Labour participation dips to 40% from 46% in six years

GS 2, Gender, Employment, Issues Relating to Development.


-In 2021­22, just 40% of Indians of legal working age were employed or searching for work. According to data from the Centre for Monitoring Indian Economy, the labour force participation rate in 2016­17 was more than 46 percent.

  • Over the last six years, India’s labour force has fallen from around 445 million to 435 million. Currently, over 1,085 million Indians are 15 or older and have the legal right to work.
  • Women’s labour-force participation, which was already in the low double digits, has fallen much more. In 2016­17, around 15% of women were working or seeking for work. In 2021­22, this figure fell to 9.2 percent.
  • The participation percentage among men fell to 67 percent more than 74% of the time.
  • The drop in participation rate was greater in metropolitan regions. In metropolitan regions, the rate fell to 37.5 percent from 44.7 percent, a decline of more than seven percentage points. The rural percentage declined from 46.9 percent to 41.4 percent.
  • Participation rates in 23 of the 24 states with data fell in March 2022 compared to March 2016.

Labour Force Participation:

  • The labour force participation rate is defined as the proportion of the working population aged 16 to 64 that are presently employed or looking for work in the economy. Anyone who are still studying, housewives, and people above the age of 64 are not counted in the labour force.
  • Following India’s independence, the country’s labour history regarded gender concerns as extraneous; the fact that there were low numbers of female employees was immaterial to the all-encompassing narrative of caste and class mobilisation. Some decades later, the 1980s saw a further wave of feminisation of labour activity, during which labour and social rights were increasingly regarded as costly and rigidities. Since then, India’s development strategies have tended to focus on women’s reproductive rather than productive responsibilities, as seen by the amount of money invested in population and family planning programmes, which has had a good influence on women’s employment.

What are the statistics for women?

  • Since the First and Second Five-Year Plans (1951-56 and 1956-61), maternal and child health have been an integral part of India’s Family Welfare Programme, with the goal of “reducing the birth rate to the extent necessary to stabilise the population at a level consistent with the requirements of the national economy.” The Government of India’s National Population Policy, announced in 2000, reaffirmed the government’s commitment to safe motherhood programmes within the broader framework of reproductive health.
  • In India, the 2017 Amendment to the Maternity Benefit Act of 1961 seeks to promote women’s participation in the workforce by providing beneficial entitlements to female employees, such as increasing maternity leave from 12 weeks to 26 weeks and requiring crèche services in all establishments with more than 50 employees. The law was enacted to guarantee that women’s involvement is not hampered by reproductive responsibilities.

Various regulations in India promise to assist women thrive in the workplace-

  • Yet, their effect is the inverse. Female involvement in export-oriented manufacturing employment dropped in the 1990s, despite growing trade and lower trade barriers, most likely due to legal restrictions on women’s working hours imposed by workplace rules.
  • The government is attempting to safeguard these unorganised employees with programmes such as the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), which offers social security to the unorganised sector through a pension plan.
  • Rates of growth and changes in the structural composition of production and labour force are two fundamental indices of structural transformation in any economy.
  • The first indication in India has shown fairly constant variations, particularly since the 1991 reforms, while the trend in employment has not showed any continuous or apparent pattern.
  • Despite the fact that the Periodic Labour Force Survey (PLFS) shows an increase in the worker-to-population ratio and a closing of the gender gap in employment in recent years, India’s unemployment situation remains dismal.

Indian Employment and the Economy

What are the Trends in Economic Growth Rates?

  • The economy’s growth rate (measured by Gross Value Added (GVA) at constant prices) increased from 4.27 percent in the 20 years preceding economic reforms to 6.34 percent in the 20 years following reforms, and to 6.58 percent between 2010-11 and 2019-20 at 2011-12 prices.
  • This development trajectory has been followed by a persistent drop in agriculture’s proportion of total economic production, from 30% in 1990-91 to 18% in 2019-20, and a steady increase in non-agriculture output’s share of total economic output.

Who keeps track of India’s employment data?

  • The Decennial Population Census and the National Sample Survey Office’s countrywide quinquennial (5-yearly) surveys on employment and unemployment have been two significant sources of data on workforce and employment (NSSO).
  • The NSSO’s quinquennial surveys only give data up to 2011-12. As a result, it was superseded by the Periodic Labour Force Survey (PLFS), which began on an annual basis in 2017-18.
  • It gathers information on a variety of factors, including the degree of unemployment, the forms of employment and their respective shares, the earnings obtained from various sorts of occupations, the number of hours worked, and so on.

What are the Current Employment Trends?

  • The worker-to-population ratio (WPR) increased from 34.7 percent in 2017-18 to 38.2 percent in 2019-20, according to PLFS statistics.
  • This is a reversal of the previous pattern, which showed a decrease in WPR following 2004-05.
  • The shift also means that employment has grown at a far quicker rate than population growth.
  • WPR has risen in both the rural and urban populations, as well as in both the male and female populations.
  • This increase in WPR is all the more important because it coincides with an increase in the labour force participation rate.

How does the Actual Unemployment Scenario differ from the Data Presented?

  • More Job Searchers than Positions: According to PLFS statistics, the number of jobs rose faster than the number of job seekers between 2017-18 and 2019-20.
  • Despite this, the number of jobless people grew by 2.3 million between 2017-18 and 2018-19, owing mostly to an increase in the number of job searchers (52.8 million) during the same period.
  • Salaried Workers Have Fallen: The percentage of salaried persons has fallen from 21.2 percent in 2019-2020 to 19 percent in 2021, implying that 9.5 million people have left the salariat to become unemployed or work in the informal sector.
  • No Exodus from Agriculture: According to the sectoral structure of the workforce, 45.6 percent of employees in India are involved in agriculture and associated activities, 30.8 percent in services, and 23.7 percent in industry.
  • There has been no rise in the share of industry and services in total employment from 2017-18 to 2019-20. This suggests that the agricultural labour shift is not taking place.
  • Causes of Agricultural Job Prevalence: The youthful labour force, which is becoming more educated, sought more remunerative job outside of agriculture, but only a handful succeeded.
  • This is due to the adoption of capital-intensive and, in many cases, labour-displacing technologies and production tactics by the industrial and services sectors.
  • This is exacerbated by the increasing usage of modern technology such as Artificial Intelligence (AI) and the Internet of Things (IoT).


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