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MOSL: ECOSCOPE-Quality of India’s employment improves…albeit at a much slower pace

ECOSCOPE: Quality of India’s employment improves…albeit at a much slower pace

 

The government published its first Periodic Labor Force Survey (PLFS) annual report 2017-18 (Jul’17-Jun’18) in end-May’19. The headline numbers suggest that the labor force participation ratio (LFPR) and worker-population ratio (WPR) has declined further; however, the unemployment rate has seen a sharp rise. Nevertheless, considering the massive underemployment in the country, the quantitative analysis of India’s labor market is not enough, and thus, a qualitative analysis is necessary. Our analysis confirms that while the quality of India’s employment has continued to improve in the past few years, the pace of improvements has slowed markedly v/s the previous period between 2004-05 and 2011-12. Key findings of our analysis are:

 

• India’s LFPR not as low as the headline numbers suggest: India’s labor force participation ratio (LFPR) for all ages has declined consistently and was as low as 36.9% in 2017-18, primarily because of the youth and low participation of women. The youth (15-24 years) LFPR has declined from 50% in 2004-05 to 29.6% in 2017-18, while that of the working age population (25-59 years) has declined from 74.3% in 2004-05 to 68% in 2011-12 and further to 62.9% in 2017-18 (implying annual decline of about 1pp since 2004-05). More notably, while LFPR among men (rural and urban) for working-age population remains ~97%, it has declined consistently from ~51% in 2004-05 to ~30% in 2017-18 for females. Within female population, the urban female LFPR has been low and broadly stable at 24%; the rural female LFPR has led to the fall in total female LFPR. Excluding rural females, India’s LFPR has declined only marginally from 80.8% in 2011-12 to 79% in 2017-18.
• WPR among youth and working-age population replicated past trend…: The worker-population ratio (WPR) among the youth (aged 15-24 years) declined from 33.3% in 2011-12 to 21.9% in 2017-18, implying an annual decrease of 1.9pp, same as that between 2004-05 (when it was 46.7%) and 2011-12. WPR among the working-age population (25-59 years) also witnessed similar trends – from 73.4% in 2004-05 to 67.3% in 2011-12 and further to 61.4% in 2017-18.