Labour participation: Revamped PLFS data should help policymaking

The National Statistics Office (NSO) last week released the first monthly bulletin of the Periodic Labour Force Survey (PLFS), underscoring that India’s official statistics are beginning to meet the demands of a fast-growing economy. It was argued by many economists and analysts that India needed high-frequency data on employment conditions. In the absence of official data, analysts used data from private sources, which were often questioned for coverage and methodology. Although not directly comparable with earlier labour statistics, owing to a change in methodology, the bulletin showed India’s unemployment rate for people aged 15 and above at 5.1 per cent. The unemployment rate in urban areas stood at 6.5 per cent as against 4.5 per cent in rural areas.  The data, based on the current weekly-status approach (which uses a seven-day reference period to determine employment status), showed the all-India labour-force participation rate was 55.6 per cent in April, with a sharp rural-urban divide.  It also showed that the gender divide in labour-force participation continued to persist in both rural and urban areas.

  The Ministry of Statistics and Programme Implementation (Mospi) had recently announced several changes to the PLFS, including the release of monthly estimates of key labour-market indicators, such as the labour-force participation rate and the unemployment rate for both rural and urban areas. Further, the coverage of the quarterly surveys will now be extended to bring within their ambit rural areas, and annual reports will be aligned with the calendar year, making the data more comparable with international labour statistics. These changes were long overdue. Access to limited and infrequent official data was seen as an impediment to timely and evidence-based decision-making. Besides, India’s labour market is witnessing rapid structural transformation, driven by technological change and increasing female labour-force participation, though it is still considerably low. 

  Other aspects of the revamp include an increased sample size and the introduction of a rotational panel scheme across both rural and urban areas. Each selected household will now be surveyed four times in four consecutive months, allowing for more reliable insights into employment trends. Such methodological refinements mark a substantial improvement in survey design and execution. The NSO has also taken steps to address technological bottlenecks. For instance, it uses computer-assisted personal interviews and other web-based applications to ensure consistency at the stage of primary data collection.

  While the government’s move to a monthly PLFS bulletin is a welcome step, the numbers continue to reveal the persistent problems in India’s employment conditions. The female labour-force participation in the 15 years and above category was just 25.7 per cent in urban areas. Lower participation among women in the labour market significantly affects the total participation rate. In urban India, this was at 50.7 per cent, which means nearly half the workforce in urban areas is neither working nor looking for work. In the 15-29 age category, the participation is even lower at 41.2 per cent. As has been argued here and elsewhere, creating gainful employment for India’s large and rising workforce is the single-biggest policy challenge. Regular employment reporting will provide a better understanding of the state of the economy, encourage discussions on employment, and help shape policy intervention.