A step backward: On unemployment in India

Synopsis: The periodic labour force survey (PLFS) indicates that India, far from modernising and formalising its economy, seems to be moving backwards in terms of the employment available.


Recent PLF survey has stated that unemployment rate has declined by a percentage point to 4.8 per cent in 2019-20. The previous number, in the first PLFS in 2017-18, had been the highest recorded for over four decades.

However, a close look at the PLFS data reveals the dismal state of unemployment in India.

Must Read: Periodic Labour Force Survey and unemployment in India – Explained, pointwise
What is the present state of unemployment in India?

Firstly, PLFS data reveals that the unemployment rate is much unchanged, at almost 9 per cent, since 2017-18

Secondly, even more recent indicators, after the second wave, are more disturbing about the trend-line of unemployment. For instance, the Centre for Monitoring Indian Economy (CMIE) own survey suggests that unemployment in India rose to 8.3% in August 2021, an increase of over a percentage point from 7% in July.

Thirdly, even the industrial sector has apparently lost jobs, continuing a trend since the pandemic hit, which the CMIE says has cost 10 million jobs in manufacturing alone.

What does the PLFS data indicate?

PLFS data reveals that there has been a decline in good-quality employment opportunities since the last PLFS.

Workers have been forced into less remunerative and less secure jobs.

The share of regular salaried workers has been declining for some years, reflecting problems with the formalisation of the economy.

The proportion of the non-agricultural workforce working in the informal sector rose to almost 70 per cent.

There has also been a sharp rise in the proportion of people working in household enterprises who receive no compensation.

Women are working more, but as unpaid family workers in agriculture.

The most worrying point is that there has been an increase in the share of workers in agriculture. The first time that this has happened in the modern statistical era.

Source: This post is based on the article “A step backward” published in Business Standard on 12th Sep 2021.

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