Bleak picture of unemployment in India

The three most important microeconomics factors that broadly affect the economy of a country are foreign currency exchange rate, inflation rate and unemployment rate. The Reserve Bank calculates the first factor daily and accurately, and also organizes it. The inflation rate is declared every month by the Ministry of Statistics and Program Implementation, which is the data of the previous month. Like October’s inflation becomes known in November. Unlike foreign currency exchange rates, inflation data can be questioned because it is determined by averaging the prices of many commodities. But, the increase in expenses in interest rate, dearness allowance and various contracts is calculated on the basis of inflation data only. It is the job of the Reserve Bank to keep inflation low and stable. But, it continues to grapple with the financial challenge arising from the increase in government expenditure. As soon as the election season started last month, political parties made a series of promises of free facilities, which will further burden the government exchequer and increase inflation. Neither the Reserve Bank nor the government will take responsibility for this.

But the picture of the third important factor of the economy, i.e. unemployment, is not clear. But why is it not clear? The first reason is that half of our labor force is engaged in agriculture and they are considered entrepreneurs or self-employed. It is estimated that 40 percent of agricultural production comes from landless laborers or small farmers who work as laborers on others’ fields. Their employment is seasonal, but there is neither any written agreement with their so-called owners, nor are they provided with any facilities. The remaining 80 percent of the labor force works in the informal or non-registered sector. They also do not have any contract. Many people who describe themselves as working may be working part time.

Not having a full-time job could be considered unemployment, but that would be misleading. In a country where 90 percent of the labor force does not have a fixed job, people looking for work are found saying, ‘I want work, not a job’. The reason for slow employment growth in the formal sector is either restrictive labor laws or economic growth in which the emphasis is more on capital rather than labour. In such a situation, how can we get the real picture about employment? The government releases a statement called Periodic Labor Force Survey (PLFS) every quarter since 2017. In this, an assessment of three indicators is given in urban areas – population ratio of workers, labor force participation rate and unemployment rate.

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The government also releases annual estimates of unemployment in urban and rural areas. The latest report for the quarter ending in July shows that the labor force participation rate for men has remained stable at 73.5 percent for the last five quarters, and for women has increased from 18.9 to 21.1. Secondly, the unemployment rate for men has declined from 7.1 to 5.9 percent, and for women from 7.6 to 6.6 percent. This improvement is commendable, but women’s labor participation is still very low. India’s women’s labor participation is the lowest among G-20 countries. India’s women’s labor participation is the lowest among G-20 countries. But, in a recent report quoting a statement by the Education Minister, it was said that the participation of women has increased to 37 percent in 2022-23.

This is 16 percent more than the claim made in the PLFS report for April to July, although only urban labor is estimated in it. It is being said that perhaps this number is coming down due to lack of correct counting. Or perhaps, the questions are being asked wrong. For example, if a woman helps in some household business and is asked ‘if she is working’, she will probably deny. But, if asked ‘Is she lending a hand in home-made products (handicrafts or cottage industries)’, the answer would probably be yes. The International Labor Office has also agreed to improve the way women’s work is collected in India. But despite this, the difference of 21.1 percent and 37 percent is very high. So, who is right?

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This confusion is further increased by the data of a private company, Center for Monitoring Indian Economy (CMIE). There has been a lot of debate and criticism regarding his method. But, their figures show the unemployment situation to be more serious. CMIE has reported the unemployment rate among youth to be as high as 37 percent in some states. Another source of information in this regard comes from the Employees’ Provident Fund Organization (EPFO), especially about the formal sector. It is claimed that increase in the number of PF means increase in employment. But, in this, data is taken only from those companies where PF rules are applicable, i.e. such workplaces where more than 10 people work. In such a situation, if the number of workers increases from nine to 11, then the registration of 11 people will be counted in the PF figures, whereas in reality only two people have got new jobs.

Then, if someone leaves the job, EPFO ​​will not exclude him from the count. Estimating the true picture of employment is like the story of blind men and elephants. It all depends on how it is being counted. In the last four years, the number of labor force in agriculture sector increased from 42.5 percent to 46.5 percent, which later declined slightly. But, this is a matter of concern because there is less money in farming. Employment in the manufacturing sector is also either decreasing or stable. Considering the need for employment growth for the economy, such a method of accurate calculation should be introduced, which can give a reliable idea of ​​the situation of employment and unemployment.

(These are the personal views of the author.)

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