What’s the news?

The issue of employment has been a central topic in economic policy discussions, especially in recent decades, as the correlation between economic growth and job creation has appeared fragile.

Central idea

The COVID-19 pandemic intensified economic disruptions, causing financial distress, surging unemployment, and rural migration. The 2022-23 labor force survey shows rising participation rates and lower unemployment but raises concerns with declining regular employment and a rise in self-employment.

The national labor force participation rate (15 years and above) has grown from 49.8% in 2017-18 to 57.9% in 2022-23.
Both rural and urban areas have witnessed increased participation, with a more significant rise in rural regions.
Female participation in rural areas increased from 24.6% in 2017-18 to 41.5% in 2022-23, indicating higher female engagement in the labor force.
However, this rise may also reflect economic distress in rural areas, pushing women to seek employment to augment family incomes, including work under MGNREGA.

The percentage of self-employed individuals increased from 55.6% in 2020-21 to 57.3% in 2022-23.
Concurrently, the share of regular wage/salaried employment declined from 21.1% to 20.9%.
The proportion of workers engaged in informal sector enterprises in the non-agricultural sector also rose from 71.4% in 2020-21 to 74.3% in 2022-23.

While unemployment rates have fallen across the board, especially among the youth (age group 15-29), the decline in regular wage/salaried employment and the increase in self-employment raise concerns.
These trends indicate that the economy may struggle to create sufficient productive and well-paying job opportunities to absorb the annual influx of millions into the labor force.
Inadequate job creation remains the most significant challenge facing policymakers.

The recent labor force survey highlights both positive and concerning trends in India’s labor market. Addressing the challenge of job creation and ensuring that these jobs are productive and remunerative should remain a top priority for policymakers in India’s economic development agenda.