India’s unemployment rate fell to a six-year low of 3.2 per cent in the July-June 2022-23 period, down from 4.1 per cent in the same period the previous year, according to the latest annual Periodic Labour Force Survey (PLFS) report.
The report, released by the National Statistical Office (NSO) on Monday, showed a decline in unemployment rates in both rural and urban areas during the 2022-23 period to 2.4 per cent and 5.4 per cent, respectively, from 3.2 per cent and 6.3 per cent in the 2021-22 period.
The unemployment rate for rural women (1.8 per cent) was lower than that for rural men (2.7 per cent) in 2022-23; in urban areas, the rate was higher for females (7.5 per cent) compared to males (4.7 per cent).
The unemployment rate for a one-year period under the so-called “usual status” for persons aged 15 years and above declined for the fifth consecutive year since the survey was launched in April 2017.
Before the PLFS, the National Sample Survey Organisation (now known as NSO) used to release data related to employment and unemployment based on household socioeconomic surveys once every five years.
In the 2017-18 period, the unemployment rate at the all-India level stood at 6 per cent.
In usual status, employment is determined based on a reference period of 365 days preceding the date of the survey, as distinct from “employment status”, which is determined based on a reference period of seven days, known as the current weekly status (CWS) of the person.
The latest survey also showed a significant increase in the labour force participation rate (LFPR), which represents the share of people either working or seeking work in the population, to 57.9 per cent in the 2022-23 period from 55.2 per cent in the 2021-22 period at the national level.
The rural LFPR stood at 60.8 per cent, up significantly from 57.5 per cent in 2021-22, while its urban equivalent increased to 50.4 per cent from 49.7 per cent over the same period.
But, there has been a strain on the quality of employment as the share of people having regular or wage employment declined to 20.9 per cent in the 2022-23 period from 21.5 per cent in the previous year’s period.
On the other hand, the share of people engaged in self-employment, including unpaid household work or running a small business, increased to 57.3 per cent in the period under review from 55.8 per cent a year ago.
Santosh Mehrotra, visiting professor at the University of Bath, pointed out that contrary to popular belief, labour markets are yet to recover as the share of wage employment is significantly and consistently lower than in the pre-pandemic period, leading to an increase in self-employed individuals. In 2018-19, wage employment accounted for 23.8 per cent of total employment.
“Wage employment is a sign of improving labour markets.
"However, its decline in the past year and the corresponding increase in labour force participation rate shows that more and more people are joining the labour markets and the economy isn't able to generate enough decent jobs for them, which is leading them to engage in self-employment either as unpaid household help or running a small business.
"In a way, the impact of reverse migration during the pandemic which saw the addition of nearly 50 million people to agriculture is yet to be overcome,” he added.