PLFS 2022-23: Good news, bad news, and the unanswered questions

The fifth round of annual periodic labour force survey (PLFS) of 2022-23 is out but the buzz around it is missing. It’s not being cited to talk about job creation, formalisation of jobs or expansion in wages and social security cover. Remember, jobs are the best means for redistribution of wealth – especially when an economy is growing, creating more wealth.

But before explaining the silences, first the good news.

Three good news

The PLFS of 2022-23 points to a flourishing job market. All the three headline numbers – worker-population ratio (WPR), labour force participation rate (LFPR) and unemployment rate (UR) – are consistently improving since 2017-18.

WPR reflects proportion of population working – also called “employment rate” (ER) in advanced economies. Higher WPR means more people are working, raising national income (GDP) and productivity. It is captured in different ways – like “usual status”, “current weekly status” (CWS), “15 years and above”, “all ages” etc. In the present case, only the CWS and “all ages” data are used for two reasons: (i) CWS is the standard method used by advanced economies and hence, can be used for comparisons (ii) “all ages” catches the Indian reality better because, unlike advanced economies, Indian workforce has good presence of children and elderly (beyond retirement age).

India’s WPR in CWS for “all ages” is consistently going up – from 32.7 in 2017-18 to 38 in 2022-23.  What about OECD countries (which is a mix of advanced and emerging economies)? It averaged 71% in Q2 (April-July) of 2023[1] and remained higher than 66% even during the pandemic 2020. So, the OECD average is way higher than India’s 38%.

LFPR reflects workers (men and women) as well as those looking for work (“active population”) – and a good indicator of hopes and aspirations of people. India’s LFPR in CWS status for all ages is also going up (except for a dip in 2021-22) – from 35.9 in 2017-18 to 40 in 2022-23. For women (FLFP), their participation is also going up from 15.8 to 23.7 during the same period.

In comparison, the OECD’s average LFPR was 73.7% in Q2 of 2023 and remained above 70% even during the pandemic. Its FLFP was 66.7% in Q2 of 2023 and has always remained close to the LFPR (marginally lower). Here too, India is way down.  

Unemployment rate (UR) reflects how many are looking for jobs but can’t find. In CWC, India’s UR has gone down from 8.9 in 2027-18 to 5.1 in 2022-23. The OECD average is below 5%.

All these are improvements but that is the end of good news from the PLFS of 2022-23.

Flight from good jobs to bad

The distribution of jobs by status shows:

1. Best quality jobs, “regular wages/salaried” have fallen from 22.8% of the total jobs in 2017-18 to 20.9% in 2022-23.

2. Bad quality jobs, “casual”, are also falling from 24.9% to 21.8% during the same period.

Where are the workers going?

They are shifting to “self-employment” – either becoming (a) “own account” workers and employers or (b) “helper in household enterprise” – an officialese for unpaid worker – during the same period (2017-18 to 2022-23).

3. Self-employment has risen from 52.2% to 57.3%.

4. Unpaid workers have increased from 13.6% (of the total workforce) to 18.3% during the same period.

5. Women unpaid workers are rising rapidly – up from 31.7% of total women workers to 37% during the same period. So, a swell in the FLFP mentioned earlier is actually bad news for women.

Thus, the flight of workers from regular wages/salaried and casual to self-employment is swelling the ranks of unpaid and vulnerable workers, mainly women. This assessment gets reinforced by other findings of the PLFS of 2022-23.

Sectoral distribution of jobs shows a shift from high-productive, high-paying manufacturing to low-productive, low-paying agriculture during the same period of 2017-018 to 2022-23.

6. Manufacturing jobs consistently falling from 12.1% to 11.4%.

7. Agriculture jobs rising from 44.1% to 45.8% (it had fallen to 42.5% in 2018-19).

8. Services jobs are fluctuating (41.7% to 44.4%).

This is reverse structural (Lewisian) transformation – pointing to the impact of awry GDP growth.

Falling wages and social security

9. The wages are going down for different categories of workers. For regular wages/salaried, average ‘real’ wage is negative (-) 2.9%; for self-employed, negative (-) 1.8%; for casual, a marginal improvement of (+) 0.6%.

10. Social security is tracked only for the best quality jobs – regular wages/salaried. Here, the situation is worsening. Those with “no social security” is rising (one of PF/pension; gratuity; healthcare/maternity benefits etc.) – from 49.6% to 53.9%.

What happened to the Code on Wages of 2019 and the Code on Social Security of 2020 promising “universal” minimum wages and social security cover to domestic workers, gig workers, platform workers and home-based workers?

Both laws remain non-operational (as do the two other new labour laws, the Industrial Relations Code of 2020 and Occupational Safety, Health and Working Conditions Code of 2020). There is no sign yet when those will be implemented and the precarity of workers is worsening by the year.

Rise in informal enterprises

‘Proprietary and partnerships” in no-farm sectors are classified as informal sector enterprises – by the PLFS. With the government’s push for formalisation – contributing to PFs through the Prime Minister’s Rozgar Protsahan Yojana (PMRPY) since 2016 and the GST of 2017 – it should be going up. But PLFS reports from 2017-18 to 2022-23 show:

11. Number of proprietary and partnerships in non-farm sector (informal) is consistently going up from 68.2% to 74.3%.

The inevitable conclusion is that the formalisation push is not working. There are those who quote EPFO’s monthly data – not annual data which is more accurate – to claim millions of new jobs are being created. Instead, it’s the PLFS reports which provide the over-all picture about workforce and show a spike in informal enterprises? The EPFO data is about formal jobs only. The EPFO’s annual reports does show, in six years between FY16 and FY22 (up to which data is available), the number of “regular contributors” to the EPFO has increased by 8.7 million – that is, a mere 8.7% of the 100 million new jobs in a decade promised in March 2015.

Seven unanswered Questions

The PLFS being a comprehensive annual survey, it is important for it to reveal some fundamental or basic information about workers and workforce. The fifth in series, the PLFS 2022-23 fails to say:

(i)   How many people are working (total number) in India?

(ii)  How many of them are children or above the age of 60 or 64?

(iii) How many new jobs are created annually or in the past six years (since the first annual PLFS report of 2017-18)?

(iv) Which sector is producing (like agriculture) or shedding (like manufacturing) jobs and how many?

(v)  What is the total number of informal workers? For the past 10 years, the Ministry of Labour and Employment shows 94% workers are in “unorganised” or informal sector.

Earlier, this information was provided by the Planning Commission every year – after corroborating with other surveys and data. Now, neither the government nor the Planning Commission’s substitute NITI Aayog releases this data.

Equally importantly, the PLFS 2022-23 doesn’t explain:

(vi) Why all the headline employment numbers – WPR, LFPR (including FLFP) and UR – are going up consistently since 2017-18, despite a series of adverse events that caused overnight loss of jobs and business—GST and demonetisation, Covid lockdowns?

Altering data presentation

Incidentally, PLFS 2022-23 has changed all the data tables being provided for decades?

For example, “statement 8” in all previous PLFS is about WPR in “usual” and “CWS” status. But in the PLFS of 2022-23, it is “percentage of workers engaged in proprietary and partnership”. The same is true about a large number of “detailed tables” given in the appendix. The total number of tables has been drastically reduced – with the total pages going down by nearly half.

This ends up reducing critical information. Here is one question the answer to which may require hiring both data and subject expert:

(vii) How many workers are employed in government sector?

The PLFS of 2020-21 carried a short table giving distribution of workers in enterprises – from which the percentage of workers in government establishments could be easily calculated – 6.8% of the total workforce in 2020-21. Now it has been deleted from the PLFS of 2022-23 altogether.

Earlier, all such deletions were approved by an independent National Statistical Commission (NSC). Now, bureaucrats do as they please – to confound both those in the government and outside.