023-24. The rise in long-term unemployment among women can be attributed to several factors. During the pandemic, many women, particularly those in caregiving roles, were disproportionately affected by job losses, leading to longer unemployment spells. Additionally, gendered labour market segregation – where women are often concentrated in sectors like retail, hospitality, and education – may contribute to extended job search times, especially since these sectors were hit hardest by the pandemic.

Among younger individuals (15-29 years), the data reveals a concerning trend. While the proportion of youth unemployed for less than or equal to 6 months decreased between 2020-21 and 2023-24 (from 14.7% to 11.8%), there was a significant increase in the length of unemployment lasting more than one year. Specifically, the percentage of young people unemployed for 1-2 years increased from 23.% to 32.1%. A similar upward shift is observed in both the 2-3 years and over 3 years categories.

This shift reflects the growing challenges faced by young job seekers in an increasingly competitive and complex job market. The youth labour market is heavily influenced by factors such as educational attainment, skill gaps, and the availability of entry-level positions. The rise in long-term unemployment among young people can be attributed to several key factors: slower recovery of the job market post-pandemic, mismatched skills and job requirements, and heightened competition for limited opportunities. Moreover, technological advancements like automation and digitalisation have exacerbated the issue.

Evolving industry demands

For middle-aged individuals in the 30-45 age group, the data reveals significant changes in short-term and long-term unemployment patterns. In 2020-21, this group had the highest proportion of individuals unemployed for 1-2 years (25.4%), and 23.2% were unemployed for 2-3 years. By 2023-24, long-term unemployment became even more pronounced, with 41.4% now unemployed for more than 3 years. This shift is driven by the transformation of industries and the growing demand for advanced, technology-driven skills. Middle-aged workers, while experienced, often find their qualifications outdated. Family responsibilities may also limit their ability to pursue retraining or relocate, compounding their challenges.

Older workers encounter significant barriers to re-entering the workforce. While the percentage of individuals (aged 46-60) unemployed for less than 6 months decreased from 20.1% in 2020-21 to 17.3% in 2023-24, long-term unemployment in both the 1-2 year and 2-3 year categories remained significant. Older workers face unique challenges when re-entering the workforce, including age discrimination, declining industry relevance, and a lack of modern digital skills, all of which make it more difficult to secure employment. For individuals aged 60 and above, the situation is even more challenging and severe. The percentage of this group unemployed for over 3 years increased sharply from 22.6% in 2020-21 to 47% in 2023-24.

The data from 2020-21 and 2023-24 reveal a complex and evolving unemployment landscape, with significant shifts across gender, age, and the duration of unemployment. Long-term unemployment is rising across all demographic groups, highlighting the need for policies that support skill development, reduce labour market barriers, and create greater employment opportunities for workers at all stages of their careers. There is another factor that needs to be accounted for, where some sections of the employable youth are looking forward to maintaining life-work balance rather than going all out to grab and slog for whatever employment opportunities are available. This phenomenon will potentially leave such youth unemployed for longer periods.

As economies continue to recover and adapt to new technological realities, it is essential to provide targeted support for the most vulnerable groups in the labour market, including youth, women, middle-aged workers, and older workers. By focusing on reskilling, enhancing job market accessibility, and addressing specific demographic challenges, policymakers can help foster a more inclusive, resilient, and sustainable labour market for all.

(Palash is fellow at National Council of Applied Economic Research, New Delhi; Wankhar is a retired Government of India officer)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.