What PLFS tells us about India’s labor market

What are the major numbers to track?

The January-March unemployment rate in the calendar year (CY) 2021 was close to the pre-Covid levels of January-March 2020. For men, it was 8.6% for the March quarter of CY21 and the year-ago quarter. However, in the case of women, the rate stood at 11.8% in March 2021, up from 10.6% in the year-ago period. The labor force participation rate (LFPR), or the percentage of people working, looking for work, or available for work, was 47.5%. The worker population ratio (WPR), or the percentage of people employed in the population, was 43.1%.

What do the numbers represent for the female LFPR?

In India, on average, female LFPR is one third of that of males. This may be due to the existing gender gap in wages, higher education and skill training, constraints on female mobility, and uncountable domestic work. Increasing women LFPR will not only benefit women but will also boost the level of development. In March 2021, the LFPR for men was 20 basis points lower than pre-Covid levels, while for women it was 21.2% in March 2021, as against 21.9% in the year-ago period. Thus, women had to bear the brunt of economic and social decline. One basis point is one hundredth of a percentile.

What about women elsewhere?

In most occupational groups worldwide, women had a high share of unemployment – ​​particularly among service and sales workers, where women accounted for about 62% of job losses. The crisis sharply reduced economic activity and demand for labor, leading to a 4.8% reduction in total working hours worldwide in January-March 2021.

How has the labor market performed since April 2021?

PLFS data for April-September 2021 is still awaited, the formal sector data of Employees’ Provident Fund Scheme can help us understand the changes in the labor market. In April-June 2021, the scheme had 2.3 million new subscribers, as against 1.08 million in April-June 2020. Therefore, the second wave of COVID-19 was not as fatal to the formal labor market as the first. The July-September 2021 numbers were even better with 2.8 million new customers. This shows that the economy is returning to normalcy.

What does high LFPR mean?

An increasing LFPR allows more working-age people to actively participate in the labor market, indicating increased economic activity. GDP data for Q2 and other key macroeconomic indicators, i.e. Goods and Services Tax collections, e-way bills, energy consumption, exports, consumption expenditure during the festive season, etc., all showed an increase. However, Omicron’s influence will dictate the future direction for investors.

Jagdish Shettigar and Pooja Mishra are faculty members at BIMTECH