Employment and participation

Female entry into labour force stays low

The National Sample Survey Office, under the Union Ministry of Statistics and Programme Implementation, has released its annual summary of the Periodic Labour Force Survey, or PLFS. The report covers the period between July 2021 and June 2022, which of course means that it takes on the period immediately after the devastating second wave of Covid-19 in India. The PLFS is used to calculate an unemployment rate for India. The report says that during 2021-22 this metric declined, as compared to 2020-21, to 3.2 per cent from 3.3 per cent in rural areas and from 6.7 per cent to 6.3 per cent in urban areas. This direction of travel is gratifying, if not unexpected, given the recovery from the pandemic. However, there are many questions attached to the use of a regular unemployment rate — the number of those searching for work but unable to find it, as a proportion of the regular workforce — in India. These include the large number of those self-employed, the presence of disguised unemployment, and the requirements of subsistence work, which prevent people from entering the “searching” category.

Considerable attention thus focuses on the labour force participation rate, or LFPR, which is in some ways a better gauge of trends in the economy. Raising the LFPR, particularly for women, is generally agreed to be a major priority to increase India’s level of potential economic growth. From that perspective, the PLFS does not show any appreciable structural break. The LFPR for rural women above the age of 15 is at 36.6 per cent in 2021-22; and for urban women above 15 a worrying low 23.8 per cent. By contrast, 78.2 per cent of rural men above the age of 15 work, and the corresponding proportion in urban areas is 74.7 per cent. The rural LFPR for women is higher because they generally engage in agricultural work close to their homes at a rate higher than that for men. While the PLFS is not strictly comparable with equivalent surveys from more than a few decades ago, there is a broad academic consensus that the female LFPR in India is not increasing and may in fact be declining. In the past, statisticians had argued the low LFPR “misses the reality of working females integral to the economy of the household and the country” — that, in other words, there is a need to include women’s unpaid domestic work in the LFPR numbers. But this is fundamentally unpersuasive. The point of the LFPR is to measure the degree to which the economy is being able to incentivise and accommodate potential workers. Including unpaid domestic work in the LFPR will not make it a clearer measure.

This very large differential between the male and female LFPRs sets India apart from its global peers. In most Southeast Asian countries, the female LFPR is over 50 per cent. In China it is close to 70 per cent. By some accounts, the influx of women workers into the formal workforce helped drive the East Asian miracles of the 1970s and 1980s, and is a major differentiator for the Bangladesh economy today. The PLFS is thus a reminder that ensuring access to work outside the home for women must be a priority if growth is to move to a higher base. This will require attention to not just law and order and women’s security, but also to the norms surrounding women leaving home for work.