Economy unable to create quality jobs

Some facts revealed by the Periodic Labour Force Survey (PLFS), carried out by the National Sample Survey Office (NSSO), have thrown useful light on the country’s labour market.

It has reported that the unemployment rate in the country has fallen to a six-year low of 3.2 per cent. The Labour Force Participation Rate (LFPR) for persons of age 15 years and above increased from 49.8 per cent in 2017-18 to 57.9 per cent.

The Worker-Population Ratio also improved during the period. LFPR in urban areas saw an increase from 47.5 per cent in 2017-18 to 48.8 per cent in 2022-23. While it was about 73.5 per cent for males, it increased from 20.9 per cent to 23.2 per cent for females. While these figures are positive, it is the connection between them that gives them meaning. Importantly, while these figures are about the quantity of employment, the quality of it needs to be studied for their real value. 

The decline in unemployment is a sign of improvement in the labour market, but the survey also shows that there is a decline in the share of regular wage and salaried employment and a rise in self-employment.

The quality of employment becomes an important factor in this context. In the non-agricultural sector, the share of people who had informal employment increased from 71.4 per cent in 2020-21 to 74.3 per cent in 2022-23.

This is casual employment where there is no job security and wages are very low. The survey also showed that the share of the self-employed persons has risen from 55.6 per cent in 2020-21 to 57.3 per cent in 2022-23, and the share of regular wage-earners and salaried persons has fallen from 21.1 per cent to 20.9 per cent.

The conclusion to be drawn from this data is that the economy has not created productive and remunerative types of employment in sufficient numbers to absorb the millions of persons entering the job market every year. 

The labour force participation rate also needs attention. The increase was more in urban areas than in the rural sector. Much of the rural increase is accounted for by females, whose participation rate in rural areas has risen from 24.6 per cent in 2017-18 to 41.5 per cent in 2022-23.

This is an increase of roughly 17 percentage points. This has been attributed to economic distress in rural areas, which is forcing women to work in order to augment their family income.

This inference is supported by the fact that work under NREGS, and specifically women’s work-days under the programme, had increased during the period. The message from the survey is that the economy has to generate much more employment and the quality of jobs should improve. More women should come to the job market, but not out of distress.