Indian labour workforce and the dilemma stemming from survey findings

The recently released RBI KLEMS data reveals many interesting facets. For instance, the total labour force in India is at 59.7 crore, which is nearly equivalent to 56.8 crore as per the ASUSE survey. This figure is significantly different from private employment surveys. If we look at the decadal employment numbers, RBI data shows that during FY14-23, India created 12.5 crore jobs, compared to only 2.9 crore during FY04-14. Even if we exclude agriculture, the total number of jobs created in manufacturing and services is at 8.9 crore during FY14-FY23 and 6.6 crore during FY04-FY14.

Besides, the total employment reported MSMEs registered with the MSME Ministry has crossed the 20-crore mark, as per the Udyam registration portal. As of July 4, around 4.68 crore Udyam-registered MSMEs reported 20.19 crore jobs, including 2.32 crore by GST-exempted informal micro enterprises, up by 66 per cent from 12.1 crore jobs last July.When one takes the share of EPFO with KLEMS, the FY24 share at 28 per cent is drastically lower than the average share of fie-year period (FY19-FY23) at 51 per cent.

As EPFO data capture primarily low-income jobs, the declining share is quite encouraging and indicatesthat better paid jobs are getting available in the economy. Also consider the fact that the share of formal labour force is 55 per cent as per ASUSE survey and 61 per cent as per the PLFS survey. Given this scenario, one wonders why the government numbers vary from those of private employment surveys. Significantly, the State Bank of India's economic research wing has come up with a couple of possible logical reasons.

One of them is that private surveys, at times, possibly suffer from innate flaws in their sample selection technique, thereby under-representing women, children and the poor while over-representing the other extreme. Such unemployment numbers are more skewed, that is, concentration is inclined towards higher values, signifying that unemployment measured through such surveys are more on upside in comparison to PLFS.

It may also be factually incorrect to account for the surge in workforce, particularly females in agriculture, as a sign of employment distress by noted labour economists.

Moreover, the fact is that jobs in agriculture account for 60 to 70 per cent of the recent increase in female workforce in rural areas. This is attributable to significant increases in work opportunities in agriculture that have arisen from (a) rapid growth in the agriculture sector output (about four per cent annual growth) creating extra demand for labour, (b) a fall in employment of rural males in agriculture by about 13.3 million between 2019-20 and 2022-23, caused by their decision to shift to non-agricultural activities in rural and urban areas thereby vacating jobs that could be taken up by female workers and (c) the reluctance of a section of male youngsters in rural areas to work on the farms, which has contributed to creation of employment opportunities for female workers.

There are many labour economists, who think that a negative view should not be taken of the increase in employment of unpaid female workers and the rise in the share of self-employed. One therefore has to be cautious about dealing with and interpreting survey findings.