Number Theory: Who is being added to India’s labour force?

This is the first of a four-part data journalism series on the key trends seen in the Periodic Labour Force Survey

The Periodic Labour Force Survey (PLFS) conducted between July 2022 and June 2023 was the first one conducted after the Covid-19 pandemic almost completely subsided. Data released from the survey in October shows that key trends in India’s labour market remain the same as during the pandemic: a rise in labour force participation, a fall in the headline unemployment rate, an increase in unpaid work, and a shift in work to rural areas. That indicates these trends may be here

Data released from the survey in October shows that key trends in India’s labour market remain the same as during the pandemic (PTI)

How much has India’s labour force grown?

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  How much has India’s labour force grown?

  It is difficult to find the drivers of India’s labour force growth without answering this question. However, PLFS does not answer this question directly. According to the survey, India’s labour force participation rate (LFPR, or the share of population that is working or looking for work) has increased from 36.9% in the first PLFS conducted in 2017-18 to 42.4% in the latest PLFS conducted in 2022-23. If these figures are applied to India’s population projections from National Commission on Population (NCP), one can get estimates of India’s labour force. This shows that India’s labour force has increased from 484 million in 2017-18 to 585 million in 2022-23, a growth of 101 million. As expected, India’s population growth is lower in comparison: 69.5 million.
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  Is the labour force growth solely on account of a rise in working-age population?

  Not completely. While all projections suggest that India’s working-age population is still growing, this alone cannot account for the addition of 101 million to the labour force since 2017-18. The population of those in the 15-60 years age group has grown by 30 million between the first and latest PLFS, according to PLFS ratios applied to total population projections. However, the age group now participates in the labour force much more: 62% in 2022-23 compared to 53% in 2017-18. It is this combination of higher LFPR and growth of the age group that ensures that 90% of the labour force growth is because of this age group. To be sure, this is not just because of the young; the 40+ age group alone accounts for half the addition to the labour force since 2017-18.
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  A large chunk of the addition to the labour force is from women

  This is expected from the trends in LFPR seen in the PLFS series. Women’s LFPR has grown from 17.5% in 2017-18 to 27.8% in 2022-23, while men’s LFPR has remained almost stagnant (55.5% in 2017-18 to 56.2% in 2022-23). Therefore, most of the labour force growth is because of women. The size of women’s labour force has grown from 112 million to 186 million. This means that women have contributed 74 million of the 101-million growth in the labour force.
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  With a bump in population, rural areas account for almost all additional labour force

  This is a worrying trend seen in PLFS – and one that suggests that the rise in women’s LFPR needs to be taken with a pinch of salt. If PLFS ratios are applied to total population projections, rural areas alone account for 97 million or 96% of the growth in labour force since 2017-18. This is again a combination of both the population growth of rural areas and higher labour force participation in rural areas. The rural population has grown by “only” 88 million, but rural LFPR has increased from 37% to 43.4% (mostly because of growth in women’s LFPR in rural areas).
• Rural population growth is not expected in an urbanisng India. How has it happened? This question can be answered with certainty only for 2020-21 PLFS, the first year when rural population share increased in PLFS. The 2020-21 PLFS also conducted a survey on migration. This showed that urban-to-rural migration increased sharply after the Covid-19 pandemic, as HT had reported at the time. It is not possible to say with certainty what might have happened after 2020-21 because the PLFS has not conducted a migration survey again. This makes it difficult to judge whether natural population growth or migration patterns are the reason for the growth in rural population. This is the first of a four-part data journalism series on the key trends seen in the Periodic Labour Force Survey. The second part will look at the number and kind of jobs created since 2017-18.