THE recent Periodic Labour Force Survey (PLFS) Annual Report 2023-24 suggests signs of improvement in labour force participation rate and worker population ratio compared to past years but at the same time underlines some structural problems in employment in recent period. There had been a steep rise in unemployment rate during the pandemic but the average rate of unemployment for quite some time, even before the pandemic, was showing a rising trend.

From the perspective of development in countries such as India, crude unemployment rates use to be low compared to advanced economies as people have no other asset to fall back upon and the only source of earning is by selling their labour power. In such situations open unemployment rates figure to be low because people can hardly afford to remain unemployed and hence forced to accept lower wages or poor working conditions. Therefore, the real measure of employment scenario in normal situations is not the unemployment rate which is essentially a broad measure and remains stable over time but more important seem to be the parameters that manifest quality of employment. Undoubtedly a steep rise in unemployment rates during abnormal times being moderated in the post pandemic normal scenario is good news but development relates to structural composition of employment, nature of employment, and wages and social security of the employed population.

YOUTH LABOUR FORCE  PARTICIPATION

India’s Labour force Participation Rate (LFPR) or the proportion of the population available in the labour force as working or seeking for jobs had been low and close to 50 per cent before the pandemic. For population fifteen years of age and above, the overall LFPR that is rural and urban taken together was 49.8 per cent and 50.2 per cent in 2017-18 and 2018-19 respectively. In the rural areas the respective counts were higher 50.7 and 51.5 respectively and for urban India the figures were relatively lower 47.6 and 47.5 per cent respectively. People employed and available for work in the labour market increased during the post pandemic period and in 2023-24 all India, rural and urban figures are respectively 60.1 per cent overall, 52 per cent in urban India and 63.7 per cent in rural India. This means a rise of about 6.6 percentage points compared to 2020-21 figures. It is also important to remember that overall unemployment rate was 6 per cent in 2017-18 before Covid; it was on average 4.5 per cent during the pandemic and that has come down to 3.2 per cent in 2023-24. Female unemployment rate in urban areas continues to be as high as 7.1 per cent although it shows a relative decline from 9 and above per cent during the pandemic.

The worrying fact however is the low LFPR for the youth population of age between 15-29 which was consistently lower than the LFPR for the working age population of 15 and above taken together. In 2023-24 LFPR for the overall working age population is 60.1 but for the age group 15-29 it is 46.5 per cent. In both rural and urban India, the LFPR among the youth has been lower compared to that of the overall working age population. This can be explained by the fact that unemployment rate among the youth in 2023-24 has been recorded 10.2 per cent when the average unemployment rate is 3 per cent only. In urban India unemployment rate among the youth is 14.7 per cent, for males it is 12.8 per cent and for females it is 20.1 per cent. Considering rural and urban together in fact the situation has worsened compared to 2022-23. For both males and females in India the unemployment rate among youth of age 15-29 has increased in 2023-24 compared to 2022-23.

This is the sad part of the story when India is passing through a phase of potential demographic dividend and the average age of India’s population stands at 28 years. This fact needs to be read along with another figure which says unemployment rate is highest among the educated population. People who have attained education of secondary level and above record an unemployment rate of 7 per cent and among females of this age group it is even higher at 10.6 per cent. This raises question that even if India might be becoming the third largest economy soon, she is unable to employ her youth and educated labour force. This is also an indicator of the fact that the production structure of the country continues to rely on traditional skills and does not create room for educated young work force.

DISMAL PICTURE OF EMPLOYMENT

Even though unemployment rate has declined generally one needs to see the nature of employment that has increased in the recent past. Firstly, it is significant to note that the share of agriculture in employment has been increasing since the last three years. It has increased in 2023-24 also compared to the previous year. This is quite surprising and paradoxical that India being in a high growth path and one of the fastest growing economies in the world is experiencing a reverse migration from non-agriculture to agriculture while the share of manufacturing remaining completely stagnant in the last two years and lower than that in 2021-22.

The rise in the share of agriculture in employment is happening at a time when rural India faces a stagnation in rural wages which shows that this becomes the last resort of survival for many who failed to continue to earn an income through non-agricultural activities. Also, within total number of people employed the share of self-employed turns out to be 58.4 per cent in India. In rural segment this share is 64.7 per cent and in the urban India it is 40.4 per cent. This high share of self-employment and more so 39 per cent being own account owner meaning owner of enterprises those engage no hired labour. Hence large section of the population is engaged in economic activities that fetch them mere subsistence. More importantly 13.8 per cent female self-employed in urban areas and 42.3 per cent of the female self-employed are helpers in household enterprises, a large part of such activities is unpaid.

The share of regular wage/salary-based employment is only 21.7 per cent of total employment and out of these regular salaried employees, 58 per cent do not have any written contract and 53.4 per cent of them are not eligible for any social security benefits. It is also evident from the latest PLFS report that the self-employed in India on an average earns a monthly income which is only 66 per cent of the average monthly incomes of regular salaried workers. The average monthly wage/salary earnings of regular workers during April to June 2024 was Rs 21,103 while the average monthly incomes of self-employed during the same period turns out to be Rs 13,900. All these indicate a dismal picture of employment in India. Since employment is the only route of earning livelihood for the majority people in India, underutilised human resources manifest in lower demand leading to underutilised productive capacity in the economy.