The Periodic Labour Force Survey conducted by the NSSO shows that, of India’s labour force of 487 million, about 458 million are gainfully employed—i.e. 29 million of the labour force is unemployed, making for an unemployment rate of 6%. The NSSO jobs data reveals a few interesting aspects. While the labour force participation rate (PLFR) was 39.5% in June 2012, it came down to 36.95% in June 2018, which meant the number of unemployed increased by 18 million between 2012 and 2018, despite the number of people looking for jobs falling by 260bps over the period. What’s worse, the female labour force contracted by 13 million and the youth (15-29 years) PLFR fell by 650bps. The slide was more pronounced in rural areas.
One of the positives that the NSSO data throws up, as per a Kotak Institutional Equities analysis, is that though agriculture remains the main employment provider despite accounting for a relatively smaller share of the GVA, employment, particularly in rural areas, is moving away from it and towards services. A host of factors are likely responsible, from improved rural infrastructure to availability of credit. Another positive is the shrinking informal employment and the rising formal employment—while casual employment slid by 510bps, salaried employment rose by 480bps. A part of the slide in informal employment can perhaps be explained by the effects of the demonetisation and GST shocks.