The National Sample Survey Office’s Periodic Labour Force Survey showed that India’s labour force participation rate, which is the proportion of the population working or seeking jobs, fell to 49.8% in 2017-’18 from 55.9% in 2011-’12, Business Standard reported on Monday.
In 2004-’05, 63.7% of the population was part of the labour force.
The study showed that half of India’s working-age population is not contributing to any economic activity for the first time. A higher decline in labour force participation rate, up by 11.5 percentage points, was witnessed in 2011-’12, during the United Progressive Alliance government’s second term in office.
The numbers are part of the NSSO’s periodic Labour Force Survey Report for 2017-’18, which has not been released by the government yet. However, Business Standard has accessed the survey, and earlier reported that it found the unemployment rate in India at a 45-year-high of 6.1% in 2017-’18. This was the first full financial year after the government demonetised high-value currency notes in November 2016.
“It’s a serious cause of worry as you are unable to utilise the demographic dividend factor – especially keeping in mind the fact that 65% of the population is in the working age group,” said Indian Council for Research on International Economic Relations senior fellow Radhicka Kapoor.
According to economists, a decline in the labour force participation rate, along with a high rate of unemployment, is a cause of concern.
Between 2011-’12 and 2017-’18, the proportion of the active labour force declined twice for women. The labour force participation rate for women fell by around eight percentage points to 23.3% in 2017-’18, while that for men declined by four percentage points to 75.8%. The report showed that only about a quarter of the women in India are either working or seeking jobs.
The decline in labour force participation rate was also higher in rural areas, from 67.7% to 58.7%, than in urban areas, from 49.3% to 47.6%. The gap in labour force participation rate has narrowed between urban and rural areas due to a decline in the active labour force in villages.
Although the female labour force participation rate in urban areas stayed almost the same, at 20.4%, it fell sharply by more than 11 percentage points in rural areas.
“Education plays a big role in the declining size of the labour force. But case studies and field reports also suggest that lack of suitable work, especially for women, is not readily available,” said Amit Basole, head of the Centre for Sustainable Employment at Bengaluru-based Azim Premji University. “Flexibility in work timings and proximity to their households are an important factor for females.”