Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

[op-ed snap]Unemployment in India: The real reason behind low employment numbers

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Mains Paper 3: Economy | Development & employment

From UPSC perspective, the following things are important:

Prelims level:Periodic Labour Force Survey (PLFS).

Mains level: Mismatch in actual job growth and data being provided and reasons why there is a mismatch


NEWS

CONTEXT

Last month saw a series of discussions related to employment numbers reported in the leaked Periodic Labour Force Survey (PLFS).

Reason Behind Different Employment rates reporting

  • There to be a stark difference in the methods used to choose survey households.
  • The PLFS is based on the education level of households and the EUS is based on expenditure (urban) or livelihood (rural) of households.
  • Any direct comparison of the survey results of the PLFS with the earlier EUS would lead to erroneous inference about the employment scenario.
  • The sample chosen in the PLFS was not quite representative of the underlying Indian population in terms of the achievement of secondary education leading to lower estimates for the population, labour force participation and employment.

The EUS

  • The EUS, which was last conducted during the 68th round of the NSSO for the duration July 2011 to June 2012, is a comprehensive survey providing a complete scenario of the labour force, across sectors like agriculture, industry, services, etc, in both rural and urban areas.
  • In any survey, a sample of locations are chosen judiciously to represent the entire country.
  • For the EUS 2011-12, the selection of locations for First Stage Units (FSU) in the sample, urban and rural classification was made based on the data from Census 2001 and each town with a population of more than 10 lakh was represented as a separate group in sample locations.
  • For the Second Stage Strata (SSS), the criteria for choosing households in both the rural and urban areas was household affluence, as shown in the accompanying table.
  • In rural areas, 50% of chosen households are those with principal earnings from non-agriculture-based activities.
  • For urban areas, the Monthly Per Capita Expenditure (MPCE) available from the previous rounds of the NSSO household surveys forms the basis for selecting households.
  • The sample also has good representation of the middle class engaged in gainful employment-related activities.

The PLFS

  • It provides continuous update on the employment situation in India (quarterly for urban and yearly for rural areas).
  • This survey has, for the first time, used the Computer Assisted Personal Interviewing (CAPI) method to capture data—a great step towards technology adoption. The sample size of various NSSO surveys are comparable and may assumed to be in line with the last EUS survey of 2011-12.
  • There is a major change in the criteria for the selection of households in the SSS for both rural and urban areas, based on the number of members in the household having general education up to secondary level (10th standard).
  • At first glance, the household selection criteria for the PLFS seems aspirational in nature, as the choice of households is dependent upon the education level of the household instead of the earlier criteria of affluence/expenditure.
  • It is true that mostly formal or better-playing employment is linked to the education level of the household members and this move by the PLFS is really aspirational in nature.
  • Percentage of people above secondary level as of 2011 is quite low, at 21.51%, which goes further down to 15.3% for the rural population but has a healthy number of 35.24% for the urban population. Not all informal or daily wage employment requires more than secondary level education. A healthy literate level of 63.07% implies that a large portion of the population has basic literacy, which is what is required for daily wage employment.
  • It can be seen that there are 66.42% of households (75.61% rural and 46.20% urban) with no family members with general education above secondary level. Whereas only 25% of households have been sampled based on these criteria, leading to a huge mismatch between the reality and the samples drawn. People from these households are mostly daily wagers or engaged in informal employment, which would also show lower employment estimates.

Conclusion

  • These numbers provided a good view on the education level of the people in India and showed that the stratification criteria used in the PLFS is not quite aligned to the secondary and above secondary levels of education in the country.
  • This under sampling, leading to under-representation of such households, is leading to lower estimates of the people for this group in labour force participation and employment rate.
  • The percentages of households for the urban area, though far from the sample sizes are closer to the reality in urban areas compared to rural areas.
  • It would be proper to wait for the next round of the PLFS (2018-19) that is under progress and compare its findings with the results of the PLFS (2017-18) to make a more correct assessment of the employment rate in the country.

 

 

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