Statsguru: Five charts explain how big is India's labour force

The latest Periodic Labour Force Survey (PLFS) for July 2019-June 2020 (2019-20) shows that in a year of severe economic slowdown, India’s labour force participation increased to 40.1 per cent of the population, compared to 37.5 per cent in the previous period. 

The worker population ratio increased from 35.3 per cent to 38.2 per cent and the unemployment rate, which is the proportion of the unemployed in the labour force, declined from 6 per cent to 5.1 per cent.

Business Standard applied these ratios for three previous rounds of PLFS — 2017-18, 2018-19 and 2019-20 — to the estimated population in these periods. 

For instance, the estimated population for 2019-20 is the mean of the population on July 1, 2019, and July 1, 2020, projected by the Registrar General of India. It is important to note that these are not accurate figures on India’s labour market, but informed estimates. This is what the analysis found.

The size of India’s labour force is likely to have reached 540 million in 2019-20. More women entered the labour force in this one-year period, shows chart 1a. Further, most of the expansion in the labour market has happened in rural areas, reveals chart 1b. This may be the early impact of reverse migration. Chart 1c shows that as many as 44 million people got added to the workforce in 2019-20.

However, the expansion of the workforce has manifested in the low-value farm sector, shows chart 2. Agriculture added about 35 million new workers. But more importantly, most of the added workforce is informal in nature. Formalisation took a hit in 2019-20, reveals chart 3, as the number of formal workers stagnated at about 85 million, while informal workers rose by 10 million to reach an estimated strength of 194 million.

Chart 4 shows that vulnerable kinds of employment added more workers in 2019-20. Predictably, income was hit the most in this vulnerable category, shows chart 5.

StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines