8 highlights
-
A quick look at the recently released Periodic Labour Force Survey (PLFS) reveals a decline in the unemployment rate from 5.8 per cent in 2018-19 to 4.8 per cent in 2019-20. This fall in the unemployment rate from the 45 year high of 6.1 per cent as reported in the first PLFS (2017-18) is indeed a respite.
-
However, these statistics need to be interpreted with caution. They are based on the “usual status” approach wherein the activity status of a person is captured for a reference period of 365 days preceding the date of survey. Those who are reported as unemployed by this approach are those who are chronically unemployed.
-
Significantly, even beyond the issue of using the weekly status measures, the lower unemployment rate (based on usual status approach) appears to be a consequence of economic distress and lack of gainful employment opportunities which have pushed jobseekers into low productivity and low paying work, thereby intensifying the challenge of under-employment.
-
To begin with, an examination of the composition of the workforce by employment type shows that the share of self-employment in total employment has increased to 53.5 per cent, up from 52.1 per cent as reported in the previous two PLFS rounds (2017-18 and 2018-19)
-
The third group comprises those who are engaged in their household enterprises, working full or part time, but do not receive any regular salary or wages in return for the work performed. It is this latter category, considered as poor quality employment, that has witnessed an increase in its share in total employment from 13.3 per cent (2018-19) to 15.9 per cent (2019-20) and contributed to the falling unemployment rate.
-
The share of regular salaried workers, which had been steadily rising in India until the PLFS 2018-19 and is considered as a more stable and secure form of employment, is now showing a decline.
-
This is indicative of a stalled structural transformation process, one which had picked up pace after 2004-05 with both the share and absolute numbers of workers engaged in agriculture declining with a concomitant rise in the non-agricultural sector. However, as non-agricultural sectors have failed to create jobs at a rapid pace in recent times, many jobseekers have been pushed back into the agricultural sector resulting in its emergence as an “employer of last resort”.
-
It is worth noting that India has been witnessing a rapid decline in female Labour Force Participation Rate (LFPR) since 2004-05. This trend has been partly attributed to the withdrawal of women from the workforce as a consequence of an “income effect” — an increase in their family’s income. The PLFS 2019-20, however, shows a sharp increase in the female LFPR by 5.5 percentage points.