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the share of regular workers saw a small increase in rural India (HT file)
the share of regular workers saw a small increase in rural India (HT file)

Looking beyond India's headline unemployment number

The results of the periodic labour force survey (PLFS) for 2017-18 shows that the employment structure in the country is changing

The new periodic labour force survey (PLFS) for 2017-18 conducted by the National Sample Survey Office (NSSO) generated a lot of interest and attention because of the high rates of unemployment and the low rates of workforce participation (or WPR) that it reported.

Now that the heat and dust around the survey has settled, and the government has released the report and the raw data for the PLFS 2017-18, it is time to have a more meaningful debate on the changes in the country’s labour market over the past few years. The comparability of the PLFS with past NSSO employment surveys remains a contested issue out the PLFS results are broadly comparable with past surveys.

NSSO has conventionally used three different measures for classifying the activities of the population viz. the usual status, current weekly status and current daily status, each having different reference periods. The usual status, quoted most often, is based on the employment status of the respondent in the year preceding the survey. The other indicators are based on the status in the week preceding the survey.

The usual status data has two components: principal status and subsidiary status. The former refers to the activity that a person pursues for the major part of the year. The latter refers to any work activity pursued for a smaller duration besides the principal activity. A usual status worker is one working either in principal or subsidiary activity.

The accompanying chart shows the distribution of persons (aged 15 years and above) by principal activity for 2011-12 and 2017-18. Overall, the principal status workforce participation rate (WPR) declined 7.4 percentage points between 2011-12 and 2017-18 to 71.4% in rural India. The fall perhaps mirrors the rise in rural stress, which seems to have shrunk employment opportunities. The WPR also fell for urban males but the decline (4.5 percentage points) was smaller compared to that among rural males. The urban WPR was 69% in 2017-18.

In rural India, the share of male casual workers has seen the sharpest fall between 2011-12 and 2017-18, declining 7.6 percentage points to 19.8%. This segment comprises casual workers in farm and non-farm sector, hired by rural establishments. Clearly such hiring has gone down. Simultaneously, there has been an unprecedented rise in the share of unemployed rural males from 1.7 percent in 2011-12 to 4.6% in 2017-18.

However, the data also shows that there was a significant fall in the share of persons engaged in unpaid family labour among rural males. Their share fell by 2.8 percentage points between 2011-12 and 2017-18 to 6.6%. This section of the workforce represents the disguised part of family labour, whose withdrawal may not impact the output of the family enterprise, and which may in fact reflect improvement in the economic status of their households. Another silver lining in the data is that the share of regular workers saw a small increase in rural India.

Interestingly, the share of the “rentiers, pensioners, and remittance recipients" category saw an impressive rise over the same period, rising 2.8 percentage points to 4.5% among rural males in 2017-18. There is a similar increase among urban males as well.

Without additional data on the sources of such earnings, it is difficult to say if this increase is being driven by improved pension schemes, return migration, or improved economic condition due to other earnings or remittances.

Among rural females, the WPR (based on principal status) fell across all categories other than that of regular or salaried employment (which saw a small jump). Overall female WPR fell 3.9 percentage points between 2011-12 and 2017-18 to 21%.

For urban females, the WPR has however witnessed a small improvement, rising from 16.6 percent in 2011-12 to 17.1% in 2017-18, with the rise in salaried workers driving the increase.

A heartening development over the past few years has been the increase in the share of students in the population aged 15 years and above. Among rural females, the share of students rose 2.7 percentage points between 2011-12 and 2017-18 to 10.4%.

Most rural women report being engaged in domestic household chores. But there are two sub-categories within this section: those engaged only in household work and those who apart from routine household work are also engaged in other activities outside the home such as (unpaid) collection of firewood, cattle feed, tailoring, sewing etc. Between 2011-12 and 2017-18, the share of those engaged in only household work saw a 15.9 percentage point jump to 42 percent. Over the same period, the share of the other sub-category declined by an equivalent magnitude to 33.6%.

The reduction in grazing land and such other village commons, and the wider availability of clean fuel through state-funded subsidies could bring down the share of these activities even further in the coming years.

Among females, the share of subsidiary workers has historically been high but this category appears to be declining now. The share of rural women who reported being engaged in subsidiary employment declined 11.1 percentage points between 2011-12 and 2017-18 to 5.2%. There was a similar drop among rural male workers as well, indicating a decline in economic activities pursued as a marginal activity in the Indian economy. This decline as well as the decline in unpaid family labour could be due to improvements in educational and economic conditions, freeing many workers from the drudgery of unremunerated or poorly paid work. However, the increase in the share of the unemployed and the sharp drop in the labour force participation rates, especially among females, should worry policymakers.

Amitabh Kundu is a former professor of Jawaharlal Nehru University and PC Mohanan is a former member of the National Statistical Commission

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