Economic Survey: Labour Markets, Employment Recover Beyond Pre-Covid Level

Net addition in EPF subscriptions during FY22 was 58.7% higher than in FY21 and 55.7% higher than that in 2019.
<div class="paragraphs"><p>(Source: Freepik)</p></div>
(Source: Freepik)

Labour markets and employment recovered beyond pre-Covid level with sustained effort in last few years, including world's largest vaccination drive in India, said the Economic Survey 2022-23.

The document tabled in the Parliament on Tuesday said, "Labour markets have recovered beyond pre-Covid levels, in both urban and rural areas, as observed in supply-side and demand-side employment data."

Quarterly urban employment data shows progress beyond pre-pandemic levels as the unemployment rate declined from 8.3 per cent in July-September 2019 to 7.2% in July-September 2022.

Reflecting rising formalisation of employment, net addition to EPFO payroll is steadily moving upward after swiftly rebounding from Covid-19, with the majority share coming from the youth.

The net addition in EPF subscriptions during FY22 was 58.7% higher than in FY21 and 55.7% higher than that in the pre-pandemic year 2019.

Net average monthly subscribers added under Employment Provident Fund Organisation increased from 8.8 lakh in April-November 2021 to 13.2 lakh in April-November 2022.

The swift rebound of formal sector payroll addition can be attributed to the Aatmanirbhar Bharat Rojgar Yojana, launched in October 2020 to boost the economy, increase the employment generation in post Covid-19 recovery phase, and to incentivise creation of new employment along with social security benefits and restoration of employment lost during the pandemic, it stated.

As per Annual Survey of Industries 2019-20, employment in the organised manufacturing sector has maintained a steady upward trend over time, with the employment per factory also increasing gradually, it noted.

Employment has been rising faster in factories employing more than 100 workers than in smaller ones, suggesting scaling up of manufacturing units, it also noted.

Year-on-year decline in monthly demand for Mahatma Gandhi National Rural Employment Guarantee Scheme work is emanating from normalisation of the rural economy due to strong agricultural growth and a swift bounce-back from Covid-19, it pointed out.

The noticeable rise in Rural Female Labour Force Participation Rate from 19.7% in 2018-19 to 27.7% in 2020-21 is a positive development, it stated.

Notably, India's female labour force participation rate is likely to be underestimated, with reforms in survey design and content required to capture the reality of working females more accurately.

As per Usual Status in Periodic Labour Force Survey, the labour force participation rate, Worker Population Ratio and unemployment rate in PLFS 2020-21 (July-June) have improved for both males and females in both rural and urban areas compared to PLFS 2019-20 and 2018-19.

The LFPR for males has gone up to 57.5% in 2020-21, as compared to 55.6% in 2018-19.

Female LFPR has gone up to 25.1% in 2020-21 from 18.6% in 2018-19. There is a notable rise in rural female LFPR from 19.7% in 2018-19 to 27.7% in 2020-21.

According to broad status in employment, the share of self-employed increased and that of regular wage/salaried workers declined in 2020-21 vis-à-vis 2019-20, driven by trend in both rural and urban areas. The share of casual labour declined slightly, driven by rural areas.

As per the Economic Survey, based on the industry of work, the share of workers engaged in agriculture rose marginally from 45.6% in 2019-20 to 46.5% in 2020-21, the share of manufacturing declined faintly from 11.2% to 10.9%, the share of construction increased from 11.6% to 12.1%, and share of trade, hotel & restaurants declined from 13.2% to 12.2%, over the same period.

The Economic Survey highlights measurement issues in calculating female LFPR.

The common narrative of Indian women's low LFPR misses the reality of working females integral to the economy of the household and the country, it stated.

Measurement of employment through the survey design and content can make a significant difference to final LFPR estimates, and this matters more for measuring female LFPR than male LFPR, it stated.

Survey states that there is a need to broaden the horizon of measuring work, which constitutes the whole universe of productive activities alongside employment, especially for women.

According to the latest International Labour Organisation standards, limiting productive work to labour force participation is narrow and only measures work as a market product.

It does not include the value of women's unpaid domestic work, which can be seen as expenditure-saving work such as collecting firewood, cooking, tutoring children, etc, and contributes significantly to the household's standard of living.

The Survey recommended that a wholesome measurement of 'work' may require improved quantification through redesigned surveys.

That said, there is further significant scope to nullify the gender-based disadvantages to enable free choice of women to join the labour market. Ecosystem services, including affordable creches, career counselling/handholding, lodging and transportation, etc., can further help unlock the gender dividend for inclusive and broad-based growth.

The PLFS conducted by the statistics ministry at a quarterly level for urban areas is available till July-September 2022.

The data shows an improvement in all the key labour market indicators in the quarter ending September 2022, both sequentially and over the last year, as per the Current Weekly Status.

The LFPR increased to 47.9% in July-September 2022 from 46.9% a year ago, while the worker-population ratio strengthened from 42.3% to 44.5% in the same period.

This trend highlights that the labour markets have recovered from the Covid impact, it pointed out.

Self-help groups (SHGs), having demonstrated their resilience and flexibility during Covid, can be an effective conduit to tap the rising willingness of females to work. The 1.2 crore SHGs, comprising of 88% all women SHGs, cater to 14.2 crore households, it stated.

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