Explore labour force participation rates and worker enumeration in India, vital for UPSC Economics and employment statistics preparation

Understanding Workforce and Labour Force in an Economy

• Definition of Worker and Economic Activity

  • Human capital is considered engaged when a person participates in any economic activity. They earn a living while contributing to the economy.
  • Such individuals are called part of the workforce or the employed.

• Non-workers and the Unemployed

  • Non-workers are not engaged in economic activity but may be seeking work or available for work.
  • They are classified as unemployed. The workforce and unemployed together make up the labour force.

• Components of the Population

  • The population is divided into the workforce, unemployed, and non-workers.
  • Non-workers are not a part of the labour force since they are unavailable for economic activity.
  • Workforce contributes to national production; unemployed are willing but unused; non-workers are unavailable.

• Schematic Structure of Population

  • The population can be broken down as follows:
  • Population
  •   ↳ Labour Force
  •       ↳ Workforce (Employed) – Utilised by the economy
  •       ↳ Unemployed – Available but not utilised
  •   ↳ Out of Labour Force – Not available for economic activity

• Measurement of Labour Force and Workforce

  • It is essential to understand how employed, unemployed, and non-workers are counted in a country like India.
  • These measurement aspects are covered in the following section.

Enumeration of Workers in India

• Key Data Sources on Workers

  • National Sample Survey Organisation (NSSO) and Office of the Registrar General of Census are the two main institutions collecting workforce data.
  • NSSO provides extensive data on employment and unemployment at regular intervals across India.

• Reference Periods for Activity Status

  • NSSO uses three reference periods to determine a person’s activity status: year, week, and day.
  • Usual Principal Status (UPS) uses a year as the reference period to classify a person as employed, unemployed, or out of the labour force.
  • A person is employed under UPS if engaged in economic activity for 183 days or more in a year.
  • A person is unemployed if they were available for work but not engaged in any economic activity during the reference period.

• Definition of Subsidiary Status

  • A subsidiary status worker is engaged in an economic activity for a shorter duration during the reference period.
  • UPS-employed and subsidiary status workers together make up the total employed category.

• Current Weekly and Daily Status Methods

  • Current Weekly Status (CWS) measures employment and unemployment during an average week.
  • Current Daily Status (CDS) assesses person-days of employment or unemployment over an average day.
  • CDS provides the most inclusive estimate as it captures both open unemployment and visible underemployment.
  • The difference between CDS and CWS unemployment rates indicates the level of visible underemployment.
  • Dividing CDS-based unemployed person-days by 7 gives the average number of unemployed persons per day.

• Employment Estimates and Criteria

  • UPS employment measures stable, long-term employment.
  • UPSS (Usual Principal + Subsidiary Status) adds those who worked intermittently to UPS-employed.
  • CWS employment includes people employed for at least one hour during the reference week.
  • CDS employment measures employment in terms of person-days and reflects labour force utilisation.
  • CDS is the most accurate for estimating real employment levels, while the other methods may slightly overestimate due to broader definitions.

• Relationship Between Employment and GDP

  • Employment generation depends on the volume and composition of economic activity in an economy.
  • Gross Domestic Product (GDP) represents the total output of goods and services.
  • Levels of employment are influenced by the size and structure of GDP.

• Factors Affecting Employment Levels

  • Availability of capital for production
  • Skills and expertise of the labour force
  • The interaction of labour and capital in production
  • Influence of material, financial, and human capital, technology, labour productivity, and government policies

Labour Force and Workforce Participation Rates

• Definitions

  • Labour Force includes both the employed and unemployed population willing to work.
  • Labour Force Participation Rate (LFPR) is the percentage of the population actively engaged in or seeking work.
  • Work Participation Rate (WPR) refers to the percentage of the labour force that is actually working.
  • The gap between labour force growth and employment growth indicates trends in unemployment.

• Trends in Male and Female Participation

  • Male participation has consistently remained higher than female participation in both labour force and workforce (1983–2009-10).
  • Using the UPSS criterion, LFPR was:
    • 42.9% in 1983
    • 42.3% in 1993-94
    • 43.0% in 2004-05
  • Female participation rates in those years were:
    • 29.8%, 29.0%, and 29.4% respectively
  • Using the UPS criterion, female LFPR was even lower:
    • 21.1% in 1993-94
    • 22.4% in 2004-05
  • In 2004-05, male UPS rate was 55.1% and UPSS rate was 55.9%, while corresponding female rates were 22.4% and 29.4% respectively (India Labour and Employment Report, 2012).

• Rural and Urban Comparisons

  • Female participation in rural areas is higher than in urban areas.
  • Urban male participation was higher than rural males in 1999-2000, 2004-05, and 2009-10.
  • LFPR for rural males increased slightly in 2009-10 vs. 2004-05, while it declined for urban males.
  • NSSO’s 66th round revealed a significant drop in rural female work participation between 2004-05 and 2009-10:
    • UPS employment: 20%
    • UPSS employment: 26%
  • In urban areas, female UPS employment dropped from 13.5% to < 12%, and UPSS from ~17% to < 14% (Mazumdar, 2011).

• Reasons for Decline in Female Participation

  • Social conservatism leading to women withdrawing from the labour market
  • Increased pursuit of higher education among women
  • Decline in employment opportunities across all age groups is a more plausible explanation

• Dynamic Nature of Participation Rates

  • LFPR is not constant; it varies with economic, social, and cultural factors.
  • Women and children are more sensitive to these changes.
  • Poor women tend to participate more, but may withdraw as household income increases and re-enter at higher income levels or education.
  • Female LFPR follows a U-shaped curve with respect to per capita income (India Labour and Employment Report, 2012).

• Table: Labour Force and Workforce Participation Rates (CDS basis, %)

  • Labour Force Participation Rate (LFPR):
    • Rural Male: 52.7 (1983), 53.4 (1993-94), 51.5 (1999-00), 53.1 (2004-05), 53.6 (2009-10)
    • Rural Female: 21.9, 23.2, 22.0, 23.7, 19.7
    • Urban Male: 52.7, 53.2, 52.8, 56.1, 55.6
    • Urban Female: 12.1, 13.2, 12.3, 15.0, 14.1
  • Workforce Participation Rate (WFPR):
    • Rural Male: 48.2, 50.4, 47.8, 48.8, 50.1
    • Rural Female: 19.8, 21.9, 20.4, 21.6, 18.2
    • Urban Male: 47.3, 49.6, 49.0, 51.9, 52.2
    • Urban Female: 10.6, 12.0, 11.1, 13.3, 11.7