Labour force participation is up, unemployment is down. What about the quality of work?

The issue of jobs has been at the heart-of economic policy discussion, especially in recent decades when the link between economic growth and employment generation has been seen to be rather tenuous . The pandemic has been a major trigger of economic disruption , causing widespread financial distress , touching off a surge in unemployment and leading to mass migration back to villages. Seen against this backdrop , the latest periodic labour force survey for 2022-23 throws up several interesting trends. As per the survey, the labour force participation rate has continued to rise across the country. Alongside , the unemployment rate has continued to decline. This should, on the face-of it, be indicative of an improvement in the labour market. However, the survey also documents a decline in the share of regular wage/salaried employment and a rise in self-employment. These trends require closer examination.

At the all-India level, the labour force participation rate (15 years and above) has increased from 49.8 per cent in 2017-18 to 57.9 per cent in 2022-23. While participation rates have increased in both rural and urban areas, the rise is to a much greater extent in the former. Much of this increase has been driven by females, whose participation rate in rural areas has risen from 24.6 per cent in 2017-18 to 41.5 per cent in 2022-23 — an increase of roughly 17 percentage points over this period. While this should be encouraging , considering the low levels of female participation in the country, some have suggested that this rise in participation is indicative of the economic distress in rural areas, which is pushing women to work in order-to augment their family incomes. After all, work under MGNREGA , where wages are lower than in other non-farm occupations, has seen a steady uptick over the years (even excluding the pandemic years of 2020-21 and 2021-22), and women person days under the programme have also been steadily rising.

Alongside this increase in labour force participation rates, the share of the self-employed has risen from 55.6 per cent in 2020-21 to 57.3 per cent in 2022-23, while the share of regular wage/salaried employed has fallen from 21.1 per cent to 20.9 per cent. The percentage of workers engaged in informal sector enterprises in the non-agricultural sector has also gone up from 71.4 per cent in 2020-21 to 74.3 per cent in 2022-23. While unemployment rates have declined across board , and among the youth (those in the age group of 15-29 years), this falling share of regular wage/salaried and rise in self-employment reinforces concerns that the economy is unable to generate sufficient productive and remunerative forms of employment to absorb the millions entering the labour force each year. Inadequate job creation was, and still remains, the biggest challenge confronting policymakers .