Editorial 2 : Labour Force Survey has an update. It’s a welcome one
Context
Changes in the PLFS’s methodology and frequency are welcome. As India’s economy grows and seeks to attract global investors, credible and timely data will be non-negotiable. The current data on the Indian labour market leaves a lot to be desired.
PLFS – improved version
- India’s Ministry of Statistics and Programme Implementation has unveiled a new and improved version of the Periodic Labour Force Survey (PLFS) and, with that, started providing timely data on the state of the labour market.
- The PLFS was launched in 2017 as an annual survey to replace the quinquennial Employment-Unemployment Surveys.
- Up until now, apart from the annual picture of India’s unemployment, PLFS would provide a quarterly update, but only for urban areas.
- Last week, the MoSPI shared the first-ever monthly PLFS data for April. Shifting to a monthly reporting cycle promises a salutary effect on policy evaluation.
- In the past, timely official data was scarce to find out the impact on unemployment of, say, a pandemic-induced lockdown or a disruption like demonetisation.
- Some private agencies, such as the CMIE, have long been providing monthly, and even weekly, data, but such data has been challenged.
The improvements
- The PLFS has been revamped beyond just improving its frequency.
- For one, the sample design has been improved and the sample size enlarged.
- The sample size for each round of survey will now be a 2.65 times increase in sample households to be covered in the PLFS.
- The district has been made the primary geographical unit to ensure sample observations from most of the districts in the PLFS sample, which, in turn, will improve the representativeness of the estimates.
- Also, notably, the annual reporting period has been aligned to the calendar year, beginning with January 2025 instead of July-June.
- This shift will enable timely updation of India’s labour market statistics in the databases maintained by the international agencies.
Concerns Regarding India’s Labour Force
- Female LFPR remains much lower than male, with urban female unemployment at 8.2%. Only 3% of employed women aged over 25 years hold advanced degrees.
- WPR and LFPR show minimal year-on-year change, indicating sluggish job creation.
- Employment growth is not proportional to economic growth, indicating jobless or low-quality job growth.
- A large proportion of the unemployed workforce consists of youth, especially those with secondary or higher education.
- According to the ILO, India has the 2nd-longest average workweek globally at 46.7 hours, with 51% working over 49 hours, just behind Bhutan.
- Despite this, India's labour productivity remains low, with a Gross Domestic Product (GDP) per working hour of just USD 8, placing it 133rd globally as of 2023.
- A large portion of the rural workforce remains engaged in low-productivity or subsistence work, raising concerns about underemployment and the prevalence of informal, insecure jobs over quality, skill-intensive employment.
Conclusion
As India’s economy grows and seeks global investors, credible and timely data will be non-negotiable. The current data on the Indian labour market leaves a lot to be desired. These changes in the PLFS’s methodology and frequency are welcome.