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What stronger labour force participation means for the economy

Photo: HTPremium
Photo: HT

The Periodic Labour Force Survey (PLFS) data for January-March 2021, released last week, shows that unemployment rates for the quarter were close to pre-covid levels of 2020. And women bore the brunt of the pandemic in terms of the economic fallout. Mint explains:

The Periodic Labour Force Survey (PLFS) data for January-March 2021, released last week, shows that unemployment rates for the quarter were close to pre-covid levels of 2020. And women bore the brunt of the pandemic in terms of the economic fallout. Mint explains:

What are the key numbers to track?

The unemployment rate for January-March in calendar year (CY) 2021 was close to the pre-covid levels of January-March 2020. For men, it was 8.6%, both for the March quarter of CY21 and the year-ago quarter. However, in the case of women, the rate was higher at 11.8% in March 2021 as against 10.6% in the year-ago period. The labour force participation rate (LFPR), or the percentage of people who are working, seeking work, or available for work, was 47.5%. The worker population ratio (WPR), or the percentage of employed people in the population, stood at 43.1%.

What do the numbers for female LFPR show?

In India, on an average, female LFPR is one-third that of men. This could be due to existing gender gap in wages, higher education and skill training, barriers on female mobility, and uncounted domestic work. Increased female LFPR will not only benefit women, but will also boost growth levels. In March 2021, LFPR for men was 20 basis points short of pre-covid levels, while for women it was at 21.2% in March 2021 as against 21.9% in the year-ago period. Thus, women bore the brunt of the economic and social fallout. One basis point is one hundredth of a percentage point.

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What about women elsewhere?

Across most occupational groups worldwide, women bore a higher share of joblessness—notably among service and sales workers, where women accounted for nearly 62% of the job losses. The crisis sharply curtailed economic activity and demand for labour, leading to a 4.8% reduction in total working hours worldwide in January-March 2021.

How  has  labour market fared since April 2021?

With PLFS data for April-September 2021 still awaited, formal sector data from the Employee Provident Fund scheme can help us understand labour market shifts. In April-June 2021, the scheme had 2.3 million new subscribers, as against 1.08 million in April-June 2020. The second wave of covid-19, therefore, was not as lethal as the first for the formal labour market. The numbers for July-September 2021 were even better at 2.8 million new subscribers. This shows the economy is returning to normalcy.

What does a higher LFPR mean?

A rising LFPR shows more working age people engaged actively in the labour market, thereby indicating increased economic activity. Gross domestic production data for the second quarter and other key macroeconomic indicators, i.e. goods and services tax collections, e-way bills, energy consumption, exports, consumption expenditure during the festival season etc., all show an increase. However, the Omicron’s impact will set the future course for investors.

Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH

 

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