Bihar Unemployment Crisis Deepens Amid Labour Market Challenges

The issue of unemployment in Bihar has become more critical in 2025. Voter concerns about jobs have doubled since 2015, denoting the urgency of the employment crisis. Official data from the Periodic Labour Force Survey (PLFS) reveals a complex and troubling picture beneath seemingly moderate unemployment rates. This analysis explains Bihar’s labour market challenges through key indicators and comparisons with similar States.

About Bihar’s Employment Indicators

Bihar’s unemployment rate (UR) appears low at 3% annually and 5.2% quarterly. However, this masks deeper problems. The Worker Population Ratio (WPR), the share of working people in the population, is 46.2% quarterly and 51.6% annually, both well below the national averages. The Labour Force Participation Rate (LFPR), the proportion actively working or seeking work, is also low. Low WPR and LFPR with a low UR indicate many people have stopped looking for jobs, a phenomenon called the Discouraged Worker Effect.

Comparison with Similar Low-Income Large States

Bihar’s employment indicators are the lowest among nine large, low-income States with populations over three crore and below-average per capita income. These include Assam, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, and West Bengal. Bihar ranks at the bottom in WPR and LFPR, while Uttar Pradesh is slightly better but still poor. This comparison confirms Bihar’s labour market is in a worse state than peers.

Youth Employment and Gender Disparities

Youth employment (ages 15-29) is particularly bleak. Only 28% of Bihar’s youth work, the lowest among comparable States. Female participation is even worse. Just 30.1% of women aged 15 and above work, and among young women, only 31.2% engage in work compared to 49.3% in Jharkhand. These figures reveal severe gender gaps and barriers for youth employment.

Job Quality and Informality

Bihar’s labour market is dominated by informal and insecure jobs. Only 8.7% of workers have regular wage or salaried employment, the lowest in India. Nearly 24% are casual labourers, the second highest among comparable States. This lack of formal jobs undermines income security and economic stability for workers.

Impact of Migration and Data Limitations

PLFS data covers only residents within Bihar during the survey period. Large-scale outmigration of workers is not captured, potentially understating employment challenges. Many migrants seek work elsewhere due to lack of local opportunities, worsening Bihar’s labour market woes.

Governance, Education and Economic Challenges

Bihar’s low literacy rate of 73.2% (age 5+) and poor human capital development limit job creation. Despite political promises and industrial summits, investment and formal sector growth remain minimal. Nearly two decades of governance under Chief Minister Nitish Kumar have not reversed structural weaknesses in education, employment, or industrialisation. Without urgent reforms, Bihar risks deepening poverty and social instability.

Questions for UPSC:

1. Critically discuss the causes and consequences of low Labour Force Participation Rate in Indian States with reference to Bihar.
2. Analyse the impact of informal employment on economic development and social security in India. How can formalisation be accelerated?
3. Examine the role of education and skill development in addressing unemployment in low-income States. Point out policy measures to improve human capital.
4. Estimate the effects of internal migration on regional labour markets and socio-economic conditions in India. Discuss challenges in capturing migrant data in official surveys.

Answer Hints:

1. Critically discuss the causes and consequences of low Labour Force Participation Rate in Indian States with reference to Bihar.

1. Low LFPR in Bihar is due to the Discouraged Worker Effect where many stop seeking jobs due to poor opportunities.
2. Low literacy (73.2%) and poor human capital restrict employability and workforce engagement.
3. Gender disparities – female LFPR and WPR are very low, especially for young women (around 30%).
4. Economic underdevelopment and lack of formal jobs reduce incentives to join the labour force.
5. Consequences include hidden unemployment, poverty persistence, and social instability.
6. Low LFPR masks true unemployment and limits economic growth and tax base expansion.

2. Analyse the impact of informal employment on economic development and social security in India. How can formalisation be accelerated?

1. Informal employment dominates Bihar’s labour market (only 8.7% regular salaried jobs), causing income insecurity and lack of benefits.
2. High casual labour share (23.8%) leads to unstable livelihoods and vulnerability to shocks.
3. Informality restricts tax revenues, limiting public investment in infrastructure and welfare.
4. Formalisation improves job security, social security coverage, and productivity.
5. Accelerate formalisation via labour law reforms, incentivising MSMEs, digitalisation of payroll, and skill certification.
6. Promote industrialisation and investment to create more formal wage/salaried jobs.

3. Examine the role of education and skill development in addressing unemployment in low-income States. Point out policy measures to improve human capital.

1. Low literacy and poor skills in Bihar limit employability and economic diversification.
2. Education improves labour force quality, enabling access to formal and higher-paying jobs.
3. Skill development aligned with market demands reduces structural unemployment.
4. Policy measures – strengthen primary and secondary education, vocational training, and apprenticeship programs.
5. Promote female education and skill-building to address gender gaps in employment.
6. Encourage public-private partnerships and improve infrastructure for skill development.

4. Estimate the effects of internal migration on regional labour markets and socio-economic conditions in India. Discuss challenges in capturing migrant data in official surveys.

1. Migration from Bihar is driven by lack of local jobs, leading to labour shortages locally and remittance inflows.
2. Destination regions benefit from migrant labour but face challenges in social integration and infrastructure strain.
3. Migration helps reduce poverty but can cause brain drain and weaken local economies.
4. PLFS and official surveys often exclude migrants absent during reference periods, underestimating employment and LFPR.
5. Data challenges include tracking seasonal, circular, and informal migrants and lack of unified migrant databases.
6. Improved survey design, periodic migration-specific studies, and integration of administrative data can help capture migrant realities.