The annual Periodic Labour Force Survey (PLFS) reports are probably the most valuable addition to India’s official statistical economic database in recent times. Regular labour-market data not only provides a timely assessment of the nation’s economy, but also aids in making better informed policy decisions. Since the 2022-23 PLFS report was published in September 2023 (for the year ended June 2023), several commentators have highlighted the decent growth reported in India’s total employment, a rising female labour force participation ratio (LFPR) and a higher share of self-employment, often with some conjecture on informal-sector performance. However, there are two nuances that do not appear to have received enough attention.
First, while the LFPR and worker population ratio (WPR) of males aged above 15 years have increased in 2022-23, they have fallen for all ages, and dropped sharply for the prime working age group of 30-59 years. The male LFPR for the 30-59 years group is estimated at 91%, the lowest in the past three decades—versus not just the erstwhile employment-unemployment surveys before the 2017-18 period, but compared to 95-97% in the past five years after annual labour surveys began. The female LFPR for the 30-59 years group, however, has increased to 50.2% in 2022-23, the highest since 2004-05 (it was 39.6% in 2011-12). Similar trends are visible in the WPR as well—up for females aged 30-59 years to 49.4% in 2022-23 from 33.2% in 2017-18, and down to 90.0% from 95.3% for males during the corresponding periods. Further details suggest that while the LFPR and WPR for females have improved across urban and rural areas (with higher share of the latter), these ratios for males have declined in both urban and rural India, with a substantial fall in the latter. Our calculations suggest that LFPR and WPR for males aged 30-59 years in rural areas declined to 89% each in 2022-23, from 95.8% and 95.2% in 2021-22 and 97.6% and 96.4% in 2018-19. Although the contrast of a rise in both male rates for the 15-29-years age bracket and fall in the 30-50-years group is surprising, there could be at least two plausible causes for the latter.
It is possible that pandemic-related migration trends are finally reversing, leading to a fall in male workers in rural areas, thus resulting in a WPR contraction. This is assuming that the denominator may not be fully capturing the fall in rural population (i.e., a reversal of the reverse migration that happened during the pandemic). There are, however, three serious problems with this reasoning. One, if misleading population estimates explain the WPR fall in 2022-23, then we should have observed a sudden rise in WPR during the period of the pandemic (2019-20 or 2020-21), as population estimates even then would not have fully captured reverse migration (from urban to rural). However, as the graph depicts, the ratios are largely unchanged in the past five years. Two, had male migration from rural to urban areas explained this fall, we should have noticed a commensurate rise in urban male LFPR and WPR or a rise in the urban male unemployment rate. The urban male LFPR and WPR in 2022-23 was lower than in all the years between 2017-18 and 2020-21, though slightly higher than in 2021-22, and the unemployment rate was the lowest in six years; and three, higher-than-pandemic demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) raises doubts over a substantial reversal of reverse migration. This reason, thus, is not very convincing.
The second possible cause for India’s male WPR decline could be a rise in discouraged workers, which, if true, could be a serious concern for the economy. There could be multiple causes for discouragement. One, it could be that a lack of job opportunities in rural areas (especially non-farm) led to a lower workforce. If so, it fits well with sustained strong demand for MGNREGA work in 2022-23 and 2023-24; and two, it is also possible that males found fiscal support (in the form of rural job, free/subsidized gas cylinders, free food, subsidized housing, etc) sufficient to stay at home, out of the workforce. This scenario, in my opinion, would be one of the worst situations because such lazy behaviour is unwarranted and indicates acceptance of subsistence living, which is unproductive for any economy.
The rise in female LFPR could be attributed to a lot of factors. It is possible that fiscal support freed up time for women, which allowed more to join the workforce. However, the majority (up to 85%) of the increase in female employment is in the agriculture sector and self-employment category. This indicates a relatively unproductive use of time and other resources. An analysis of the average gross earnings of self-employed women in rural areas reveals a 3.5% growth from June 2019 to June 2023. This is the slowest growth among all categories and is negative in real terms, in contrast with the average annual (nominal) growth of 5-13% for females in other categories, including casual and salaried workers in both rural and urban areas. Are women engaging in farm activities because they don’t have enough time for non-farm jobs? Or is it because non-farm job opportunities are scarce in rural areas? Or do they feel that such employment may only be temporary?
I am uncertain about the possible reasons for the observed decrease in India’s male workforce and the increase in female participation. However, these simultaneous trends could be on account of males becoming discouraged or lazy, even as women of their households return to the farm sector for work since they have few other options. Or, it could be due to a reversal in the trend of male migration, resulting in more time available to women, who, for the time being, have chosen to enter the agricultural sector. The forces behind these labour-force trends are worth studying as they could have significant and contrasting implications for India’s economy.