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Resource centre on India's rural distress
 
 

A disconcerting picture behind the headline numbers -Ishan Anand

-The Hindu

There is evidence to suggest that the PLFS data may underestimate the loss of earnings and fall in consumption

The third annual round of the Periodic Labour Force Survey (PLFS) data conducted during July 2019-June 2020 was released recently. The PLFS captures key indicators of the labour market such as the labour force participation rate (LFPR) — the proportion of population working or seeking work; worker-population ratio (WPR) — the proportion of population that is working; and the unemployment rate (UR) — the proportion of population in the labour force that is seeking but unable to find work. It also provides data on the earnings of different segments of workers.

The PLFS 2019-20 was expected to provide official estimates of the labour market distress that followed dwindling GDP growth and a lockdown following the novel coronavirus pandemic that brought several economic activities to a standstill. The data, however, show a decline in the unemployment rate to 4.8% in 2019-20 — the lowest in three years. While the headline numbers may seem pleasing, a detailed analysis paints a rather disconcerting picture.

Falling unemployment rate

The LFPR, WPR and UR are measured using two approaches — usual status and current weekly status. The usual status considers the activity of an individual over a relatively long period during the last 365 days, whereas the current weekly status is based on activity performed during the reference period of the last seven days.

The unemployment rate, as measured by the usual status, fell from 6.1% in 2017-18 to 4.8% in 2019-20. This is because even as the LFPR increased from 36.9% to 40.1%, the WPR increased from 34.7% to 38.2% during the same period. In other words, while there was an increase in the share of the population in the labour force over the last three years, there was an even higher increase in the share of those who were able to find work, and hence unemployment fell.

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