India’s Youth Unemployment Falls Below Global Average In 2025: SBI Report

India’s urban labour market is showing signs of steady improvement, particularly among younger workers, according to a new report released by State Bank of India Research.

Based on the latest Periodic Labour Force Survey (PLFS) 2025 data and unit-level analysis, the report reveals that India’s youth unemployment rate has fallen below the global average, signaling stronger employment momentum despite ongoing global economic uncertainty.

The report stated that India’s unemployment rate for the 15–24 age group stood at 9.9 per cent in 2025, lower than the International Labour Organization’s projected global youth unemployment rate of 12.6 per cent for the same year.

The findings indicate that India’s employment ecosystem is gradually strengthening through industrial expansion, infrastructure investment, manufacturing growth, and rising opportunities in non-agricultural sectors.

India’s Youth Unemployment Rate Continues To Decline

According to the SBI Research report, India has witnessed a gradual decline in youth unemployment over the last several years. The rate fell from 10.9 per cent in PLFS 2022 to 10.3 per cent in 2024 and further eased to 9.9 per cent in 2025.

The report noted that the decline has occurred despite persistent global labour market disruptions caused by inflationary pressures, geopolitical tensions, automation, and slower economic growth in several developed economies.

“Globally, youth unemployment continues to remain substantially higher than overall unemployment levels, highlighting the challenges faced by young populations in securing employment opportunities,” the report noted.

Why Youth Employment Matters

Youth employment remains one of the most critical indicators of economic stability and future growth potential. A large working-age population entering the labour force requires sustained job creation across industries to maintain economic momentum.

India currently possesses one of the world’s youngest populations, giving it a demographic advantage compared to aging economies in Europe, Japan, and parts of China. Economists believe that effectively utilizing this workforce could significantly boost India’s long-term economic growth.

Structural Changes In India’s Labour Market

The report highlighted that India’s labour market is experiencing a broader structural transformation, especially with increased participation in manufacturing, services, logistics, infrastructure, and technology-driven sectors.

Shift Away From Agriculture

One of the most notable changes has been the gradual movement of workers from traditional agricultural employment toward non-farm sectors. This transition is considered important for improving productivity, wages, and long-term economic development.

Growth Of Manufacturing

Government initiatives such as Make in India, Production Linked Incentive (PLI) schemes, semiconductor manufacturing investments, and expanding industrial corridors have contributed to rising employment opportunities in manufacturing.

Infrastructure Expansion

Massive infrastructure projects involving roads, railways, airports, renewable energy, and urban development have also created large-scale direct and indirect employment opportunities across states.

Growth in the Services Sector

India’s services sector, including IT, fintech, healthcare, logistics, e-commerce, hospitality, and digital services, continues to absorb a growing number of young professionals.

SBI Research Highlights Alternative Employment Analysis

Apart from youth unemployment, SBI Research also emphasized that analysing employment conditions among people aged 30 years and above may provide a clearer understanding of structural employment trends.

Using its revised methodology, the report estimated significantly lower unemployment rates for older age groups.

For urban males above 30 years of age, the unemployment rate was estimated at 2.26 per cent, compared with the PLFS-reported 11.8 per cent for younger age groups.

Understanding The Difference

Younger individuals often face higher unemployment rates because many are transitioning from education into the workforce, searching for better opportunities, or preparing for competitive examinations and higher studies.

Older age groups typically show lower unemployment because they are more established professionally and possess greater work experience and skill specialization.

India’s Economic Growth Supporting Job Creation

India remains one of the fastest-growing major economies globally, with sectors such as renewable energy, artificial intelligence, electronics manufacturing, defence production, digital commerce, and startup ecosystems contributing to employment growth.

Rise Of Startups And Digital Economy

India’s startup ecosystem has become one of the largest in the world, generating jobs in technology, delivery services, fintech, edtech, AI, mobility, and creator-driven industries.

The increasing penetration of digital infrastructure, UPI payments, smartphone usage, and internet connectivity has also accelerated employment in platform-based and gig-economy services.

Government Focuses on Skill Development

Programs such as Skill India, PM Kaushal Vikas Yojana, Digital India, and various state-level skilling initiatives aim to improve employability among youth entering the workforce.

Experts believe that upskilling in artificial intelligence, automation, cybersecurity, semiconductor technology, and advanced manufacturing will play a major role in sustaining employment growth over the coming decade.

Global Labour Market Challenges Continue

While India’s numbers have improved, global youth unemployment remains a concern in many economies due to slower hiring, automation risks, and weak industrial growth.

Many developed countries continue to face economic slowdowns, layoffs in technology sectors, and reduced manufacturing output. Against this backdrop, India’s relatively stronger employment trends stand out positively.

However, economists also caution that maintaining employment momentum will require continuous investments in education quality, vocational training, industrial competitiveness, and labour-intensive sectors.

Conclusion

The latest SBI Research report highlights encouraging progress in India’s urban employment landscape, with youth unemployment falling below the global average in 2025. The steady decline from 10.9 per cent in 2022 to 9.9 per cent in 2025 reflects improving labour market conditions supported by economic expansion, manufacturing growth, infrastructure development, and rising opportunities in non-agricultural sectors.

While challenges related to skill gaps, automation, and job quality remain, India’s demographic strength and expanding digital economy continue to create new employment avenues for young workers. If current growth momentum continues alongside effective policy implementation, India could further strengthen its position as one of the world’s leading employment-driven emerging economies.