By Dr. Gyan Pathak
After unemployment rate in India officially reaching 6.1 per cent in 2017-18, which was 45 years high, PM Narendra Modi led government has been successful in reducing it to 3.2 per cent on paper by 2023-24 which wraps up increasingly disturbing level of labour market distortion in the country.
The Periodic Labour Force Survey (PLFS) 2023-24 for the period from July 2023 to June 2024 has put the unemployment rate at 3.2 per cent on usual status basis for the year. There is thus no improvement in the unemployment scenario since it was at the same level in the previous year 2022-23, which remained stagnant, belying the repeated claims of the government of declining unemployment in the country.
Back to PLFS 2023-24 data, the unemployment rate on the basis of usual status of 3.2 per cent, the proportion of unemployed persons in the population is estimated at 1.4 per cent. It should be noted that the government usually talks about unemployment chiefly on the basis of usual status which is rosier than the unemployment rate on the basis of current weekly status (CWS). For the year 2023-24 the unemployment rate on CWS basis was 4.9 per cent and the proportion of unemployed in population was 2.1.
The unemployment data brings a puzzle that is hard to crack, when we compare the male and female unemployment rates. In 2023-24, unemployment rate for female was 3.1 per cent which was lower than 3.2 per cent for male on the usual status basis, but CWS data shows female unemployment rate higher at 5 per cent than 4.9 per cent for male. The picture just reversed when usual status changes to CWS. Which data one should believe?
Unemployment rate in urban areas on the basis of usual status was 5.1 per cent, but on the basis of CWS it was 6.7 per cent. For male these were 4.4 per cent and 6 per cent, and for female 7.1 and 8.7 per cent respectively. Female suffered more on account of unemployment in the urban areas is 2023-24.
In the rural areas, the situation reversed – unemployment among male was higher than females. Unemployment rates for male in rural areas in 2023-24 were 2.7 per cent on usual status basis and 4.4 per cent on CWS basis. Female unemployment rates were lower at 2.1 per cent and 3.9 per cent respectively.
The unemployment rate calibrated to be at lower level can only be understood when we read it with the actual employment made available in the country. PM Narendra Modi had made a claim in July 2024 of an exponential rise in employment in the country, based on Reserve Bank of India’s (RBI’s) KLEMS data that showed 46.6 per cent increase in total employment to 643.3 million in 2023-24, as against the previous year 2022-23.
Now let us have a look at PLFS 2023-24 data on labour force participation rate (LFPR). PLFS data shows LFPR at 45.1 per cent in 2023-24 as against 42.4 per cent in 2022-23 on usual status basis and 42.3 per cent and 40 per cent on the basis of CWS respectively. As for Worker Population Ratio (WPR) these were 43.7 per cent in 2023-24 as against 41.1 per cent in 2022-23 on usual status basis, and 40.2 per cent and 38 per cent on CWS basis respectively. Thus, both the LFPR and WPR data do not support the claim of such a high increase in employment which RBI data showed on the basis of which PM Narendra Modi made a big claim in sharp increase in employment.
We can also look into the disturbing level of labour market distortion that has been wrapped up by a calibrated low level of unemployment on paper. Let us have a look at the headcount of employed people. PLFS 2023-24 shows that 19.4 per cent people were counted as employed who were actually helping in the household enterprises and were not getting wages at all. Number of such people had risen from 18.3 per cent in 2022-23, and 17.5 per cent in 2021-22.
It is a mark deterioration in the labour market where opportunities of paid employment have been declining. What then unemployed people could do? They became just helping hand in family enterprises without wages, only to be counted as employed. Among these employed 36.7 per cent were females, and 10.1 per cent were male. The level of such employed females has been almost stagnant for the last there years, but for male it has been worsening, that is more and more males are turning into helping had in family enterprises because they are unable to find job opportunities in the market. In 2022-23, 9.3 per cent males were helpers in household enterprises, which increased to 10.1 per cent in 2023-24.
Then there are own account workers and employers. Large number of them are being helped by family members without getting wages but counted as employed as mentioned in the preceding paragraph. They are stagnant at about 39 per cent. Most of such employment are of very low earning and actually unemployment in disguise.
A total of 58.4 per cent of the total employed people in 2023-24 were self-employed. The percentage of self-employed has risen from 55.8 per cent in 2021-22 and 57.3 per cent in 2022-23. It is indicative of the declining job opportunities in the labour market which enforcing people to become either helping hand in household enterprises or own account worker so that they can survive amidst lack of social security coverage.
Regular wage and salaried jobs have been almost stagnant, the PLFS 2023-24 shows. It was 21.5 per cent in 2021-22, declined to 20.9 per cent in 2022-23, and reached 21.7 per cent in 2023-24. Share of casual labour in the work force was also declining which was 19.8 per cent in 2023-24, but was 21.8 per cent in 2022-23 and 22.7 per cent in 2021-22.
PLFS 2023-24 data wraps up such increasingly disturbing labour market deterioration and much more under the calibrated decline in unemployment rate on paper. Ground level reality is very hard to cope with. Conditions of employment are very bad. About 58 per cent employed people in regular wage or salaried jobs had no written job contacts in 2023-24, 47.3 per cent were not eligible for paid leave, and 53.4 per cent were not eligible for any specified social security benefit. (IPA
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