Unemployment rate fell in 2021-22

The rate of unemployment has declined the most for urban women and the least for rural women

The Ministry of Statistics and Programme Implementation (MoSPI) released, on February 24, 2023, the fourth Annual Report of the Periodic Labour Force Survey (PLFS). The survey was conducted from July 2021 through June 2022. This is India’s official labour survey. Its results differ from estimates from the privately conducted Consumer Pyramids House­hold Survey (CPHS) of CMIE.

The PLFS measures labour statistics using two definitions — the usual status (US) and the current weekly status (CWS). The usual status could classify a person to be employed during a year if the person was emp­lo­yed in a “subsidiary” activity for only 30 days of the year. Under the CWS, a person can be classi­f­ied as employed if she was wor­king for at least one hour on at least one of the seven days prec­e­ding the date of the survey. And, the status of employment is assigned priority over other statuses such as unemployed or out of labour force. These are extremely liberal definitions of employment.

Effectively, the use of data based on such liberal definit­i­ons understates India’s employment challenges. The definitions are thus so as to align employment statistics with the official production (national accounts) statistics. But, such an alignment is neither the concern of an anxious population waiting for jobs and nor should it be the concern of policy mak­ers who are to address India’s employment challenge. If a person spent one hour in a week working on the family-owned farm, she would be considered to be an employed by the PLFS. But, neither the person consid­ers herself to be employed and nor should policy makers consi­der her to be employed. The de­tailed PLFS data all­ows us to wean out such rather underemployed persons (such as unpaid fam­ily workers) to get a better sense of India’s employment challenges.

CPHS classifies a person to be emp­lo­yed only if the person was em­ployed for a better part of the day of the survey. This is a far more realistic definition.

According to the PLFS, the unemployment rate defined by the usual status was 4.1 per cent in 2021-22. It was higher, at 6.6 per cent, by the current weekly status. According to CMIE’s CPHS, it was 7.5 per cent during the same July 2021 through June 2022 period.

All three measures agree that the unemployment rate declined in 2021-22 compared to 2020-21. According to US, the rate fell marginally from 4.2 per cent to 4.1 per cent; according to CWS it fell significantly from 7.5 per cent to 6.6 per cent and according to CPHS it fell from 7.7 per cent to 7.5 per cent.

We stick with the CWS measure of the PLFS for brevity.

The unemployment rate has fallen for men and for wo­men; it has fallen in urban and rural regions. It has declined the most for urban women and the least for rural women. Never­the­less, the unemployment rate continues to be the highest among urban women and the lowest am­ong rural women.

The unemployment rate for urban women was 12.2 per cent in 2020-21 and 9.9 per cent in 2021-22, implying a sharp fall of 2.3 percentage points. The unemployment rate for rural women dropped from 4.8 per cent to 4.3 per cent in the same time comparison.

Urban women face the most adverse labour market condit­ions according to the PLFS. They have the lowest labour force participation rate (LPR) at 22.1 per cent. Yet, they face the highest unemployment rate of 9.9 per cent. Less than one in every five urban women is em­ployed. The employment rate (called the worker participation rate in the PLFS) is a mere 19.9 per cent for urban women. CPHS tells us a similar story of the plight of urban women although its results paint a much worse condition.

Rural women are only slightly better off than urban women. Their employment ratio was 27.9 per cent in 2021-22. While rural females faced a very low unemployment rate of just 4.5 per cent, their LPR was still quite low at 29.2 per cent.

The definitional difference between PLFS and CPHS is most manifest in the LPR of wo­men. Women classified as part of the labour force in the PLFS (27.2 per cent) are three times those similarly classified in the CPHS (9.4 per cent). However, in the case of men, the differen­ce is much smaller, at about 14 per cent. Male LPR was 75.9 per cent according to the PLFS and 66.8 per cent according to CPHS.

A large proportion of the wo­men who clear the low definit­i­onal bar set by PLFS for employment fail to clear the relatively stiffer bar set by CPHS. This is be­cause of their nature of empl­oyment. PLFS calls this the “broad status in employment”. Table 38 of the PLFS shows that 60.6 per cent of the employed women were actually self-emp­loyed, half of who were self-em­ployed as helpers in household enterprises. Only 20 per cent were regular salaried workers.

Women work a lot more than men. However, their participation in labour markets outside the boundaries of the home is limited.

The writer is MD & CEO, CMIE