Decoding PLFS Data: Does Drop in Unemployment Mean Jobs Being Created? Where?

A regular-salaried employee works an average of 50 hours a week, yet monthly income remains stagnant at Rs 21,000.

We decode the recent PLFS annual report to understand how many jobs were created and in which sector; how many educated youth are unemployed; what is the average monthly income of payrolled employees and how many hours per week do Indians work.

(Image: The Quint/@AroopMishra)

One in ten among India’s young workforce is unemployed, according to the annual report of the Periodic Labour Force Survey (PLFS) published by the Union government on 23 September.  

PLFS data suggests that the overall unemployment rate has nearly halved from 6.0 in 2017-18 to 3.2 in 2023-24 and that the Labour Force Participation Rate (LFPR) has increased by over 10 percent.

Does this mean jobs are being created, and if so, then where? 

The data also suggests that even though a regular-salaried employee works an average of 50 hours a week, their average income remains almost stagnant at Rs 21,000 per month. Besides, it is evident from the data that the employment and wages gap between men and women has hardly been bridged.  

The Quint decode the PLFS data to understand indicate how big India’s unemployment problem is: 

But First, What Does LFPR Mean? 

The total number of people working and those looking for work comprise the Labour Force. Hence, Labour Force Participation Rate (LFPR) is defined as the number of people in the Labour Force as a percentage of the total population.  

As per PLFS data, LFPR has increased by 10.3 percent in the last five years, which means more people were added into India’s labour force. It is evident from the data, that the growth was three times in rural areas as compared to urban ones.  

If we look closely at the industries and type of work the labour force is engaged in, we will find clues to emerging patterns.  

For instance, the number of women engaged in agriculture in rural areas has increased, or the number of men working in factories in cities has decreased.

“This when seen with the table above shows that regular salaried jobs have stagnated for men and reduced for women in cities. Jobs in manufacturing or services have hardly seen any growth over the last few years. So, urban women are either engaging in domestic work or returning to their villages to work in farms, which is unpaid familial work,” reasoned Deepanshu Mohan, Professor of Economics and Dean, OP Jindal Global University. He is Director, Centre for New Economics Studies and a Visiting Professor, London School of Economics and University of Oxford.

Similarly, when we look at the data for men living in urban areas, it is evident that though regular salaried jobs have been stagnant, it is those who are engaged in self-employment that have increased.  

“More and more people are becoming street vendors, or opening their own shops or working in utilities, as plumbers, electricians, drivers, etc. This job creation is not worthy of celebration,” Mohan argued. 

What About Unemployment Rate?

The number of people unemployed as a percentage of the total labour force is the unemployment rate.  

According to PLFS data, India’s unemployment rate has consistently declined over the last five years, falling to nearly half its value during the pre-Covid times. Again, the unemployment rate in urban areas is nearly double than that in rural areas, and women in urban areas continue to bear the maximum brunt of joblessness—with 7.1 percent women in the labour force unemployed.  

It is important to note here that PLFS defines an individual as employed if they are able to work at least 30 days in a year or at least an hour in a week.  

According to an independent think tank Centre for Monitoring Indian Economy (CMIE), India’s unemployment rate was at an eight-month high of 9.2 percent in June this year. 

“Working 30 days a year doesn’t count as employment. Even MGNREGA promises 100 days of work to rural people. These parametres are hopelessly outdated. There needs to be consensus on data collection. Plus, we still don’t have a recent population census. Without it, neither of the data sets is truly accurate,” said Sutanu Guru, Consulting Editor with CVoter.

'Youth Unemployment Unchanged, Marginal Job Creation in Male-Dominated Sectors'

PLFS data suggests that 10.1 percent youth (15-29 years) in the labour force remain jobless. However, CMIE data indicates that 44.49 percent youth in 20-24 years group and 14.33 percent in 25-29 years category remained jobless in the Oct-Dec'23 quarter.   

“While diagnosing two data sets, we can look at each on its merits. While PLFS used a larger, more consolidated data set, CMIE’s data is more frequent. While it may seem on a macro level that it is declining, youth unemployment remains more or less unchanged,” Mohan said. 

He attributed the large proportion of unemployed urban women to the government’s inability to create jobs in sectors, where the gender ratio is relatively balanced. 

“For instance, education and healthcare sectors have hardly witnessed any job growth and remain underfunded. The marginal increase in jobs has been in the trade and transport, which are male-dominated sectors. In cities, where gig work and utilities sectors witnessed job creation, it employs largely male workers,” Mohan elaborated. 

More Than Half India’s Salaried Employees Working Without Social Security Benefits

The number of salaried employees who are working without any social security benefits such as provident fund, gratuity, health insurance, maternity leave, etc remains overwhelmingly large at 58.8 percent—registering an increase in the number of women over the years. And this does not include those engaged in the agriculture sector.  

The Quint had earlier reported that a majority of the 77-lakh-strong gig workforce also continue to work without social security benefits. 

In addition, the number of hours worked per week for a regular-salaried employee is nearly 50—which means that a regular-waged worker works an average of ten hours for five days a week or 8.5 hours for six days in a week.  

“India has a very serious employment issue. Only those with government jobs are definite beneficiaries of all these social security benefits till they reach 60 years of age. The remaining lakhs of men and women in the workforce are hopelessly vulnerable to exploitation,” Guru remarked.

‘Stagnating Incomes to Pinch People, Political Parties’

According to PLFS data, the average monthly earnings of a regular salaried employee is a little over Rs 21,000 — with the income inequality among men and women hardly bridging.  

“While average monthly income was increasing from 1991 to 2019-20, post-Covid they have largely plateaued. With rising inflation, especially food prices, this is bound to pinch the people as well as political parties,” Guru told The Quint.  

In the context of inflation, Mohan said that these “low incomes will push workers to breach the poverty levels and compel migrant workers to return to their villages and engage in familial agriculture work, that largely remains unpaid.”  

He also asserted that India’s unemployment problem is two-pronged:  

1. Underemployment or disguised employment - where an individual is employed at a job which does not fully utilise their skills or experience and pays inadequately with respect to their economic needs. Case in point would 40,000 graduates and 6,100 postgraduates applying for the job of a sanitation worker in Haryana.  

2. Skill Mismatch 

The International Labour Organisation (ILO) in March this year had noted that the share of educated youngsters, with secondary or higher education, among all unemployed people has doubled — increasing from 35.2 percent in the year 2000 to 65.7 percent in 2022. 

PLFS data too indicates that 7 percent of those with secondary or higher education have been unemployed in 2023-24. The number is again higher — nearly double — for women (10.6 percent) when compared to men (5.9 percent). 

“Many educated youth in the services sector have resorted to agriculture or are now self-employed. The government’s skill training initiatives largely provide vocational training but an aspirational youth does not want to become an electrician or a plumber,” Mohan said.