Significance of PLFS reports
The annual PLFS — as well as its predecessor, the quinquennial Employment-Unemployment Surveys — are conducted by the National Sample Survey Office in order to get an understanding about the state of employment in India.
The PLFS provides data on different metrics so that the policymakers can understand the proportion of people demanding work, the proportion of people among them who failed to get a job, the gender differences in employment as well as wages etc. The PLFS also tells the sectoral distribution of workers in the economy — what percentage is involved in agriculture, for instance. It also records the type of work people do — for instance, how many are engaged in casual labour, how many work for themselves, and how many have regular salaried jobs etc.
Recall periods
It is also noteworthy that PLFS collects data in two ways — Usual Status (US) and Current Weekly Status (CWS). Broadly speaking, within usual status, the survey respondent has to recall their employment details from the last one year while in the CWS, the respondent has to recall the details over the past one week.
More precisely, the estimate of the labour force in the usual status includes
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- the persons who either worked or were seeking/available for work for a relatively long part of the 365 days preceding the date of survey and also
- those persons from among the remaining population who had worked at least for 30 days during the reference period of 365 days preceding the date of survey
The estimate of the labour force according to the current weekly status approach is derived by considering those who worked for at least 1 hour or was seeking/ available for work for at least 1 hour on any day during the 7 days preceding the date of survey.
Increasingly, the global practice has been to focus more on CWS because the recall is better over the past week.
Most of the findings below are all based on CWS.
Latest findings
1) Unemployment Rate (UER)
The UER is often the most talked about metric in popular discourse. Simply put, it refers to the proportion of people who demanded work over the past year and failed to get it.
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As the data in Table 1 shows, for the population above 15 years of age, the UER has fallen significantly — from 6.6% to 5.1% over the last year (that is, July to June cycle). Simply put, 5.1% of all the people above 15 years of age who demanded work failed to get one.
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TABLE 1: India’s employment story since 2017
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(Note: Employment is defined as per Current Weekly Status (CWS). Source: PLFS various rounds, State of Working India 2023, Indian Express Research)
2) Labour Force Participation Rate (LFPR)
The UER rate is calculated as a proportion of the population that is demanding work. But this population — which demands work — also goes up and down for a variety of reasons. The LFPR is a measure of the total population demanding work, and it is presented as a proportion of the total population that is above 15 years of age.
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As the data in Table 1 shows, India’s LFPR, which had been inching up, shot up significantly in the past year. As of 2022-23, 54.6% of all Indians above the age of 15 were looking for a job.
3) LFPR for women
This metric looks at LFPR for among women to ascertain where the additional demand for jobs is coming from. The data shows that female LFPR has gone up over the years but there were two discrete step-ups — one in 2019-20 (when India’s GDP growth rate had slowed down to less than 4% and this was before the Covid pandemic hit) and second in 2022-23 when it rose to 31.6%.
4) Worker Population Rate
Since the proportion of people demanding work (the LFPR) goes up and down and the percentage of those failing to get a job (the UER) is expressed as proportion of the former, it can throw off analysis. As such, there is another way to look at the labour market: Worker Population Ratio (WPR). The WPR is the percentage of persons employed among the persons in the population. Thus, instead of looking at how many demand a job and how many fail to get it, the WPR simply gives a measure of how many people have a job as a proportion of the total population.
This metric too has been going up and especially noteworthy are the two discrete step-ups in 2019-20 and 2022-23.
5) WPR among women
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This metric throws light at the WPR for women to understand what’s leading to the spike in overall WPR. Again, the WPR for women has been going up but two main spikes have been in 2019-20 and 2022-23.
6) Monthly earnings
The PLFS reports also provide a sense of how much do people earn in different types of jobs. There are three main categories, as detailed in the Table 2.
(Note: Employment is defined as per Current Weekly Status (CWS). Source: PLFS various rounds, State of Working India 2023, Indian Express Research)
While it is true that incomes have broadly gone up — after falling during Covid — the main takeaway from this data emerges when one compares how little have monthly incomes changed over the past 6 years, especially in the face of a sharp rise in inflation. To be sure, since late 2019, annual consumer inflation has always been above the RBI’s target of 4%.
7) Distribution of workers
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To accurately make sense of more and more people working, it is important to know not just what they earn but also what kind of work they do. For this, we look at data collected over usual status by PLFS. Table 3 alongside gives the details of the three main classifications: self-employment, casual labour (say a construction worker) and regular salaried job. Self-employed has two sub-categories: (i) own account worker and employer and (ii) unpaid helper in household enterprises.
The data shows that self-employment has risen and jobs in the other two categories have fallen in proportion.
It is also noteworthy that self-employment among women is the key driver for this overall trend.
(Note: Employment is defined as per Usual Status. Source: PLFS various rounds, State of Working India 2023, Indian Express Research)
Upshot
At first glance, PLFS 2022-23 throws up some positive trends: Unemployment rate continues to fall, LFPR and WPR see significant spikes. In particular, it is heartening to note that more and more women are joining the workforce. This would suggest that as the Indian economy recovers, more and more well-paying jobs are getting created.
However, when one looks at what these new jobs are and how much they pay, the understanding changes.
That’s because the only jobs that are getting created are of the “self-employment” type. When an economy grows, businesses employ people. When an economy struggles, people lose their regular jobs, and become “self-employed”.
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Similarly, the trend for women across all metrics suggests that weak household finances have pushed women, who were outside the workforce in the past, to join in, often as “unpaid helpers in household enterprises”.
Similarly, sectorally, too, India seems to be moving backwards with the proportion of Indians employed in agriculture going up over the past year while those in manufacturing having fallen.
Lastly, a booming economy sees monthly incomes improve. However, that is not the case in India.
Share your views and queries at udit.misra@expressindia.com
Until next time,
Udit
8 min read
