Indian Express

13-October-2023

1) Trends in the Periodic Labour Force Survey

Context:

• The Periodic Labour Force Survey (PLFS) Annual Report 2022–2023 has been released by the National Sample Survey Office (NSSO).
• This article will discuss the key highlights with a special focus on labour force participation.

What is the Periodic Labour Force Survey (PLFS)?

• The year 2017 saw the National Sample Survey Office (NSSO) launch the project.
• Goals:
  • To estimate the major indicators of employment and unemployment (i.e., the Worker Population Ratio (WPR), the Labor Force Participation Rate (LFPR), and the Unemployment Rate (UER)) in the ‘Current Weekly Status’ (CWS) for the short time interval of three months for the urban areas exclusively.
  • To annually estimate employment and unemployment indicators in both rural and urban areas using “Usual Status” and CWS.

What are LFPR, WPR and UER?

• The labour force participation rate (LFPR) is the percentage of the working population between the ages of 16 and 64 who are either employed or looking for work.
• The percentage of the population that is employed is known as the Worker-Population Ratio (WPR).
• The percentage of people in the labour force who are unemployed is known as the unemployment rate (UER).

What are the key findings of the PLFS Annual Report 2022-23?

• Labour Force Participation Rate (LFPR):
  • It increased significantly over the last six years, from 36.9 per cent in 2017-18 to 57.9 per cent in 2022-23.
  • In rural areas, LFPR increased from 50.7% in 2017-18 to 60.8% in 2022-23, while for urban areas it increased from 47.6% to 50.4%.
  • LFPR for males in India increased from 75.8% in 2017-18 to 78.5% in 2022-23, and a corresponding increase in LFPR for females was from 23.3% to 37.0%.
• Worker Population Ratio (WPR): In rural areas, WPR increased from 48.1% in 2017-18 to 59.4% in 2022-23, while for urban areas it increased from 43.9% to 47.7%.
  • WPR for males in India increased from 71.2% in 2017-18 to 76.0% in 2022-23, and the corresponding increase in WPR for females was from 22.0% to 35.9%.
• Unemployment Rate (UR): India’s unemployment rate dropped to a six-year low in the financial year July-June 2022-23 to 3.2 per cent.
  • In rural areas, UR decreased from 5.3% in 2017-18 to 2.4% in 2022-23, while for urban areas it decreased from 7.7% to 5.4%.
  • UR for males in India decreased from 6.1% in 2017-18 to 3.3% in 2022-23, and a corresponding decrease in UR for females was from 5.6% to 2.9%.

Trends in Labour Force Participation:

• Both rural and urban areas have seen an increase in participation rates, but the former has seen the increase to a far greater level.
• Women’s participation rates in rural areas increased significantly throughout this period, from 24.6 per cent in 2017–18 to 41.5 per cent in 2022–23, or by almost 17 percentage points overall.
• Given the low levels of female engagement in the workforce, this should be considered as a positive sign.
• However, others have argued that the increase in participation is a sign of economic hardship in rural regions, which is forcing women to work in order to raise their families’ incomes.
• Also, MGNREGA employment has gradually increased over the years (even after removing the pandemic years of 2020–21 and 2021–22), and the number of women participating in the program has also steadily increased.

Self-employed vs salaried people:

• Alongside this increase in labor force participation rates, the share of self-employed people increased from 55.6% in 2020–21 to 57.3% in 2022–23, while the share of people earning a regular wage or salary fell from 21.1% to 20.9%.
• In the non-agricultural sector, the proportion of workers employed in the informal sector increased from 71.4 per cent in 2020–21 to 74.3 per cent in 2022–23.

Concerns:

• While unemployment rates have decreased overall and among young people (those aged 15 to 29), the rising self-employment rate and declining share of regular wage and salary employment raise questions about the economy’s ability to absorb the millions of people entering the labor force each year.
• The main problem which the policymakers are facing is the inadequate job creation.

Way Forward:

• With declining unemployment rates, rising LFPR and WPR, and improvements over the pre-pandemic period, the survey results point to a favorable trend in the Indian labor market.
• These trends point to a stronger economy, greater job possibilities, and higher rates of workforce participation, particularly among women, in urban areas across the nation.
• Also, effective steps need to be taken in the area of job creation, which is still a concern.

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