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Periodic Labour Force Survey 2022-23

Context:

The Periodic Labour Force Survey (PLFS) is conducted by the Ministry of Statistics & Programme Implementation (MoSPI) and the survey period is July to June every year.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. Details of the PLFS -2022-23
  2. Definition of Unemployment
  3. Measurement of Unemployment Rate
  4. Periodic Labour Force Survey (PLFS) Overview
  5. Challenges in Measuring Unemployment in India
  6. The Way Ahead for Addressing Unemployment in India

Details of the PLFS -2022-23:

  • The data on Employment and Unemployment is collected through Periodic Labour Force Survey (PLFS) which is conducted by the Ministry of Statistics & Programme Implementation (MoSPI) since 2017-18. 
  • The estimated Unemployment Rate (UR) on usual status for persons of age 15 years and above of different general education level during 2021-22 and 2022-23 is as follows:
  • As per the data, the rate of unemployment has a declining trend across different education levels.

Definition of Unemployment:

  • ILO’s Perspective: According to the International Labour Organisation (ILO), unemployment refers to the state of being without a job, actively seeking employment opportunities, and being available to engage in work.
  • Clarity: Therefore, someone who has lost their job but does not actively seek another job is not considered unemployed. This highlights that joblessness is not equivalent to unemployment.

Measurement of Unemployment Rate:

  • Formula: The unemployment rate is calculated as the ratio of the number of unemployed individuals to the total labour force.
  • Labour Force: The labour force is defined as the sum of those who are currently employed and those who are actively seeking employment (the unemployed).
  • Exclusion: Individuals such as students and those involved in unpaid domestic work who do not fall into either the employed or unemployed categories are considered outside the labour force.
  • Factors Affecting the Unemployment Rate: The unemployment rate can decrease if an economy fails to generate enough job opportunities or if individuals decide not to actively search for work.

Periodic Labour Force Survey (PLFS) Overview:

  • The Periodic Labour Force Survey was launched by the National Statistical Office (NSO) in April 2017.
  • The survey was initiated to address the need for more frequent and timely availability of labor force data.

Objectives:

  • To estimate key employment and unemployment indicators within a short time interval of three months specifically for urban areas using the “Current Weekly Status” (CWS) approach.
  • To estimate employment and unemployment indicators annually using both the “Usual Status” (ps+ss) and CWS approaches for both rural and urban areas.

Indicators:

The PLFS focuses on estimating the following indicators:

  • Labour Force Participation Rate (LFPR): It represents the percentage of individuals in the population who are part of the labor force, which includes those who are employed, seeking work, or available for work.
  • Worker Population Ratio (WPR): This indicator represents the percentage of employed individuals in the population.
  • Unemployment Rate (UR): The UR indicates the percentage of individuals who are unemployed among those in the labor force.

Current Weekly Status (CWS):

  • CWS refers to the activity status of individuals based on their activities during the preceding seven days before the survey.

Conducting Authority:

  • The Periodic Labour Force Survey is conducted by the National Sample Survey (NSO), which operates under the Ministry of Statistics and Programme Implementation (MoSPI).

Types of Unemployment in India

  • Disguised Unemployment: This is a situation in which more people are employed than are required. It is mostly seen in India’s agricultural and unorganised sectors.
  • Seasonal unemployment: Unemployment that happens only during particular seasons of the year. In India, agricultural labourers rarely work throughout the year.
  • Structural Unemployment: This is a type of unemployment that occurs when there is a mismatch between the jobs available and the abilities of the available workers.
  • Cyclical unemployment: Unemployment that rises during recessions and falls with economic expansion. It is mostly a phenomenon of capitalist economies.
  • Frictional Unemployment:  It is also known as Search Unemployment, is the time lag between jobs when someone is looking for a new job or moving jobs.

Causes of Unemployment in India

  • Jobs in the capitalist world have become highly specialised but India’s education system does not provide the right training and specialisation needed for these jobs.
  • In India nearly half of the workforce is dependent on Agriculture – even though agriculture is underdeveloped in India and only provides seasonal employment.
  • Mobility of labour in India is low due to factors like language, religion, and climate.
  • The industrial development had adverse effects on cottage and small industries – as the cottage industries fall, many artisans become unemployed.
  • Constant increase in population has been a big problem and one of the main causes of unemployment.
  • Certain work is prohibited for specific castes in some areas and this also contributes to unemployment.

Challenges in Measuring Unemployment in India:

Social Norms and Job Search:

  • In a developing economy like India, social norms and constraints often influence an individual’s decision to actively seek employment.
  • This can lead to an underestimation of the true unemployment rate.

Domestic Work Example:

  • A survey by the National Sample Survey Organisation (NSSO) found that a significant percentage of women engaged in domestic work expressed a willingness to work if job opportunities were available within their households.
  • However, since they were not actively looking for work, they would not be counted as unemployed.

Informal Nature of Jobs:

  • In contrast to developed economies where individuals typically hold year-round jobs, India’s informal economy results in frequent job transitions.
  • An individual may be unemployed one week but could have worked as a casual laborer the previous month and as a farmer for most of the year.

Differing Methodologies:

  • Various organizations use different methodologies for measuring unemployment.
  • For example, the Centre for Monitoring Indian Economy classifies individuals based on their activity on the day preceding the interview.
  • This approach yields a higher unemployment rate but lower labor force participation rates because in an informal economy, there is a lower probability of individuals having work on any given day compared to longer reference periods of a week or a year.

Inaccurate Data Reflection:

  • Sometimes, the methodologies in use do not accurately reflect economic disruptions.
  • For example, the nationwide lockdown in March 2020 significantly impacted the Indian economy, but this was not immediately reflected in the Periodic Labour Force Survey (PLFS) unemployment rates, which cover a period from July of one year to June of the next. Consequently, unemployment rates measured under both UPSS and CWS standards decreased in 2019-20 and 2020-21.

Developing Economy Trade-off:

  • Measuring unemployment in a developing economy involves an inherent trade-off. Adopting a very short reference period results in higher unemployment rates but lower employment rates, while a longer reference period yields the opposite.
  • Developed nations face less of this dilemma due to their more industrialized economies, where work tends to be consistent throughout the year.

The Way Ahead for Addressing Unemployment in India:

  • Election Significance: Unemployment is becoming a crucial issue in upcoming elections. Therefore, it is essential to address it effectively.
  • Understanding Definitions and Measurements: To tackle unemployment successfully, it is imperative to have a clear understanding of how it is defined and measured in a developing economy like India. This understanding will aid in crafting more targeted and impactful policies to address the issue.

-Source: The Hindu, PIB


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