Self-Employment Surge: A Crucial Driver in India's Job Landscape

HDFC Bank's report reveals self-employment as the fastest-growing employment category in India, surging from 239 million in FY18 to 358 million in FY24. This growth outpaces salaried jobs and casual labor, with significant female participation. The shift underscores self-employment's central role in India's evolving employment landscape.

In a significant revelation, HDFC Bank's 'Employment Trends in India' report highlights the explosive growth of self-employment as a pivotal force driving India's job market over the last six years. According to the study, self-employment, encompassing both farm and non-farm sectors, ballooned from 239 million in fiscal year 2018 (FY18) to an impressive 358 million by fiscal year 2024 (FY24). The report describes this impressive expansion as a 'healthy CAGR of 7.0 per cent.'

This burgeoning self-employment sector now outpaces salaried work and casual labor, underscoring a fundamental transition in India's labor landscape. Salaried jobs have seen a nominal rise—from 105 million in FY18 to 119 million in FY24—reflecting a modest 'CAGR of 4.1 per cent,' while casual labor saw a slight uptick, from 114 million to 122 million, with a mere 'CAGR of 1.1 per cent' during the same time frame.

The report further indicates a broad rise in labor market participation, noting a substantial increase in the Labor Force Participation Rate (LFPR) for individuals aged 15-59 years—from 53 per cent in FY18 to 64.3 per cent in FY24. Women's participation also saw a significant climb, reaching 31.7 per cent in FY24, as opposed to the male LFPR of 58.2 per cent.

Overall employment swelled by 155 million between FY18 and FY24, with a striking surge in female employment, which soared by 103 million, nearly double the addition of male workers. This trend hints at a growing inclination towards self-employment among women and youth, possibly due to the limited availability of regular wage-based jobs. The report further emphasizes the dominant role of self-employment, now representing more than half of India's employed populace.

Sectorally, the employment landscape has also shifted, with 614 million people employed in India by FY24. Non-farm sectors constitute 54 per cent, juxtaposed with agriculture's 46 per cent of total employment. Interestingly, agricultural employment witnessed growth, fueled predominantly by female participation, despite the rising prominence of non-farm opportunities. The farm sector saw a substantial increase, with female employment rising by 74 million, while male employment recorded a marginal increment of 5 million.

Non-farm job creation was mainly driven by services, construction, and manufacturing sectors. Between FY18 and FY24, services alone added 41 million jobs, while construction and manufacturing contributed 20 million and 15 million jobs, respectively. The largest contributors within services included wholesale and retail trade, transport, education, hotels and restaurants, and communication-related activities, with wholesale and retail trade being particularly significant, accounting for almost 40 per cent of the entire increase in trade and services employment.

In manufacturing, employment reached 70 million, spearheaded by industries such as textiles, food and beverages, metals, furniture, and tobacco. Textiles and apparel, in particular, accounted for nearly one-third of the growth in manufacturing jobs. Notably, MSMEs emerged as a cornerstone of job creation, contributing 48 per cent to both manufacturing and services employment by FY24, with a notable increase of 17 million jobs in MSME trade and services over just two years.

(With inputs from agencies.)