Good news, bad news

Much attention has rightly been devoted to reports in this newspaper of the National Sample Survey Office’s (NSSO’s) estimates regarding the state of employment in India. The most eye-catching revelation, that unemployment is at a 45-year high, is naturally deeply worrying. However, other aspects of the NSSO’s Periodic Labour Force Survey (PLFS) deserve examination as well. They convey both good and bad news about employment trends and have implications for the framing of government policy.

 

One such revelation is that, while the overall labour force participation rate (LFPR) has declined sharply between 2011-12 and 2017-18, the two most recent relevant NSSO rounds, the decline has been particularly striking among females. The overall LFPR was 49.8 per cent in 2017-18, down from 55.9 per cent in 2011-12 — and down even more since 2004-05, when it was 63.7 per cent. But for females above 15 years of age, the decline was twice as steep in recent years. It declined by eight percentage points between 2011-12 and 2017-18, compared to a four percentage point drop for males. The LFPR for adult females now stands at an especially low figure of 23.3 per cent in 2017-18. This is driven in particular by a massive decline in labour force participation by females in rural areas. In towns, the female LFPR remained approximately the same, whereas it declined by 11 percentage points in rural areas. This is not good news. Some have argued that this is demand-driven — women are choosing to work less. But even so, it is not a positive trend at a macro level. It can no longer be the case that it is purely a product of increasing enrolment in education. It may instead be that women’s employment is seen as a necessity at lower levels of income, and that as income increases, women withdraw from the workforce. Or it may be that increasing male unemployment causes “women’s work” in rural areas to be given to men and so women stop working outside the home. Either way, it is a structural problem that needs to be addressed. India cannot grow and progress while more than half its workforce is so under-utilised. Employment and skilling policy must be redesigned to specifically target women.

 

There is also some good news — and that is the share of those receiving a regular salary has increased, according to the 2017-18 NSSO data. In towns, it increased to 47 per cent from 43.4 per cent in 2011-12, at a similar rate of increase to that seen since 2004-05, when it was 39.5 per cent. If almost half the urban workforce is now receiving monthly salaries, that is a vital indicator of the potential for formalisation. It also suggests that income security has been increasing for this segment of the workforce. More needs to be done to bring them into the social security net — while half of these salaried workers were eligible for social security benefits, 70 per cent of them had no formal contracts. Clearly formalisation is a work in progress — however, there is now a far greater possibility for successful formalisation than earlier.