The Employment Backslide

The National Statistical Office has finally released the Periodic Labour Force Survey 2020-21 report.

At first glance the annual survey shows that employment increased during the first pandemic year. This is quite unexpected, given the severe economic disruption after the pandemic, and differs from many other reports of worsening employment in India since the pandemic.

Are the results survey anomalies, or do they indicate the changing employment situation in the country? This article interprets the last three PLFS reports, from July 2018 to June 2021, to understand the pandemic by analysing some key labour market indicators.

Rural Women Working More

The labour force is the sum of those who are employed and those available for work but unemployed. The share of the labour force in employment was the highest in four years, at 41.6% in 2020-21. The worker population ratio, which is the working share of the total population, also increased, from 35.3% in 2018-19 to 39.8% in 2020-21.

Similarly the unemployment rate, which is the share of unemployed people in the labour force, decreased from 5.8% in 2018-19 to 4.2% in 2020-21. There was also a rural-urban division, as the rise in the worker population ratio in rural areas was almost 2.5 times higher than in cities and towns.

It is well documented that the impact of Covid on the rural economy was far less than in urban areas, which is reflected in the survey results. On the other hand a lot of people, particularly migrants engaged in the informalised sector, lost their employment in the urban destinations. With no means of employment in urban areas, a large number of them have now returned to their native places, where they along with their family members, especially women, are engaged in locally available activities such as agriculture and related work for their survival.

The survey further reveals that the rise in worker population ratio is largely accounted for by women rather than men: the WPR for women increased by 2.54 times more than for men. This phenomenon is more pronounced in rural areas, where the female WPR increased almost 3.2 times more than their urban counterparts. So, the rise in employment up to June last year was overwhelmingly among women in rural areas.

Industrial Structure Reverses

The industrial structure provides broad employment trends, where employment in the agriculture sector in developing countries like India is considered as subsistence and less productive, while employment in non-farm industries and services is considered more productive. It is well documented that as countries progress, 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 farming sectors in rural areas. The share of employment in agriculture increased by 3 percentage points from 57.8% in 2018-19 to 60.8% in 2020-21. This trend indicates that people are finding it difficult to get employment in non-farm sectors, and are compelled to engaged in subsistence farm activities due to a lack of other employment avenues.

In rural areas, three in four women (75.4%) are engaged in farm activities compared to around half of men (53.8%). Thus, the rise in employment in rural areas has huge implications for women's work, which is also reflected in women's increasing WPR.

The rising share of employment in agriculture reflects the impact of economic slowdown and the pandemic. The reverse migration from cities to rural areas has only increased the pressure on the farm sector to absorb workers, especially females, as a form of distress employment.

Employment Status Worsens

The status of employment broadly indicates the quality of employment, where a regular salaried job is considered better quality of employment than self-employed or casual labourer. This is because security and regularity of work and social security benefits are associated with regular salaried jobs, while social security provisions are generally not available for self-employed or casual workers.

The PLFS survey reports show that the share of self-employed has increased from 52.1% in 2018-19 to 55.6% in 2020-21, while the share of regular salaried and casual labour declined in these years. The phenomenon is more pronounced in rural areas, where the share of self-employed increased relatively more (3.3 points) than in urban areas (1.7).

However, the increasing share of self-employed in rural areas is largely attributed to the rise in unpaid helpers in household enterprises (4.6 points), while the share of own-account workers and employers declined (by 1.4 percentage points). This indicates that the jump in female WPR in rural areas is contributed mostly by the increasing employment of helpers or unpaid family workers in household enterprises.

One of the NITI Aayog's recent reports similarly argues that the rise in "disguised employment" or unpaid family workers is a more serious issue than unemployment in India. In addition, the declining share of regular salaried jobs is another serious concern, as it reflects the worsening employment conditions with a rise in low-quality employment in the pandemic years.

Distress Driven Employment

The above analysis reveals that the increase in employment in pandemic years is distress driven, and not necessarily any improvement in the overall economic situation in the country. It is shown in the report as an increase in terms of labour force participation rate, worker population ratio, and decline in unemployment rate.

It is important also 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 distress employment, not productive or decent employment.

Further, employment in the informalised sector has also increased during the pandemic years, from 68.4% to 71.4% in 2020-21. Workers in the informalised 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 the most affected by any economic shocks.

In sum, latest the PLFS survey report indicates generation of new employment in the country during the pandemic years, but most new jobs are of distress, or informal type, especially for females in rural areas. In this context there is an urgent need to generate more decent and productive employment for the growing labour force in the country, a must to meet the Sustainable Development Goal of "decent or productive employment for all" by 2030.

Dr Balwant Singh Mehta is Senior Fellow, Institute for Human Development, Delhi

Cover photo AP