There is an urgent need to generate more decent and productive employment for the increasing labour force in the country

The National Statistical Office (NSO) released the Periodic Labour Force Survey (PLFS), 2020-21 report on June 14. At a first glance, the annual survey report shows an improvement in the employment situation with rise in employment and decline in the unemployment rate during the pandemic years compared to the previous years (PLFS survey years correspond to the agriculture year July to June).

This is quite unexpected, keeping in mind the severe economic disruption after the Covid-19 pandemic. The survey results differ from several other reports, which suggest that the employment situation in the country has worsened after the pandemic. This survey report has evoked heightened interest in the findings. It calls for further investigation as to whether these results are survey anomalies or indicate the changing employment situation in the country.

This article attempts to interpret the findings from the last three annual PLFS (2018-19, 2020-21 and 2020-21) reports, and try to understand the impact of Covid-19 pandemic by analysing some key labour market indicators.

The labour force participation rate as per usual status (reference period of last 365 days preceding the survey), which is the sum of those working and those available for work or unemployed, reported highest in the four years at 41.6 per cent in 2020-21. The worker population ratio (WPR) has increased from 35.3 per cent in 2018-19 to 39.8 per cent in 2020-21, which is the percentage of employed persons in the population.

On the other hand, the unemployment rate which is the percentage of unemployed in the labour force has eased from 5.8 per cent in 2018-19 to 4.2 per cent in 2020-21. The rural-urban division shows that the rise in WPR is in rural areas, which is almost 2.5 times higher than urban areas. It is well documented that the impact of Covid-19 in the rural economy was far less than urban, which is also reflected from the survey results.

A lot of people, particularly migrants engaged in the informal sector, lost their employment during the pandemic at the urban destinations. With no means of employment in urban areas, a large number of them have returned to their native places in rural areas, where they, along with their family members especially women, are engaged in locally available activities such as agriculture and related work for survival.

The survey results further reveal that the rise in WPR is largely credited to female than male, where WPR of the former has increased by 2.54 times more than the latter. This phenomenon is more pronounced in rural areas, where the female WPR has increased almost 3.2 times more (19.0 per cent to 27.1 per cent) than their urban counterparts (15 per cent to 17 per cent) during the pandemic years.
So, the rise in employment during the pandemic years is overwhelmingly of females in rural areas.

The industrial structure provides broad employment trends, where the employment in agriculture in developing countries like India is considered as subsistence and less productive, while employment in non-farm industrial and services is regarded as more productive. It is well documented that as the country progresses, the people move away from the less productive agriculture sector in rural areas to more productive non-farm industrial and services sectors in urban areas.

However, the industrial distribution of employment in India shows a reversal of the decades-long decline in agriculture share in recent years with more and more people moving into the farm sector in rural areas. The share of employment in agriculture has increased by 3 percentage points from 57.8 per cent in 2018-19 to 60.8 per cent in 2020-21.

This trend indicates that people are finding it difficult to get employment in non-farm sectors, and they are compelled to engage in subsistence farm activities due to the lack of other employment avenues. In rural areas, almost three-fourth (75.4 per cent) of the females are engaged in farm activities compared to around half of the male (53.8 per cent).

Thus, the rise in employment in rural areas has a huge implication on women’s work, which is also reflected from increasing female’s WPR. This reveals that the rise in share of employment in agriculture reflected the impact of economic slowdown and the pandemic.

The reverse migration from cities to rural areas would have only increased the pressure on the farm sector to absorb the workers, especially females, leading to the distress employment.

The status of employment broadly indicates the quality of employment, where a regular salary is considered better quality of work than self-employed and casual labour. Regularity of work and social security benefits are associated with regular salaries, while social security provisions are generally not available for self-employed and casual labourer.

The PLFS survey reports show that the share self-employed has increased from 52.1 per cent in 2018-19 to 55.6 per cent in 2019-20, while the share of regular salaried (23.8 per cent to 21.1 per cent) and casual labour (24.1 per cent to 23.3 per cent) has declined during the last three years. This phenomenon is more pronounced in rural areas, where the share of the self-employed has increased relatively more (3.3 percentage points) than urban areas (1.7 percentage points).

However, the increase in share of the self-employed in rural areas is largely attributed to the rise in unpaid helpers in household enterprises (4.6 percentage points), while the share of own account workers and employer category has declined (-1.4 percentage points).

This indicates that the jump in female WPR in rural areas is contributed most by the increase in employment of helpers or unpaid family workers in household enterprises. A recent Niti Aayog report highlighted that the rise in ‘disguised employment’ or unpaid family workers is a more serious issue than unemployment in India. The decline in the share of regular salaried workers is another serious concern, reflecting the worsening employment conditions with rise in low quality employment in recent pandemic years.

The above analysis reveals that the increase in employment in pandemic years is distress-driven and not necessarily any improvement in the overall employment in the country. This is shown in the report as an increase in terms of labour force participation rate, the worker-population ratio, and decline in the unemployment rate. It is also important to note that the share of employment in agriculture and allied activities, and especially employment of rural women, has gone up in recent years, which is mostly of distress type not productive or decent employment.

Further, the report also reveals that employment in the informal sector has increased during the pandemic years from 68.4 per cent to 71.4 per cent in 2020-21. Workers in the informal sector are for the most part not covered by any social security benefits and also not covered by the national labour laws and regulations. Such workers are most affected by any economic shocks such as the economic downturn after Covid-19.

In sum, the PLFS survey report (2020-21) indicates generation of new employment in the country during the pandemic years, but most of the new jobs are of distress or informal type, especially for females in rural areas.

In this context, there is an urgent need to generate or provide more decent and productive employment for the increasing labour force in the country, which is must to meet the SDG goal 8 targets of ‘decent or productive employment for all’ by 2030.

The author is Senior Fellow, Institute for Human Development, Delhi