The unemployment rate in Uttar Pradesh (UP) in January 2023 was 4.2 per cent, which was significantly lower than India’s unemployment rate of 7.1 per cent. While a low unemployment rate is generally a good sign, other labour statistics paint a very different picture of the labour market condition in UP. Uttar Pradesh has one of the lowest labour participation and employment rates, owing to a drastic decline in these metrics since the pandemic. It is disconcerting that the highest decline in labour participation rate and employment rate, compared to pre-pandemic levels, is observed for youth in the 20-24 years age-group.

In September-December 2019, the labour force participation rate among the youth (aged 20-24 years) in Uttar Pradesh was 41.2 per cent. The pandemic had an adverse effect on youth labour participation in the state. Consequently, the LPR for this age group fell drastically to 31.3 per cent in May-August 2020, 27 per cent in May-August 2021 and further to 22.5 per cent in May-August 2022. In September-December 2022, the labour participation rate stood at 22.4 per cent, which is a whopping 19 percentage points fall in three years.

In Uttar Pradesh, between September-December 2019 and September-December 2022, the labour force consisting of people aged 20-24 years shrunk from 10 million to 7 million. The first sharp fall was witnessed in May-August 2020, when the labour force shrunk by around 2.5 million. Since then, only about 7-8 million people aged 20-24 years have been in the labour force. This is a significant decline compared to pre-pandemic levels.

There was also a striking fall in employment rate among youth aged 20-24 years in Uttar Pradesh. Falling employment rate, which is the proportion of working age population that is employed, is a distressing outcome signifying lack of employment opportunities for youth in the state.

Before the pandemic, the employment rates among 20-24 year olds, were in the 25-27 per cent range. These fell to around 20-22 per cent during the lockdown periods in 2020 and 2021. The employment rate has not recovered since then. In fact, it declined to below 18 per cent by the end of 2022, recording lowest employment rates among youth in Uttar Pradesh.

The employment rate for youth in the 20-24 years age bracket fell from 27 per cent in September-December 2019 to 17.4 per cent in September-December 2022. This translates to a fall in the number of employed youth in this age group by 1.1 million. In September-December 2022, there were 5.5 million employed persons of age 20-24 years in Uttar Pradesh. In comparison, the workforce comprised of 6 million persons in this age group in September-December 2021. This indicates that the number of employed 20-24 year olds in the workforce has declined considerably in the past year.

The fall in labour participation rate and employment rate among youth aged 20-24 years in Uttar Pradesh was substantially higher for males compared to females. The labour participation rate for males in the 20-24 years age bracket fell from 65.7 per cent in September-December 2019 to 34.4 per cent in September-December 2022. This is a massive 31.3 percentage points decline in the labour force participation among young males in Uttar Pradesh, as compared to pre-pandemic levels. In this period, the size of the male labour force aged 20-24 years contracted from 8.9 million to 6.6 million a reduction by around 2.3 million.

For females in Uttar Pradesh in the 20-24 years age group, the labour participation rate was 3.4 per cent in September-December 2022. In comparison, the labour participation rate pre-pandemic, in September-December 2019, was 10.3 per cent. Although a significant decline, the percentage points fall is far greater for males than females owing to the fact that female labour participation rate was much lower to begin with.

In September-December 2019, the employment rate for males in this age group was 47 per cent, compared to a mere 1.6 per cent for females. This difference in employment of males and females in the state is stark. By September-December 2022, the employment rate of males in the 20-24 years age group fell dramatically to 27.8 per cent. For females in the same age group, the employment rate fell marginally to 1 per cent. In effect, the male employment rate for 20-24 year olds in Uttar Pradesh reduced by around 19 percentage points in the three years, accounting for around 1 million fewer employed males in this age group.

The size of the workforce comprising males in the 20-24 years age group, contracted more in rural than in urban areas, reflecting the distribution of the population in the state. Between September-December 2019 and September-December 2022, the number of employed male youths fell by around 0.78 million in rural Uttar Pradesh, compared to 0.29 million in urban Uttar Pradesh. A similar trend is observed in the contraction of male (aged 20-24 years) labour force. The labour force shrunk by around 1.7 million in rural Uttar Pradesh as opposed to 0.7 million in urban Uttar Pradesh, between September-December 2019 and September-December 2022.

The downswing in labour participation rate and employment rate among youth of 20-24 years of age in Uttar Pradesh poses a serious challenge. Persons in this age group mostly comprise of those who are just entering the labour market after education. Declining labour participation among these youngsters suggests that they are discouraged by the prevalent labour market condition in the state, and are increasingly choosing to stay out of the labour force instead.