Periodic Labour Force Survey (PLFS) Report 2023-24 | 26 Sep 2024

Source: BS 

Why in News?  

Recently, the National Statistical Office (NSO) released the  annual Periodic Labour Force Survey (PLFS) report 2023-24, showing the unemployment rate stagnated at 3.2% that raises concerns about the inability to generate enough formal jobs. 

What are the Key Highlights of the PLFS report 2023-24? 

• Stagnant Unemployment Rate: The unemployment rate for 2023-24 remained unchanged at 3.2%, the same as in 2022-23. 
  • This marks the first time since the inception of the PLFS in 2017-18 that the unemployment rate has not shown a year-on-year decline. 
• Labour Force Participation Rate (LFPR): It showed a significant increase in LFPR to 60.1% in 2023-24 from 57.9% in 2022-23 at national level. 
  • The rural LFPR rose to 63.7%, while the urban LFPR increased to 52%. It suggests more people are seeking work in rural areas, possibly due to reverse migration or limited urban job opportunities during and after the pandemic. 
    • LFPR represents the share of people either working or seeking work in the population. 
• Increasing Trend in Worker Population Ratio (WPR): WPR was 58.2% in the year 2023-2024. The same for male and female was 76.3% and 40.3% respectively. 
  • WPR is defined as the percentage of employed persons in the population. 
• Marginal Improvement in Job Quality: There was a marginal improvement in job quality, with the share of salaried or regular wage workers increasing by 0.8 percentage points to 21.7%. 
• Urban and Rural Divergence: The unemployment rate in rural areas showed a slight increase, rising to 2.5% in 2023-24 from 2.4% in 2022-23. 
  • In contrast, the urban unemployment rate improved, falling to 5.1% from 5.4%. 
• Gender Disparity: The unemployment rate for women rose to 3.2% (up from 2.9% in 2022-23), while for men, it slightly decreased to 3.2% from 3.3%. 
• Increase in Self-Employment and Unpaid Work: The share of people engaged in self-employment, including unpaid household work and small businesses, increased to 58.4% from 57.3% in 2022-23. 
  • Self-employment includes both entrepreneurial ventures and precarious informal work, making it a mixed indicator of job quality. 
• Challenges in Creating Decent Jobs: The inability of the economy to generate enough decent jobs is pushing more people into self-employment, often in the informal sector or unpaid family roles. 
  • The share of wage employment remains significantly lower than in the pre-pandemic period, highlighting the difficulty in creating formal and secure jobs. 

Why India Struggles to Generate Enough Formal Jobs? 

• Increasing Informalisation in Employment: The rise in employment in agriculture, and construction is tied to increased informalisation. 
  • As these are generally unprotected by labour laws, with no access to social security, or job security. 
• Technological Advancements: The introduction of AI and IoT threatens job prospects  for even skilled workers, further complicating the employment scenario. There is growing concern that automation and digitisation will reduce labour demand.  
  • Examples, such as layoffs in IT firms shows automation can reduce job opportunities, even for skilled workers. 
• Growing Jobseekers: The increase in educated job seekers, particularly those with graduate degrees, raises concerns about the availability of suitable jobs, as the demand for such employment appears to be shrinking. 
• Policy Missteps: Policy like demonetization in 2016 and the poorly implemented Goods and Services Tax (GST) in 2017 have adversely affected MSMEs, leading to a further decline in job creation which employs most of India’s workforce. 
• Stagnant Service Sector: The output share of sectors like transport, storage, communication, and financial services remained steady but their employment share dropped from 6% to 5%, with financial services falling below 1%. 
• Skill Mismatch: Despite the government's focus on skilling, the share of workers in skilled jobs fell from 18% in 2018-19 to 14% in 2022-23.  
  • This, along with widening inequality and a declining worker-to-population ratio highlights the growing unemployment challenges. 

Way Forward 

• Sectoral Diversification: Investments in manufacturing, renewable energy, and technological innovation can create jobs with greater productivity and higher wages. 
• Strengthening MSMEs: Micro, Small, and Medium Enterprises (MSMEs) need targeted financial support, tax relief, and a streamlined regulatory environment to help them recover and expand their employment capacity. 
• Human-Centric Tech Adaptation: Emphasis should be placed on encouraging innovation in sectors that have high labour absorption capacity, such as renewable energy, healthcare, and sustainable manufacturing, which are less likely to be fully automated. 
• Industry-Aligned Skill Development: The government’s skilling initiatives should be aligned with current and future industry needs and include training in emerging fields such as green jobs, AI ethics, cybersecurity, and data analytics. 
• High-Potential Service Sectors: The focus should also be on encouraging the growth of new-age services like e-commerce, logistics, and online education, which have the potential to generate employment for a variety of skill levels.