Here is a well-formatted and self-explanatory version of the notes on unemployment in India.

Complete Notes on Unemployment: Changing Dynamics in India

These notes summarize the key concepts, data measurement methodologies, and trends related to unemployment in India, based on the provided source. The focus is on the applied economic aspects of unemployment—examining its evolving nature and trends—rather than defining basic types like structural, seasonal, frictional, or cyclical unemployment.

I. Measuring Unemployment: Data Sources and Approaches

To understand unemployment trends, it is necessary to identify which data sources and measurement rates are relevant.

A. Official Data: Periodic Labour Force Survey (PLFS)

PLFS is the official survey conducted yearly by the National Sample Survey Office (NSSO).
It replaced the quinquennial (five-yearly) Unemployment Survey (US), last conducted in 2012.
Key Insight: High-frequency data is crucial for policy-making, as five-year-old data is considered obsolete.
PLFS Frequency (since 2017):
- National Level (Rural + Urban): Yearly data.
- Urban Level Only: Quarterly data.

B. Measurement Approaches within PLFS

PLFS uses two primary approaches to measure whether a person is employed or unemployed:

Usual Status (US) Approach:
- Criteria: Based on the “majority time criteria” over the previous 365 days.
- Definition: A person is considered employed if they spent most of their time (more than 6 months) working during the last year. This provides a long-term perspective.
Current Weekly Status (CWS) Approach:
- Criteria: Uses a short recall period of only seven days (one week).
- Definition: A person is considered employed if they worked for at least one continuous hour during the last seven days. This is a much more sensitive, short-term measure.

C. Private Data Source: CMIE

The Centre for Monitoring of Indian Economy (CMIE) is a private entity that conducts its own surveys.
CMIE measures unemployment using the US and CWS approaches, as well as the Current Daily Status (CDS) approach.

Current Daily Status (CDS) Approach:
- Criteria: Measures the intensity of employment over a seven-day recall period.
- Definition: A standard working day is assumed to be eight hours.
  - Full Day (100%): Worked for more than four hours.
  - Half Day (50%): Worked for one to four hours.
  - Unemployed (0%): Worked for less than one hour.
- This approach provides an intensity-based unemployment rate, measuring underemployment.

D. Comparison and Preference of Approaches

Unemployment Rate Ranking: If measured on the same population, the CDS approach yields the highest unemployment rate (due to intensity measurement), followed by CWS, with the US approach providing the lowest rate.
Time Sensitivity: CDS and CWS are highly time-sensitive and are effective at measuring the seasonality of work (seasonal unemployment). The US approach captures a larger period, smoothing out seasonal effects.
Utility: Both US and CWS are important, especially since many jobs in India are seasonal and informal.
Data Reliability: PLFS (government) data is generally preferred over CMIE (private) due to its larger sample size and the governance systems designed to reduce political bias.

II. Unemployment Trends and Demographic Context

Data is often “sliced” based on characteristics (youth, educated, gender, etc.). The focus shifts to analyzing these specific slices to understand underlying dynamics.

A. Broad Trends (PLFS)

US-Based Trend (National): Since 2017, PLFS data using the US approach shows a consistent fall in the headline unemployment rate.
- First PLFS (2017): Approximately 6.2%
- Latest Data: Approximately 3.2%
CMIE Comparison: CMIE’s US-based numbers are usually higher than PLFS (e.g., 4% to 5% vs. 3.2%).
CWS-Based Trend (Urban Quarterly): Trends are not consistently declining because CWS captures seasonality. For instance, the rate in Jan-Mar (6.7%) was higher than in Oct-Dec (6.3%).

B. Demographic Dividend Context

India’s large young population is often cited as a Demographic Dividend, giving the country an advantage in productivity and attracting investment.
The Problem: This advantage is negated if factors like proper infrastructure, ease of doing business, or relevant skills among the youth are lacking.
The Peak is Approaching:
- Youth (15–24 years): Expected to peak around 2036.
- Overall Working Age (15–64 years): Expected to peak around 2045.
The Urgency: India has a limited window (about 10 to 20 years) to capitalize on this demographic advantage.

III. Specific Unemployment Rates and Dynamics

Analyzing sliced data reveals critical and often worrying dynamics that are hidden by the low headline (3.2%) number.

A. Summary of Unemployment Rates (Approximate)

This table shows the stark difference in unemployment rates based on the population segment and measurement method.

Population Segment	Measurement Approach	Approximate Unemployment Rate
Overall Headcount	US Approach (National)	3.2%
Overall Headcount	CWS Approach (National)	~6.6%
Youth (15–24 years)	US Approach	~7%
Youth (15–24 years)	CWS Approach	8–9%
Graduates (All Ages)	US Approach	~11%
Graduates (All Ages)	CWS Approach	13–14%
Young Graduates (Youth + Graduates)	US Approach	~20%
Young Graduates (Youth + Graduates)	CWS Approach	~25% (Highest Observed)
Older Workers (29+ years)	All Approaches	Less than 2% (1.8–1.9%)
Poor and Illiterate	All Approaches	Less than 2%

B. Composition of the Unemployed

Out of the total number of people who are unemployed:
- 56% are young people (youth).
- 83% of those unemployed youth are graduates.
Key Takeaway: Roughly 48% (almost half) of all unemployed people in India are young graduates.

C. Factors Driving High Youth/Graduate Unemployment

Higher Aspiration and Willingness to Work:
- Unemployment is defined as being able and willing to work but unable to find a job.
- Graduates generally have a higher Labor Force Participation Rate (LFPR) (the percentage of the population that is either working or actively seeking work) because most actively seek work, increasing their numbers in the unemployed category if jobs are scarce.
Job Suitability (Skilled Work):
- Graduates seek skilled work and are unwilling to accept unskilled jobs.
- They play a “wait and watch” game for a job suitable to their perceived skill level.
Affordability (Youth):
- Young people, particularly graduates, can afford to remain unemployed because their parents support them.
- This allows them to pursue “dream jobs” (like civil service) or wait for better opportunities.
Necessity (Older Workers/Poor):
- The unemployment rate for people 29 years and older is extremely low (less than 2%). They face self-pressure or necessity and must start earning, so they take up any decent job or turn to self-employment.
- Similarly, the poor and illiterate have very low unemployment (less than 2%) because they are “too poor to afford to not work.”

D. Generational Shift in Employment

The high rates among young graduates reflect a significant transition in the labor market.

Past Generations (e.g., born 1950s-70s):
- This was a “lucky generation” because few people were educated.
- Graduates found good jobs quickly (often in their late teens or early 20s) due to high demand and low supply.
Current Generation (e.g., born late 90s/2000s):
- This generation focused on acquiring degrees because they saw the success of their parents.
- However, the supply of graduates has increased dramatically, while commensurate job growth has not kept pace.
- Skill vs. Degree: The crucial message missed was that the job market requires relevant skills, not just degrees. This generation often has degrees but “lesser skills,” leading to prolonged unemployment.
Transitioning Timeline: Earlier generations secured jobs around age 20; the current generation may find jobs around age 27 or 29, reflecting this evolving trend.