Is unpaid work boosting India’s job stats?

The key labour market statistics reported in labour force surveys are typically based on three different measures: the ‘usual status’, ‘current weekly status’ and ‘current daily status’. Usual status covers the status of a person during the 365 days preceding the date of the survey, which makes it easier to interpret and allows us to generate estimates of the number of people employed and unemployed.

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Based on the usual-status measure, a key labour market indicator, the Worker Population Ratio (WPR), defined as the percentage of employed persons in the population, can be computed. It shows significant improvement since the 2018-19 PLFS, the last such survey before the pandemic. WPR has increased from 47.3% in 2018-19 to 52.9% in 2021-22. For males and females, the ratios have increased from 71% to 73.8% and 23.3% to 31.7% respectively. These statistics, particularly the rise in WPR for females, appear to show a positive development. However, this improvement needs to be interpreted with caution, as it assumes that all forms of employment in the ‘usual status’ measure are equally desirable. This is not necessarily the case, as the aggregate statistic conceals many distinct structural components.

The usual-status measure of employment has two components: those employed by principal status (PS) and those employed by subsidiary status (SS). A person is considered employed by PS if s/he is engaged in economic activities for a major part of the preceding 365 days. In addition to their principal activity, some individuals may have pursued another economic activity for 30 days or more during the reference period of 365 days preceding the survey date. This is referred to as their subsidiary economic activity. Hence, the PS category includes (i) those who do only a principal activity and (ii) those who do both principal and subsidiary activities. On the other hand, among those who were either unemployed or out of the labour force by the major time criterion (of PS), some may have worked for at least 30 days over the reference year. These individuals are treated as subsidiary status workers.

Typically, with an improvement in the employment scenario and rising prosperity, we would expect reductions in subsidiary employment. This is because those who are employed by SS are predominantly engaged as poor self-employed (own account workers or unpaid family helpers) or casual workers. Disaggregating the usual-status workers into PS and SS, we find that in the period post 2018-19, there has in fact been a sharp increase in the share of usual-status workers who are reported as employed by SS. This increase is particularly steep for women, both in rural and urban areas. For rural women, the share of those engaged only in subsidiary status activities rose sharply from 14.1% in 2018-19 to 22.5% in 2021-22 and for urban women it rose from 5.9% to 10.3%. This suggests that though women are entering the work force, they are not engaged in productive employment. Rather, they are engaged in marginal subsidiary work which is often unpaid. This may well be distress driven, and cannot be taken to be a sure-shot indicator of an easing of the country’s job crunch or an improving employment situation in the economy.

Next, let us look at how the distribution of persons (aged 15 years and above) has evolved by principal status between 2018-19 and 2021-22. Overall, the WPR (by PS) shows an increase of 3.5 percentage points from 45.6% in 2018-19. The accompanying table shows the change in the composition of principal-activity status for rural and urban areas separately for males and females. Each sub-group shows a rise in WPR (PS). The increase is particularly large for females, specifically in rural India, where it has increased from 20.9% to 27.7%.

For urban women, the share has increased from 17.3% to 19.6%. While this may appear to be an encouraging development, the statistics in the other table show that these increases are being driven by a transition of women from the status ‘attended domestic work only’ (an activity category reported as being out of workforce) into the category of own account workers (OAW) or unpaid family helpers (UFH), and not into gainful productive employment such as regular salaried work.

The share of women who ‘attended domestic work only’ declined by 7.5 and 2.8 percentage points in rural and urban areas respectively between 2018-19 and 2021-22. While in the case of rural females, the decline in the ‘attended domestic work only’ category is entirely matched by an increase in OAW and UFH , in all other sub-groups too, there is an increase in share of UFH, those who assist in running household enterprises but are not paid remuneration.

It is disconcerting that India’s rising WPR by usual status (PS+SS) in the aggregate statistics is largely being driven by a shift into forms of underemployment such as unpaid family work and own account work. It is indicative of the mounting challenge of productive job creation and calls for greater policy priority on enabling the transfer of India’s poor self-employed into regular paid employment, particularly for women.

Radhicka Kapoor is visiting professor, Indian Council for Research on International Economic Relations (ICRIER)