Periodic Labour Force Survey (PLFS) Report 2023-24

Why in News?

Recently, the National Statistical Office (NSO) published the annual Periodic Labour Force Survey (PLFS) report for 2023-24, indicating that the unemployment rate has remained stagnant at 3.2%. This raises concerns regarding the insufficient generation of formal jobs.

What is Unemployment?

Unemployment refers to the situation where individuals who are willing and able to work, actively seeking employment, cannot find jobs at the prevailing wage rates. It serves as a key indicator of a country’s economic health, reflecting the levels of economic activity, productivity, and overall social well-being.

Types of Unemployment:

• Cyclical Unemployment: This type arises from the fluctuations in the economy. During periods of economic decline, the demand for goods and services decreases, resulting in job losses.
• Structural Unemployment: This occurs when there is a mismatch between the skills of the workforce and the requirements of the industry. Technological advancements often contribute to structural unemployment.
• Frictional Unemployment: This is a temporary form of unemployment that happens when individuals are transitioning between jobs, entering the workforce for the first time, or rejoining the workforce after a break.
• Seasonal Unemployment: Certain sectors, such as agriculture and tourism, experience variations in employment levels due to seasonal changes in demand.
• Disguised Unemployment: This occurs when more individuals are employed than necessary, particularly in agriculture, where productivity remains low despite a high workforce.

Key Highlights of the PLFS Report 2023-24

1. Stagnant Unemployment Rate: The unemployment rate for 2023-24 has remained at 3.2%, the same as in 2022-23. This marks the first instance since the PLFS began in 2017-18 that the unemployment rate has not decreased year-on-year.
2. Labour Force Participation Rate (LFPR): The LFPR saw a notable increase to 60.1% in 2023-24, up from 57.9% in 2022-23.

• The rural Labour Force Participation Rate (LFPR) increased to 63.7%, while the urban LFPR climbed to 52%.
• This suggests that more individuals are seeking employment in rural areas, potentially due to reverse migration or limited job opportunities in urban areas during and after the pandemic.
• The LFPR reflects the proportion of individuals either working or looking for work within the population.
• Increasing Trend in Worker Population Ratio (WPR): The WPR was recorded at 58.2% in 2023-2024, with male and female ratios at 76.3% and 40.3%, respectively.

• The WPR is defined as the percentage of employed persons within the population.
• Marginal Improvement in Job Quality: There was a slight improvement in job quality, with the proportion of salaried or regular wage workers increasing by 0.8 percentage points to 21.7%.
• Urban and Rural Divergence: The unemployment rate in rural areas saw a minor increase, rising to 2.5% in 2023-24 from 2.4% in 2022-23.
  • Conversely, the urban unemployment rate improved, decreasing from 5.4% to 5.1%Gender Disparity: The unemployment rate for women increased to 3.2% (up from 2.9% in 2022-23), while for men, it slightly decreased to 3.2% from 3.3%.
  • Increase in Self-Employment and Unpaid Work: The share of individuals engaged in self-employment, including unpaid household work and small businesses, rose to 58.4% from 57.3% in 2022-23.
    • Self-employment encompasses both entrepreneurial activities and precarious informal work, indicating mixed job quality.
    • Challenges in Creating Decent Jobs: The economy’s struggle to produce sufficient decent jobs is pushing more individuals into self-employment, often in the informal sector or unpaid family roles.
      • The proportion of wage employment remains significantly lower than pre-pandemic levels, underscoring the challenges in creating formal and secure jobs.

Key Facts About the PLFS Report

• About: Conducted by the NSO under the Ministry of Statistics and Programme Implementation (MoSPI), the PLFS measures the employment and unemployment situation in India.
  • It was designed to overcome the limitations of previous labour force surveys conducted by the National Sample Survey Office (NSSO).
• Two Primary Objectives of PLFS:
  • First Objective: To assess the dynamics of labour force participation and employment status at short intervals (every three months) for urban areas using the Current Weekly Status (CWS) approach.
  • Second Objective: To estimate labour force metrics for both rural and urban areas using the Usual Status and CWS parameters.
• Innovations in Sampling Design and Data Collection: The PLFS introduced modifications in sampling design and the inquiry schedule compared to earlier quinquennial surveys conducted by the NSSO.
  • It also gathered additional data, such as the number of hours worked, which was not captured in prior quinquennial rounds of the NSSO.

Government Initiatives Related to Employment

• Support for Marginalized Individuals for Livelihood and Enterprise (SMILE)
• PM-DAKSH (Pradhan Mantri Dakshta Aur Kushalta Sampann Hitgrahi)
• MGNREGA: Mahatma Gandhi National Rural Employment Guarantee Act
• Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
• Start-Up India Scheme
• Rozgar Mela

Why India Struggles to Generate Enough Formal Jobs?

• Increasing Informalisation in Employment: The growth in employment within agriculture and construction is linked to rising informalisation, as these sectors are typically unprotected by labour laws and lack social security and job stability.
• Technological Advancements: The rise of AI and IoT threatens job prospects even for skilled workers, complicating the employment landscape. Concerns are mounting that automation and digitisation will decrease labour demand.
  • Instances such as layoffs in IT firms illustrate how automation can diminish job opportunities, even for skilled personnel.
• Growing Jobseekers: The influx of educated job seekers, particularly those holding graduate degrees, raises concerns about the availability of suitable positions, as demand appears to be declining.
• Policy Missteps: Policies such as demonetisation in 2016 and the poorly implemented Goods and Services Tax (GST) in 2017 have negatively impacted MSMEs, leading to a further drop in job creation within a sector that employs a significant portion of India’s workforce.
• Stagnant Service Sector: While the output share of sectors like transport, storage, communication, and financial services has remained stable, their employment share has decreased from 6% to 5%, with financial services falling below 1%.
• Skill Mismatch: Despite the government’s focus on skill development, the share of workers in skilled jobs fell from 18% in 2018-19 to 14% in 2022-23.
  • This trend, along with increasing inequality and a declining worker-to-population ratio, highlights the growing challenges of unemployment.

Way Forward

• Sectoral Diversification: Investments in manufacturing, renewable energy, and technological innovation can create more productive and higher-paying jobs.
• Strengthening MSMEs: Targeted financial support, tax relief, and a streamlined regulatory environment are essential for MSMEs to recover and expand their employment capacity.
• Human-Centric Tech Adaptation: There should be a focus on promoting innovation in sectors with high labour absorption potential, such as renewable energy, healthcare, and sustainable manufacturing, which are less likely to be fully automated.
• Industry-Aligned Skill Development: Government skilling initiatives should align with current and future industry demands, incorporating training in emerging fields like green jobs, AI ethics, cybersecurity, and data analytics.
• High-Potential Service Sectors: Encouraging the growth of new-age services like e-commerce, logistics, and online education can generate employment opportunities across various skill levels.

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