India’s Urban Unemployment Falls to 5.2%; Women’s LFPR Jumps

India’s labour market showed encouraging signs of recovery in unemployment and structural improvement in the July-September quarter of 2025.

Data released by the National Sample Survey Office (NSSO), part of the Ministry of Statistics and Programme Implementation (MoSPI), indicates that the unemployment rate (UR) for persons aged 15 years and above in urban areas eased to 5.2% during the quarter.

This is a noticeable improvement from the 6.6% recorded in the same quarter last year and the 5.7% seen in the preceding April-June quarter of 2025.

The latest figures suggest the economy’s ongoing momentum is translating into stronger job creation, particularly within urban centers which serve as key engines of growth.

The Rising Tide of Female Employment

The most significant positive trend revealed by the Quarterly Periodic Labour Force Survey (PLFS) data is the substantial increase in the Female Labour Force Participation Rate (LFPR).

This is a critical indicator, as India has historically struggled with low female workforce participation.

Unemployment Rate for Women: The UR for women aged 15 and above in urban areas dropped to 6.3% in the July-September quarter, down from 9.4% a year earlier.
Female Labour Force Participation Rate (LFPR): The LFPR for urban women in the same age group surged to 24.5%, marking a significant increase from 20.2% recorded in the July-September 2024 quarter.
Worker Population Ratio (WPR) for Women: The WPR, which measures the percentage of employed persons, also climbed from 18.3% to 23.0% year-on-year.

This indicates that more women are not only actively seeking work but are also successfully finding employment, signaling potential structural shifts in the economy, possibly driven by formalization, growth in the services sector, and specific government-backed skill development initiatives targeting women.

Declining Unemployment Across Demographics

The overall decline in the unemployment rate reflects positive movement across both genders:

Unemployment Rate for Men: The UR for men aged 15 and above in urban areas eased to 4.7% in the September quarter, down from 6.0% in the same quarter last year.
Male Labour Force Participation Rate (LFPR): The LFPR for urban men stood at 73.4%, showing stability compared to 73.0% a year earlier.
Worker Population Ratio (WPR) for Men: The WPR for urban men increased slightly from 68.6% to 70.0% year-on-year, demonstrating stronger absorption of the male workforce.

The Labour Force Participation Rate (LFPR)—the percentage of the population working or actively looking for work—for the urban population aged 15 and above registered an increase, rising to 49.3% from 48.5% in the same period last year.

Analysing the Underlying Drivers

Economists point to several key factors sustaining this positive trajectory:

Urban Economic Formalisation: The continued formalisation of the urban economy and the rise of the Gig Economy are creating diverse, flexible employment opportunities, which often appeal more strongly to female workers.
Robust Service Sector Growth: Sectors such as IT, finance, logistics, and healthcare have maintained high growth, driving significant demand for white-collar and specialized roles concentrated in urban areas.
Government Initiatives: Targeted skill development and entrepreneurship promotion schemes, especially those focused on upskilling youth and women, appear to be successfully channeling trained individuals into the labour force.

While the data provides a strong boost to the government’s narrative of economic stability and job creation, experts caution that the overall national picture, which includes rural employment, often shows higher volatility.

Furthermore, maintaining this positive trend requires sustained capital expenditure and robust private sector investment to create quality, high-wage jobs at scale.

The consistent rise in the female LFPR, however, remains the most encouraging sign for long-term inclusive growth.

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