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Structural retrogression? Steady rise in share of self-employment in agriculture 2017-18 to 2023-24

By Ishwar Awasthi, Puneet Kumar Shrivastav* 

The National Sample Survey Office (NSSO) launched the Periodic Labour Force Survey (PLFS) in April 2017 to provide timely labour force data. The 2023-24 edition, released on 23rd September 2024, is the 7th round of the series and the fastest survey conducted, with data collected between July 2023 and June 2024. Key labour market indicators analysed include the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR), and Unemployment Rate (UR), which highlight trends crucial to understanding labour market sustainability and economic growth. 
The main labour market indicators are the Labour Force Participation Rate (LFPR), defined as the percentage of people in the labour force (i.e., working, seeking work, or available for work) within the population; the Worker Population Ratio (WPR), defined as the percentage of employed individuals in the population; and the Unemployment Rate (UR), defined as the percentage of unemployed individuals within the labour force.
The overall pattern of the PLFS 2023-24 data reveals a consistently improving performance of India's labour market indicators. In the post-pandemic years, steady progress has been observed in the country's labour market based on PLFS data. However, the UR has remained stagnant over the past two years. 
The data highlights that since 2017-18, both the labour force and workforce in the country have been steadily increasing, with the exception of 2021-22 due to adverse effect of Covid-19 Pandemic. This indicates a positive trend for the economy, as the overall employment situation at the national level is improving. Additionally, the unemployment rate has shown a significant decline, dropping from 6.1% in 2017-18—an all-time high in the history of the Employment-Unemployment Survey (EUS)—to 3.2 % in in 2022-23 and 2023-24 (Figure 1) still high compared to the 2011-12 level (2.2 %).
The trends in key labour market indicators suggest that the largest increase in LFPR occurred in 2023-24 compared to 2022-23 over the past six years, while the greatest improvement in WPR was observed in 2019-20 compared to 2018-19. As illustrated in Figure 2, the Indian labour market indicators have generally performed well, with the exception of the COVID-19 period.
The performance of rural areas has been better than that of urban areas in terms of labour force supply and employment generation during the period from 2017-18 to 2023-24. The widening gap in the LFPR and WPR between rural and urban areas during this period indicates that urban areas have been providing fewer job opportunities (Table-1).
The unemployment situation in rural and urban areas clearly shows a lower unemployment rate in rural locations compared to urban areas during the period from 2017-18 to 2023-24, with the gap between the two evidently widening (Table-1). The higher unemployment rate in urban areas indicates a lack of job creation at the prevailing wage rates. However, there may be reasons for the better employment opportunities among the educated population, which is referred to as frictional unemployment; they should find employment as soon as the labour market is efficiently organised.
The Worker Population Ratio (WPR) for females has consistently been lower than for males in both rural and urban areas, with a larger disparity among urban females (Table-2). However, rural females saw nearly four times higher year-over-year WPR growth in 2023-24 compared to 2022-23. Similarly, urban females also experienced a significant WPR increase relative to males during the same period.
Employment is classified into self-employment, regular employment, and casual employment. Regular paid jobs are seen as secure, while self-employment, though often stable, can result in irregular or inadequate income. Casual employment is the most precarious, with uncertainty around both job duration and wages. Self-employment has dominated, ranging from 52% to 58% since 2017-18, with a steady increase. Regular employment constitutes about 21% to 24%, while casual employment has decreased from around one-fourth to one-fifth. In 2023-24, self-employment and regular employment both rose slightly, while casual employment dropped by 2 percentage points compared to 2022-23 (Figure 3).
While aggregate employment trends show a positive trajectory, quality remains a concern. In 2023-24, 58% of regular wage workers lacked written job contracts. Male workers saw improvement, with 41.8% having contracts compared to 40.4% the previous year, but the situation for female workers worsened, dropping from 44.2% to 42.7%. The proportion of unpaid family workers among the self-employed rose to 33.2%, up from 31.9%. However, the share of casual workers in public works increased form 3.8 percent in 2022-23 to 4.5 percent in 2023-24, potentially reflecting positive impacts from public sector infrastructure investments.
Sectoral trends in employment show a rising share of the primary sector, a somewhat declining share of the services sector, and a stagnant share of the secondary sector between 2017-18 and 2023-24. Recent trends indicate that the share of employment the primary/agriculture sector has risen, albeit marginally but rising consistently since last two years, while the service sector has increased by about one percentage point. In contrast, the secondary sector has declined by one percentage point (Figure 4) despite of huge incentives provided by the GoI such PLI, ELI etc.
A detailed breakdown of employment sectors reveals a continuous rise in the share of self-employed individuals in agriculture, while the proportion of casual workers across all sectors has declined. The share of regular wage/salary workers in the services sector has shown some improvement in 2023-24, but it has not yet returned to pre-pandemic levels (Table-3).
The share of self-employment in agriculture has consistently increased from 2017-18 to 2023-24. This rise, however, signals structural retrogression due to the sector's low productivity and incomes, often serving as a fallback for the unemployed. Many who could not sustain casual employment have likely returned to agriculture. Meanwhile, casual employment, a key source of low-paying jobs for the rural unemployed, has steadily declined since 2017-18.
The share of self-employment in agriculture has risen steadily from 2017-18 to 2023-24, indicating structural retrogression due to low productivity and income. Many who can't sustain casual jobs have returned to agriculture, while casual employment—a key source of low-paying rural jobs—has been declining since 2017-18. This clearly indicates a structural regression of the workforce into agriculture, which is neither efficient nor productive employment. 
Regular employment has accounted for about one-fifth of total jobs but has decreased from 2018-19 to 2022-23, with only a marginal increase of 1 percentage point in 2023-24. Most new self-employment appears in the primary sector, followed by secondary and tertiary sectors. The quality of employment remains a significant challenge, as the majority of employment generated lacks written job contracts for both males and females. 
More than half of regular/salaried employees, in both rural and urban areas, had no written job contract during the period from 2021-22 to 2023-24. Similarly, the percentage of wage/salaried employees not eligible for paid leave is also notably high, exceeding 50 percent for both males and females in rural and urban areas. This requires a policy call for female to be covered on urgent basis as more female are joining workforce for sustainable employment for them.
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*Ishwar Awasthi, is Former Professor, Institute for Human Development (IHD) New Delhi. Puneet Kumar Shrivastav is Faculty, National Institute of Labour Economics Research & Development (NILERD) Delhi. Source of figures and tables: PLFS Data various rounds. Note: PS= Principal Status & SS= Subsidiary Status. Views expressed are personal

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