PLFS data: Is rising employment good news? Deeper analysis suggests contrary results

By Ishwar Chandra Awasthi, Puneet Kumar Shrivastav* 
Results of the Periodic Labour Force Survey (PLFS), 2020-21, released by the Ministry of Statistics and Programme Implementation, Government of India (GoI) on June 14, 2022, show improvement in work force participation rate (WPR) and labour force participation rate (LFPR) and declining unemployment rate. Four rounds of data have been released from 2017-18 to 2020-21 based on PLFS.
The general trend in the last four rounds clearly shows consistent increase in WPR and LFPR and falling unemployment rates by usual status (PS+SS). Though increase in WPR and LFPR is reported highest in 2019-20 over 2018-19, yet rising trend in these two key indicators continues throughout, and similarly fall in unemployment is registered highest in 2019-20 over 2018-19.

Clearly, the recent results give some solace and relief after unprecedented Covid-19 pandemic that has entailed enormous loss of human lives and livelihoods and crippled economic activities (Figure-1). However, some deeper analysis provides contrary results and clearly shows that all is not good as portrayed by these results. Some cursory analysis helps to demolish the encouraging news.

The sectoral movements of workforce indicate that primary sector employment, mainly the agriculture, shows rise of workforce during the period barring a bit slow down in 2018-19. The retrogression of workforce to agriculture somehow is not positive sign of wellbeing of workforce.

Understandably, those working in non-agriculture sector have returned to agriculture under duress conditions where real wages are lower compared to non-agriculture sector. This is certainly an employment of last resort. Employment in secondary sector stagnated and tertiary sector employment contracted in 2019-20 and 2020-21 (Figure-2). These sectors are considered better paid compared to agriculture sector.
Employment is generally disaggregated into self-employment, regular employment and casual employment. Regular paid employment is generally considered secure and better which is also a proxy of decent employment. Self-employment is considered fairly secure, though incomes from certain activities might be highly irregular, inadequate and even uncertain. However, for typical casual workers, neither duration of employment nor income is certain.

In agriculture sector, self-employment shows a modest uptrend, the regular salaried/wage employment has almost stagnated and casual employment has also declined during the period (2017-17 to 2020-21). Thus, most of the employment has occurred in self-employment in agriculture.

In the secondary sector, self-employment has generally stagnated barring in 2020-21 that saw some improvements. Regular salaried/ wage employment also stagnated and declined albeit sharply in 2020-21 compared to earlier years. Casual employment also declined or stagnated with some marginal spurt in 2020-21. In services sector, self-employment stagnated from 2017-18 to 2019-20 and later some increases were noticed in 2020-21. The regular salaried/ wage employment also stagnated and declined in 2020-21. The casual employment shows a steady decline over the years.

The rise in employment has been observed in those segments which are informal and unorganized receiving no social security and without the preview of labour laws. Undeniably, nature of employment occurred as a form of last resort or distress form of employment where people cannot afford to remain unemployed for any length of time and often forced to resort whatever employment is available (Table -1).

The newly sought information in PLFS 2020-21 reveals that 12.6 percent of the self-employed engaged in primary sector are the user or consumer of their own produced products via economic activities in which they are engaged in. Whatever they are producing is being consumed by them only.
So, the question here arises whether such economic activities should be considered as employment in real sense or it’s just a strategy for survival of livelihood. Further, one third (32%) of the self-employed individuals under primary sector do sell less than 50 percent share of their produce and rest is being used for their own consumption. Only 12.5 percent self-employed do use their entire produce for market (Figure-3).
Indeed, a country like India, where more than half of the workforce is engaged in self-employment activities, which is being promoted with sincere policy efforts by government, is still long way to go. Given evidences compel us to wonder whether all that glittering is really a gold.
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*Dr Awasthi is Professor at Institute for Human Development, New Delhi; Dr Shrivastav is Assistant Director, National Institute of Labour Economics Research & Development (Under NITI Aayog, GoI), New Delhi. Views are personal