Uttar Pradesh to Gujarat: how job crisis differs in India’s poll-bound states

Ahead of crucial state polls, Time Use survey reveals vast employment disparities—from UP’s low employment participation rate to Gujarat’s formal enterprise employment. 

The worker profile of Indian states heading into assembly polls next year shows a sharp divergence in youth employment. Over 40 million people are in their twenties, and only about 47% of them are employed.

Uttar Pradesh, which will go to the polls in February, stands out, with 30 million young people and less than 40% employment. Punjab and Gujarat, by contrast, have much smaller young populations and employment rates of 58.1% and 54.1%, respectively.

Here’s what unit-level data of the Time Use Survey 2024 tells us about the state of employment in key poll-bound and some other large states:

UP’s lion's share

In Uttar Pradesh, the employment participation rate among young adults (20-29 age group) is a mere 39.7%, seven points below the national average, and only about 4% of its young adults work in formal enterprises, including the corporate and public sectors, analysis from the Time Use Survey 2024 shows.

Similarly, Himachal Pradesh and Uttarakhand, two other states going for the state elections next year, also have relatively low employment participation among young adults. Gujarat and Punjab, at the other end, have the higher employment-to-population ratio among young adults—58.1% and 54.1%, respectively. This is not different from how the story plays out across the country. Only eight Indian states have more than half of young adults in employment. While the employment-to-population ratio is the second lowest in Uttar Pradesh, the sheer size of its population also means the state produces the largest pool of working young people in the country, underscoring why its labour market outcomes carry outsized weight in the national picture.

Employment-unemployment dynamics

Young adults not in employment does not always mean unemployment. It could also mean these people may still be studying or not seeking work altogether. Among the 10 states selected for analysis—those among the largest by population as well as the key ones due for polls next year—Uttar Pradesh again stands out, with low employment but also low unemployment, suggesting that fewer young adults, especially women, seek paid work. In comparison, Bihar also shares a similar worker profile to Uttar Pradesh, though with a lower employment rate and higher unemployment rate.

By contrast, Himachal Pradesh and Punjab have higher unemployment rates. This suggests stronger demand for jobs, but the local economy is not generating enough jobs to absorb the young workforce willing to work. Gujarat, another state headed for the election, anchors the ‘strong’ quadrant, combining high employment participation with low unemployment. This is along the lines of other industrialized states, Maharashtra and Karnataka.

Formal vs family business

Looking at employer type—formal enterprises (corporations, government, and non-profit institutions) versus household enterprises—a clearer picture emerges of the quality, not just the quantity, of jobs available to young adults. States with higher real per capita income tend to have a larger share of young adults employed in formal enterprises. Karnataka, Tamil Nadu, and Maharashtra lead on both fronts, combining high income with strong formal enterprise employment. Bihar, Uttar Pradesh, and West Bengal sit at the other end.

Gujarat is a notable outlier—despite high per capita income, its formal enterprise employment share lags well below what its income level would predict, suggesting a relatively higher reliance on family businesses.

Bihar's young workers are roughly 15 times more likely to be in household enterprises than in formal enterprises; in Uttar Pradesh and West Bengal, the ratios are 8 or more. At the all-India level, urban young adults are nearly three times as likely to hold a formal enterprise job as their rural counterparts (17.2% vs 5.9%).

Rural-urban divide

On the rural-urban split, eight of the ten states have a higher urban employment-to-population ratio among young adults than in rural areas. Himachal Pradesh, one of the states with elections next year, shows the widest gap between rural and urban employment participation rates. West Bengal, Uttarakhand, and Karnataka follow, though with relatively smaller gaps. Only Bihar and Maharashtra have a higher rural employment participation rate than urban.

Himachal Pradesh records the highest urban employment participation rate (64.0%), followed by Gujarat (58.6%). For rural areas, Gujarat (57.7%) tops among all 10 states, followed by Maharashtra (56.0%). Gujarat stands out with high figures in both rural and urban areas. Bihar’s employment participation rate is below 40% in both urban and rural areas, making it the lowest overall among the 10 states.

The rural-urban gap in young adult employment within a state reflects the nature of regional job growth and how it shapes opportunities for young people. While Gujarat’s balanced growth provides job access across the state, Bihar’s uniform stagnation underscores the need to stimulate overall job creation.

Time at work

Employment and unemployment rates only tell us whether young adults have work—not how long they are working. Time at work adds a layer that employment participation and unemployment figures miss. Analysis from the Time Use Survey shows that an average employed urban young adult in India spends an hour more at work (excluding breaks) daily than their rural counterparts (7 hours 35 minutes versus 6 hours 35 minutes). In all 10 states, urban workers log more time at work than rural workers.

In two election states, Himachal Pradesh and Gujarat, urban workers log much more time at work than their counterparts in other states. Shorter rural hours likely reflect the seasonal, intermittent nature of farm and casual work. Tamil Nadu's narrow gap is consistent with its rural industrialisation, where factories are dispersed beyond city limits.

Vidya Mahambare is Union Bank chair professor of economics and director (research) at Great Lakes Institute of Management, Chennai, and Palash Baruah and Poonam Munjal are fellow and professor, respectively, at the National Council of Applied Economic Research.