India's informal labour underpins 540 million workers, obscuring unemployment data

Official Indian unemployment figures appear low, but more than 90% of the country’s 600 million‑strong labour force works in the informal sector. That translates to roughly 540 million workers without contracts, social security or stable wages. The informal economy dominates urban employment and accounts for the bulk of self‑employment, while only about 25% of the working‑age population receives a regular salary.

The lack of formal jobs is linked to declining trade‑union density, which fell from 28.8% in the mid‑1990s to 13.4% today, and to a shrinking labour‑income share of GDP, which dropped from 56.8% to 49% over the same period. Recent remarks by the Chief Justice of India comparing unemployed people to “cockroaches” sparked nationwide protests, highlighting public anger over the hidden precarity of Indian workers.

Overall, the informal nature of India’s labour market limits workers’ access to benefits such as EPF, ESI, maternity leave and pensions, reinforcing a cycle of low wages and economic insecurity for the majority of the population.