Unemployment has decreased, says Labour Survey

GS Paper 3:

Syllabus: Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.

Context:

As per the Periodic Labour Force Survey (PLFS) for 2020-21 released by the Ministry of Statistics and Programme Implementation, the unemployment rate saw a decrease of 0.6% and fell to 4.2% in 2020-21, compared with 4.8% in 2019-20

What does the survey say:

• Unemployment rate: Data show the rate of joblessness fell to 4.2% in 2020-21, compared with 4.8% earlier
  • Rural areas recorded an unemployment rate of 3% and urban areas recorded an unemployment rate of 6.7%.
• The Labour Force Participation Rate (LFPR)e., the percentage of persons in the labour force (that is, working or seeking work or available for work) in the population was 41.6% during 2020-21 (higher than 40.1% in 2019-20).
  • All-India female labour force participation rate (LFPR) in usual status has increased from 2.3% in 2021 to 25.1% as compared to 22.8% a year ago
• Worker Population Ratio (the number of employed people per thousand people) was 39.8% (an increase from 38.2% of the previous year)
• Migration rate: The migration rate, according to the survey, is 28.9%. The migration rate among women was 48% and 47.8% in rural and urban areas, respectively.
  • Migrants are defined as a household members whose last usual place of residence, at any time in the past, was different from the present place of enumeration.
• Employment-related migration: 4.4% of migration happened due to employment, which is a drastic reduction from the 10% in 2011
• Reverse migration: During the pandemic, reverse migration led to a higher rate of unemployment agglomeration in rural areas, which caused rural distress. However, the annual report on the unemployment rate shows a contradiction.

How does NSO collect sample?

The National Statistical Office (NSO) uses “rotational panel sampling design” in urban areas to assess the Labour Force Participation Rate (LFPR), Worker Population Ratio (WPR) and the unemployment rate, and visits selected households in urban areas four times. There was, however, no revisit for the rural samples.

What does report indicate?

Overall, the report suggests shifting the government’s policy directions as it has become more rural-centric. Creation of rural jobs other than in the agricultural sector and MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) could be priorities for the government at the Union and State levels.

Issues with the survey: Experts point out that a second visit to the households in rural areas could have provided a bigger and larger picture of unemployment, which did not happen in the survey.

 Measuring unemployment

Usual Status Approach: It records only those persons as being unemployed who had no gainful work for a major time during the 365 days preceding the date of the survey and are actively seeking work.

Weekly Status Approach: A person is considered to be employed if he or she pursues any one or more of the gainful activities for at least one hour on any day of the reference week.

The individual who may be employed on a usual status approach may however become intermittently unemployed during some seasons or parts of the year. Therefore, unlike the usual status approach, the weekly status approach can measure not only open chronic unemployment but also seasonal unemployment.

Current Daily Status Approach: Accordingly, a person having no gainful work even for 1 hour a day is described as unemployed for a full day. It is beneficial in sectors like farming and non-farming households where employment often fluctuates over a small period within a week.

Periodic Labour Force Survey (PLFS): PLFS was launched by National Statistical Office (NSO) in 2017 and is India’s first computer-based survey. It was constituted based on the recommendation of the Amitabh Kundu committee.

Insta Link:

Prelims Link:

1. What is NSO
2. How often government conducts Labour survey?
3. What are different measures of calculating unemployment in India?

Mains Link:

1. Despite a decrease in the unemployment rate, the government has been found lacking in providing gainful employment in India. Discuss the reasons behind it and suggest suitable remedies. (15M)

Q3

1. “A category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market.” Which type of unemployment is being discussed here? (UPSC CSE 2021)

(a) Cyclical Unemployment

(b) Frictional Unemployment

(c) Structural Unemployment

(d) Disguised Unemployment

Ans: c

Structural Unemployment is a category of unemployment arising from the mismatch between the jobs available in the market and the skills of the available workers in the market.

1. What is unemployment trap? (UPSC CSE 2021 Prelims)

(a) A situation when unemployment benefits discourage the unemployed to go to work.

(b) A situation where people working informally, without proper job contracts and thus sans any legal protection.

(c) It refers to the time lag between the jobs when an individual is searching for a new job or is switching between the jobs.

(d) It is loss of jobs due to changes in technology.

Ans: A

Unemployment trap is a situation when unemployment benefits discourage the unemployed to go to work. People find the opportunity cost of going to work too high when one can simply enjoy the benefits by doing nothing.

 Source: The Hindu