Let’s not misread labour force data

Employment numbers from the annual Periodic Labour Force Surveys (PLFS) for the July-June period from 2017-18 to 2022-23 present what seems to be a positive picture of India’s labour market in the last five years. The figures show that the labour force participation rate (LFPR) -- the share of people who are either working or are looking for work -- increased during the period. They also show a fall in the unemployment rate, with the number of jobs growing at a faster pace than the number of job-seekers. The LFPR increased from 36.9% in 2017-18 to 42.4% in 2022-23. The unemployment rate is shown to have declined from 6.1% to 3.2% during this period. These are impressive numbers. 

But the real picture is very different from what these figures outwardly convey. Unpaid work in family-owned enterprises accounts for more than one-third of the total jobs that have been created between 2017-18 and 2022-23. The bulk of these jobs were added in rural areas and went to women. Half of the new jobs are in agriculture. Over 57% of the workforce was self-employed. This was not very productive and gainful self-employment but engagement in some activity for people to support themselves. Over 18% of the workforce worked as helpers in domestic enterprises, and casual workers constituted more than 21%. Most people chose to be self-employed because of the lack of good or suitable work and wages. Casual labour under the NREGA scheme or part-time work in a family enterprise cannot be considered equal to jobs with regular wages. Unpaid labour increased substantially in both rural India and urban India during this period. About 82% of this increase was accounted for by women. Most of the casual workers were also uneducated or low-skilled. The inference from the data is that most workers were underemployed and had low skills and productivity. 

To interpret the PLFS data as showing an improvement in the employment situation is therefore misleading. India’s economy has registered high growth rates, especially in comparison with other major economies. But it has not produced an adequate number of jobs. The quality of jobs is equally important as the number of jobs. The country has a very large number of people who need jobs and many more are entering the job market. The demographic dividend that it could potentially enjoy will turn into a burden if young people are not imparted education and skills and provided jobs. The nature of development and strategies of economic growth will have to be designed and tailored to the need to create an adequate number of productive jobs for the rising population and to absorb the people in the job market.