Referring to the periodic labour force survey (PLFS) data since the pre-pandemic days to the latest payroll data of the Employees’ Provident Fund Organisation (EPFO), the Survey found an ‘all-round improvement’ in the labour market dynamics, though the latest Centre for Monitoring Indian Economy (CMIE) data points at elevated unemployment rate for the country.
Just before the pandemic hit the country by March-April 2020, labour market indicators — labour force participation rate (LFPR) and worker population ratio (WPR) — were all showing signs of improvement, though unemployment rate (UR) at 9.1% was higher in the January-March, 2020 quarter than the previous two quarters for urban youth aged 15 and above.
However, CMIE’s latest data for December, 2021 found country’s unemployment rate was at a four-month high of 7.91%; also at four-month high was unemployment in urban areas at 9.3%.
In a recent article, CMIE’s MD & CEO Mahesh Vyas said, “The unemployment rate in India is elevated compared to levels experienced in the recent past. In 2018-19, the unemployment rate was 6.3% and in 2017-18 it was 4.7%.”
LFPR is defined as the percentage of population in the labour force, comprising persons both working or seeking work. WPR is defined as the percentage of employed persons in the total population. UR is defined as the percentage of unemployed persons in the labour force.
The nation-wide lockdown imposed late March, 2020 adversely impacted the urban labour market. In the first quarter of 2020-21, the UR for urban sector rose to 20.8%. The LFPR and WPR also declined in cities and towns to 45.9% and 36.4% during the quarter.
“With the revival of economy in the subsequent quarters of 2020-21, labour market indicators showed a swift recovery. The UR (for urban youth) gradually declined during this period to reach 9.3% in Q4 of 2020-21. The UR for males as well as females, aged 15 and above, recovered to the pre-pandemic levels. Both the LFPR and WPR for males as well as females, aged 15 and above, almost reached their pre-pandemic levels during the last quarter of 2020-21,” the Survey said.
Since PLFS data come with a ‘large lag’, the Survey used subscriptions data of the Employees’ Provident Fund Organisation (EPFO) and demand for work under Mahatma Gandhi National Rural Employment Scheme (MG-NREGS) as proxy indicators to analyse the latest trends in urban and rural areas, respectively. While the EPFO data covers the low paid workers in medium and large establishments of formal sector, mainly in the urban sector, demand for work under MG-NREGS is an indicator of rural labour markets.
“The latest payroll data of EPFO shows that the net addition in EPF subscribers reached 13.95 lakh during the month of November 2021, which translates into growth of 109.21% from November 2020, and a growth of 25.65% from October, 2021. Thus, the monthly net addition in subscriptions during 2021 has not only been higher than the corresponding monthly values in 2020, but they have also surpassed the levels of the corresponding months during pre-pandemic year 2019. This points to the formalisation of the job markets as well as new hiring,” the Survey said.
Similarly, analysing the latest data on demand for work under MG-NREGS, it found employment under the scheme peaked during the nation-wide lockdown in 2020 and the demand for MG-NREGS work has stabilised after the second Covid wave.