Labor Force Survey Data Highlight Persistent Tensions in the Labor Market and Lack of Job Creation in Non-Farm Sectors


The periodic Labor Force Survey (2019-2020) indicates a steady build-up of distress in the labor market in India. As the investigation covers the period from July 2019 to June 2020, it captures both the economic slowdown before Covid and the period after the imposition of the national lockdown to limit the spread of the pandemic. Survey data shows an increase in labor force participation in agriculture during this period. This, as some have argued, implies that during this period of tension agriculture has emerged as an “employer of last resort”. Equally significant is that much of the increase in women’s labor market participation recorded by the survey during this period was in the category of unpaid family workers, and not in forms of employment. more productive. These are worrying developments.

Data from the PLFS shows that the share of the workforce engaged in agriculture increased to 45.6% in 2019-2020, from 42.5% in 2018-2019 – a sharp reversal of the decline in several decades of labor force participation in agriculture. . This suggests that the movement of labor out of agriculture, which accelerated after 2004-05, appears to have been hampered by the economic downturn. The reverse migration of labor from cities to villages would only have increased the pressure on agriculture to absorb workers. The increasing participation of women in the labor market is also problematic. Under normal circumstances, considering the low rates of female participation in the labor market in India – for women aged 15 and over it stood at 24.5% in 2018-2019 – an increase in participation would be a positive development. However, much of the increase seen in 2019-2020 was in the form of unpaid family work. In fact, according to the survey, the employment rate of unpaid workers in family businesses in rural and urban areas rose to 15.9% in 2019-2020, from 13.3% in 2018-19. For female workers, it fell from 30.9 percent to 35 percent over the period. This, as some economists have said, is indicative of an increase in underemployment.

In the months that followed, as Covid infections ebbed and flowed and restrictions on economic activities were tightened and relaxed in response, the employment situation changed accordingly. However, data on the work demanded by households under MGNREGA indicates that stress in the labor market remains higher than in the pre-Covid era. What these numbers also reflect is the failure of the economy not to be able to create enough off-farm jobs (even in the pre-Covid era) to absorb both those leaving. agriculture and the millions of people entering the workforce each year. Disturbingly, even the jobs created tend to be largely informal in nature.

This editorial first appeared in the print edition on September 8, 2021 under the title “Distress Mapping”.

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