India reaches mid-January with a labour market that still expands, yet at a slower clip. Official data show unemployment at 4.8% in December, up from 4.7% in November. Hiring momentum cooled in surveys, while formal payrolls earlier in 2025 stayed firm. Rural employment policy also shifted with a new scheme that guarantees more days of paid work. Here is what the numbers show and why they matter.
Where the labour market stands now
The government reports a 4.8% jobless rate for December 2025, matching economist forecasts. Labour force participation also edged higher in December to 56.1% on the Current Weekly Status, suggesting more people are looking for work as the year closed. That mix—slightly higher unemployment alongside stronger participation—often appears when job seekers return after festival months. What is PLFS? The Periodic Labour Force Survey is India’s official household survey that tracks unemployment, participation, and employment ratios on quarterly and monthly cycles. Its design was revamped in 2025 to provide broader, timelier estimates for rural and urban India.
Hiring cools in surveys while growth continues
Business surveys signal expansion, but at a softer pace. The HSBC–S&P Global Manufacturing PMI eased to 55.0 in December from 56.6 in November. Services growth also slowed, with the Services PMI at about 58.0, and the Composite PMI at 57.8. Readings above 50 indicate expansion. December data point to slower new orders and a pause in hiring across many firms, even as export demand held up. What is the PMI? The Purchasing Managers’ Index summarizes monthly questionnaires from firms on output, orders, jobs, and prices. A score above 50 signals growth; below 50 signals contraction.
EPFO payrolls highlight formal job creation
Payroll records offer another lens on jobs in the organised sector. EPFO net member additions reached 17.89 lakh in January 2025, with about 8.23 lakh first-time subscribers. Young workers aged 18–25 made up a large share, which usually reflects fresh entries into formal work. Monthly releases through 2025 continued to show robust flows. While these figures are not December data, they help map the base of formal hiring heading into late 2025. What is EPFO? The Employees’ Provident Fund Organisation manages mandatory retirement savings for formal workers. New registrations and net additions act as a proxy for formal job creation.
Rural jobs guarantee shifts the policy backdrop
The centre has reworked the rural employment guarantee. Reports indicate the MGNREGA programme has been reframed as VB-G RAM G, with an increase in guaranteed work to 125 days per household. The change has drawn pushback from several states and protests from worker groups. Budget watchers expect a large allocation in the upcoming Union Budget. The policy will influence rural incomes during lean agricultural periods and could shape seasonal migration. What is VB-G RAM G? It is a new rural employment framework reported to replace or restructure MGNREGA. It promises more days of wage employment and aims to tighten delivery systems. Details and implementation will determine its impact on local labour markets.
Wages and purchasing power in a global lens
International evidence shows real wages recovering in many emerging economies through 2024–2025, after the inflation shock. India’s outcome depends on keeping inflation moderate while productivity improves. Minimum wage and pay settlements lift nominal income, but purchasing power rises only if price growth stays contained. Recent PMI inputs point to milder cost pressures, which would help.
What the tracker says about 2026 hiring
The signals line up in a clear way. Unemployment ticked up, yet participation rose. PMIs still show expansion, though with slower demand and flat headcount in December. Earlier EPFO prints confirm a solid base in formal hiring, led by younger workers. Meanwhile, the rural jobs overhaul could buttress incomes in the countryside if funding and execution are strong. For employers, the message is to hire selectively and watch cost pressures. For policymakers, near-term priorities include high-frequency PLFS tracking, timely EPFO disclosures, and clarity on rural job funding. These steps will anchor confidence as India moves through early 2026.