By Partha Pratim Mitra,

Different estimates on unemployment and labour force in India are not exactly in sync with one another. Lack of robust data and infrequent release of official data have made understanding of the ground realities nebulous. Partha Pratim Mitra explains the causes for the contrary trends

Differences in government & private estimates

A RECENT RESEARCH report by Citigroup on employment in India said the country will struggle to create sufficient employment opportunities even with a 7% growth rate, a claim strongly rebutted by the ministry of labour. It fails to account for the comprehensive and positive employment data available from official sources such as the Periodic Labour Force Survey (PLFS) and the Reserve Bank of India’s KLEMS data.

The KLEMS (K: Capital, L: Labour, E: Energy, M: Materials and S: Services) database provides employment estimates at an all-India level including public and private sectors, relying also on the PLFS for primary data. As per the provisional KLEMS estimates for 2023-24, employment increased by 168.3 million to 643.3 million in 2023-24 compared to 475 million in 2017-18, a six-year period. The Annual PLFS report of the Central Statistical Office also depicts an improving trend in the labour market. The unemployment rate, as per it, declined from 6% in 2017-18 to a low of 3.2% in 2022-23.

How are the PLFS findings different from those of the CMIE?

THE SURVEY BY the Centre for Monitoring Indian Economy(CMIE), a private body, said unemployment rate in India rose sharply to 9.2% in June 2024 from 7% in May 2024, according to its Consumer Pyramids Household Survey. The unemployment rate increased in urban India as well as in rural India. Rural unemployment rate rose to 9.3% in June from 6.3% in May. Urban unemployment rate climbed from 8.6% to 8.9%.

The PLFS report, in contrast, depicted  unemployment rate at 3.2% for both males and females of age 15 years and above during July 2023-June 2024.

The contrary trends in the estimates of government and private agencies have raised questions about the very basis of these estimates which needs an explanation.

Is the methodology adopted in each estimate different?

YES, THE METHODOLOGY is different for each estimate.

The KLEMS database, currently available for the period 1980 to 2024, is meant to provide a measurement tool to monitor and evaluate productivity growth at the industry as well as the aggregate economy levels. It uses data from different rounds of the employment-unemployment surveys (EUS), the PLFS, the National Account Statistics and the Annual Survey of Industries. In the absence of yearly data from the National Statistical Office, available data are used as benchmarks and interpolated for other years.

The data on employment and unemployment is collected through the Periodic Labour Force Survey conducted by the ministry of statistics and programme implementation (MoSPI) since 2017-18. The survey period is July to June every year. It is a sample survey. The number of households surveyed was 1,01,920 (55,796 in rural areas and 46,124 in urban areas) and number of persons surveyed was 4,18,159 (2,42,546 in rural areas and 1,75,613 in urban areas). Among the persons surveyed, the total number of persons of age 15 years and above was 3,19,773 (1,80,793 in rural areas and 1,38,980 in urban areas).

What is the CMIE methodology?

THE CMIE UNEMPLOYMENT database of about 5,22,000 people contains detailed information on the members of all households in the Consumer Pyramids sample. It provides employment or unemployment status for each member (who is 15 years of age or older) of each household in the database, besides age and gender details. Information is collected during each ‘Wave’ of the Consumer Pyramids survey. Since there are three Waves in a year, the complete employment and unemployment information is collected thrice in a year for the entire sample.

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Along with the difference in methodologies, there are a few other issues which contribute to the different findings such as the definition of household and the reference period of employment.

Why is this private survey popular?

THE CMIE SURVEY, unlike the PLFS data, comes out more frequently and is known as a high frequency survey with release of monthly data while PLFS releases quarterly and annual data. That enables it to catch changes in trends at the earliest, making the findings more current and useful and enabling the CMIE survey to find more takers among researchers and ordinary people alike.

The writer is former principal labour and employment adviser, ministry of labour and employment.