Cross-chapter analysis from the India Employment Report 2024
The pandemic caused a sharp reversal in labour market trends, with disproportionate effects on youth, women, and informal workers.
The COVID-19 pandemic and subsequent lockdowns caused a sharp break in India's structural labour market trends after 2019. Although India recovered relatively quickly, the impacts of the lockdowns persisted even after the pandemic ended. The analysis in Chapter 2.7 draws on Periodic Labour Force Survey data for 2019–2022 and reveals two opposing realities: headline employment indicators improved, but the quality of employment deteriorated significantly.
Pre-COVID baseline (2019): Before the pandemic, aggregate employment had been slowly increasing, mainly due to a fall in agriculture employment. Labour was being absorbed by construction and services. The LFPR stood at 50.2 per cent and the worker population ratio at 47.3 per cent. Youth unemployment had already reached 17.5 per cent in 2019—nearly three times the 5.7 per cent recorded in 2000.
Immediate impact (2020): During the nationwide lockdown (25 March–17 May 2020), the worker population ratio plunged from nearly 48 per cent in Q4 2019 to 42.6 per cent in Q2 2020. The unemployment rate spiked to 11.8 per cent. An estimated 6.3 million young people lost their jobs during the lockdown periods. In absolute terms, 63.5 million additional persons joined the labour force and 68.1 million joined the workforce between 2019 and 2021—driven largely by distress-driven participation of women in rural areas.
Recovery trajectory (2021–2022): By 2022, the LFPR reached 55.2 per cent and the worker population ratio 52.9 per cent. Unemployment declined to 5.1 per cent by Q2 2022. However, the recovery was not a return to pre-pandemic structure. The post-pandemic upward movement in employment rates must be moderated by the quality of employment generated: most additions were in self-employment, particularly unpaid family work in rural agriculture.
Sectoral shifts: The long-term trend of labour moving out of agriculture reversed. Employment in agriculture increased by 30.8 million in 2020, 12.1 million in 2021, and 12.9 million in 2022. Construction employment also rose, but much of the new work was casual and low-wage. Manufacturing and services saw only modest gains or stagnation.
Informal worker vulnerability: Women and youths were several times more likely to lose paid jobs than men and far less likely to recover paid work after restrictions were lifted. Regular salaried employment declined during the pandemic, and the number of vulnerable regular workers dropped. Real wages for regular and self-employed workers fell, with female self-employed workers experiencing a considerably higher negative growth rate than men.
Youth-specific impacts: Youth unemployment rose from 16 per cent in Q4 2019 to 25.3 per cent in Q2 2020. Long-term youth expansion into non-farm sectors reversed: youth employment in agriculture increased by 5.6 percentage points while industry declined by 4.6 percentage points and services by 5 percentage points. The number of young workers in regular salaried jobs fell by 2.4 million during 2020–21.
The pandemic reversed long-term structural shifts in sectoral employment. Before the pandemic, aggregate employment had slowly increased mainly due to a fall in agriculture employment, with labour being absorbed by construction and services. This trend completely reversed during 2019–2022.
Agriculture reversal: Employment in agriculture and allied sectors increased by 30.8 million in 2020, 12.1 million in 2021, and 12.9 million in 2022. The quarterly data indicate that people lost jobs in manufacturing, construction, trade, hotels and restaurants during the nationwide lockdown; once the lockdown was lifted, employment in agriculture and construction increased considerably. The rise in subsistence agriculture—either as own-account workers or unpaid family workers—indicates that poor migrants returning to their native homes and marginal workers were compelled to work in rural areas for their livelihood. This represents a reversal of the Kuznets–Lewis process of structural change.
Manufacturing: Manufacturing employment showed only a modest increase: 0.3 million in 2020, 3.4 million in 2021, and 1.7 million in 2022. The manufacturing GVA fell during the COVID-19 lockdown year of 2020, then recovered over 2021 and 2022. Studies on the ground pointed to several adverse impacts on micro, small and medium enterprises during this period.
Construction: Construction employment consistently increased, by 2.4 million in 2020, 5.7 million in 2021, and 3.3 million in 2022. However, this was largely casual wage work, which is more pronounced among women in rural areas and in subsistence agriculture. Many young people who engaged in regular salaried work in the pre-pandemic years moved into more precarious employment arrangements.
Services: The overall growth of services employment fell from 2.7 per cent between 2012 and 2019 to 1.1 per cent during the pandemic period. The one bright spot was transport, storage and communication (including ICT-related services), which grew from 2.7 per cent to 19.7 per cent of employment between 2000 and 2022. Demand for high- and medium-skilled ICT workers accelerated during and after the pandemic, and the gig economy showed resilience even during the lockdowns.
Young people in India are particularly susceptible to labour market marginalization due to limited work experience, inadequate job search skills, insufficient financial resources and lack of necessary skills. The COVID-19 pandemic exacerbated this already vulnerable position, leading to job and income losses (ILO 2022c).
Employment and unemployment shock: During the pandemic, youth participation in the labour market declined, and an estimated 6.3 million young people lost their job during the lockdown periods. Youth participation swiftly increased once lockdowns were lifted, except during Q2 2021 when the second wave peaked. The urban worker population ratio for youths fell from 32.5 per cent in Q4 2019 to 26.8 per cent in Q2 2020 (the nationwide lockdown period). The youth unemployment rate rose from nearly 16 per cent to 25.3 per cent in Q2 2020, then recovered to 15.1 per cent by Q2 2022.
Quality of employment deterioration: Youth employment increased by 19.9 million between 2019 and 2021, but more than three-fourths (83 per cent) of the additional youths were in self-employment—mainly household unpaid work (13.3 million). The number of young workers in regular salaried jobs declined by 2.4 million during 2020–21. Casual work among youths increased by 4.2 million between 2019 and 2021. A partial recovery began in the post-pandemic period with a rise in regular employment, but the number of youths in casual and self-employment remained nearly stable.
Sectoral reversal: Approximately 79 per cent of additional young people joined the agriculture sector between 2019 and 2021. Youth employment in agriculture increased by 7 percentage points, while participation in industry declined by 2 percentage points and in services by 5 percentage points. The Young Lives study in 2021 also reported increasing numbers of young people from rural and impoverished households working in agriculture, especially in unpaid household work.
Education disruption and delayed entry: The pandemic caused widespread school and college closures, disrupting education and training. While the report does not quantify enrolment losses directly, it notes that the incidence of youth not in employment, education or training (NEET) was already high before the pandemic—one in three young people, with young women at 48.4 per cent versus 9.8 per cent for young men. The shift to poor-quality work during the pandemic likely delayed labour market entry for those completing education, and the sharp rise in educated youth unemployment (29.1 per cent among graduates) suggests that the pandemic intensified the job-skill mismatch.
The India Employment Report 2024 does not provide a detailed evaluation of government COVID-19 relief packages, but it notes a significant contrast with other countries. In contrast to more advanced economies, where massive economic stimulus packages and specific targeted measures were introduced to sustain business and retain jobs, India's approach was less direct. The report emphasizes that the poor quality of the post-pandemic recovery—particularly the rise in unpaid family work and subsistence agriculture—suggests that policy interventions did not sufficiently protect vulnerable workers.
Existing schemes referenced: The report discusses broader active labour market policies and skill development schemes rather than pandemic-specific measures. These include the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for short-term skills training, the National Apprenticeship Promotion Scheme, and the Skill India Mission. The National Youth Policy 2021 and National Education Policy 2020 are highlighted as frameworks for addressing youth employment, though they were not designed as pandemic relief.
Effectiveness and gaps: The report argues that the pandemic revealed structural weaknesses that require urgent policy attention. Key recommendations include: (a) making production and growth more employment-intensive; (b) creating an inclusive urbanization and migration policy, especially in the aftermath of the 2020 reverse migration; (c) securing stronger labour regulation and a minimum quality of employment; (d) expanding skills training and apprenticeships; and (e) adopting regional-level policy approaches to reduce labour market disparities. The report stresses that the post-pandemic rise in the female LFPR, driven by economic distress, shows that a large number of women are ready to work if offered remunerative opportunities—pointing to a need for gender-targeted employment policies.
Note: The report does not provide quantitative assessment of specific COVID-19 relief schemes such as PMGKY or Atmanirbhar Bharat. Government response data should be supplemented from official sources (e.g., Ministry of Finance, RBI) for a complete policy analysis.