Increasing Share Of Unpaid Workers Among Labour Force Is Ominous

By Krishna Jha

Indian economy, which is passing through one of its worst phases in history, seems set to get another major hit in the coming days. The rating agency Crisil has said the GDP growth is likely to fall to 6.8 per cent in FY25 from 8.2 per cent in FY24. The rating agency has attributed the fall in the GDP growth to the high interest rates and lower fiscal impulse in the economy.

This growth estimate is lower than the 7.2 per cent estimated by the Reserve Bank’s Monetary Policy Committee (MPC) earlier last month. Although Crisil tried to cover the bleak GDP growth outlook by claiming that the growth will become more balanced as agriculture and private consumption — last year’s laggards — are poised to rise, it has given no concrete basis for its claims. All that it could say about this is that food prices should start easing at least sequentially in the second half of this fiscal given the healthy monsoon season. “Easing food inflation and benign non-food inflation is expected to bring down headline CPI (Consumer Price Index) inflation,” it said.

Real GDP growth moderated to 6.7 per cent on-year in the first quarter this fiscal from 7.8 per cent in the previous quarter. Crisil expects CPI inflation, which was at 6.21 per cent in October, to soften to 4.6 per cent this fiscal from 5.4 per cent last fiscal.

The CPI inflation accelerated to a 14-month high of 6.2 per cent in October from 5.5 per cent in the previous month. “We expect the MPC to cut repo rate by 25 bps in December. The MPC is waiting for food inflation to ease before cutting policy rates. Persistently elevated food inflation in September and October is a worry. The RBI will also monitor risks from geopolitical uncertainties and international commodity price movements. That said, the easing of food inflation by the end of this fiscal should initiate a rate cut,” Crisil said.

Another worrying sign as far as our economy is concerned is the fact that there is no major signal about any significant improvement in the employment condition.

The Periodic Labour Force Survey (PLFS) data released by the National Statistical Office (NSO) on November 18 showed only a miniscule increase in the quarterly employment rate for urban areas.

In October, 2024, India’s unemployment rate rose to 10.10 percent, up from 7.80 percent in September. This is an increase from the average of 8.20 percent in 2018 to 2024. In June, 2024, the unemployment rate rose to 9.3 percent across India in rural areas from 6.3 percent in May. Urban unemployment rate climbed from 8.6 percent, in June, to 8.9 percent. Unemployment rose in June alongside a rise in the Labour Participation Rate and a fall in unemployment. Employment rate, which is the proportion of employed persons in the working age population, fell from 38 percent to 37.6 percent in June 2024.

Both the LFPR and the WPR have been at unmanageable rates for last several years, and the situation has worsened since the Modi government’s demonetization decision in 2016.

So far as women work force is concerned, unemployment rate among them has risen by 30 percent basis points to 3.2 percent in July 2023-June 2024. According to available data, joblessness for men fell to 3.2 percent from 5.6 percent.

The report also showed that 97.8 per cent women and 91.4 per cent men in India are outside the organised labour force due to personal or family reasons.

According to the Periodic Labour Force Survey (PLFS) for 2023-24, 36.7 per cent of females and 19.4 per cent of the workforce in India is engaged in unpaid work in household enterprises as against 37.5 per cent females and 18.3 per cent of total workers in 2022-23.

The earlier Time Use Survey 2019 by the National Statistical Office (NSO) had also shown the large proportion of women spending time over unpaid activities such as domestic work and care responsibilities. As per the Survey, around 81 per cent of females aged 6 years and above spent over five hours daily on unpaid domestic services in India, with the share being higher for the age group 15-29 years at 85.1 per cent and 92 per cent for the age group 15-59 years. Within the 60+ age group, 78 per cent of women contribute to unpaid domestic services. In comparison, men spent just over one hour daily for unpaid domestic services with 24.5 per cent share (6 years and above), 22.5 per cent (15-29 years) and 27 per cent (15-59 years).

These sets of data show that a significant portion of the workers as shown in various surveys are unpaid workers. In fact, such workers account for nearly a quarter of the overall workforce, with the situation being more severe in agriculture-heavy rural areas particularly for women. If the unpaid component of the work is removed from the calculations, the true labour force participation rate would be much worse than what is shown in different surveys. What is a matter of even more serious concern is the fact that this kind of work is making up an increasing share in the labour force participation rate. This will lead to worsening of the employment situation even while the government would keep providing a misleading picture of employment in the country. (IPA Service)