India's Labour Market Sees Structural Shift from Agriculture: Report

An SBI Research report highlights a structural transformation in India's labour market. The share of agriculture in the workforce has declined to 43%, with manufacturing and services gaining, driven by government policies like the PLI scheme.

Structural Shift in Workforce

India's labour market is undergoing a structural transformation driven by the country's broader economic transition, according to a report by SBI Research based on the latest Periodic Labour Force Survey (PLFS) 2025 unit-level data. The report said that the share of agriculture in India's workforce has steadily declined over the decades, even as manufacturing and services gain ground.

"India's labour force is undergoing structural transformation with the share of agriculture in the workforce witnessing a modest 23% decline from 66% in 1987-88 to 43% in 2023-24 over a 37-year period," the report stated.

The report highlighted that despite the decline, agriculture still accounts for 43 per cent of India's workforce in 2025, underlining the continuing dependence on the sector.

Enterprise Employment Trends

It further noted that employment in larger enterprises has increased with policy support for manufacturing. "Large enterprises (over 20 workers) now employ 13.7% of the workforce... significantly higher than 10.8% in 2024 with the government's renewed push on manufacturing," the report added.

According to the report, non-agricultural enterprises with fewer than 19 workers continue to employ over 42 per cent of workers, reflecting the dominance of small and informal enterprises in India's labour ecosystem.

The study observed that India's enterprises remain small in labour-intensive sectors such as apparel, footwear and furniture, and stressed the need for policy interventions that can channel more capital into employment-intensive industries.

The report said the government's Production Linked Incentive (PLI) scheme and focus on manufacturing are helping improve employment opportunities in larger firms.

Labour Participation and Regional Trends

On labour force participation, the report stated that the Labour Force Participation Rate (LFPR) for people aged 15 years and above stood at 59.3 per cent in 2025. Male LFPR was recorded at 79.1 per cent, while female LFPR stood at 40 per cent.

The report also pointed to significant regional disparities in employment conditions. States such as Gujarat, Madhya Pradesh, Karnataka and Chhattisgarh recorded relatively lower unemployment rates, indicating stronger labour market absorption.

Informal Sector Dominance

SBI Research further highlighted that informal employment continues to dominate India's labour market, with agriculture remaining the largest source of informal jobs, accounting for nearly 42 per cent of the informal workforce.

The report is based on PLFS 2025 data covering over 2.7 lakh households and 11.48 lakh individuals across rural and urban India. (ANI)

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