Counting the Female Labour Force Participation Rate accurately
26-08-2023
11:33 AM
1 min read
Why in News?
- The article presents a critical approach related to the quality of statistics pertaining to female labour force participation rate (LFPR) in India which underrepresents women in the labour force.
- It also highlights the recent Economic Survey 2022-23 which notes that the narrative of Indian women’s low LFPR misses the reality, emphasizing need to broaden the horizon of measuring work to include the value of women’s unpaid domestic chores.
What is Labour Force Participation Rate (LFPR)?
- It is defined as the percentage of the population (in working age-groups) that is employed, or is looking for work, but is unemployed.
- As per OECD, it is calculated as the labour force divided by the total working-age population, hence estimating an economy’s active workforce.
- The working age population refers to people aged 15 to 64. This indicator is broken down by age group and it is measured as a percentage of each age group.
What are the issues concerning Female LFPR in India?
- Low female LFPR in India compared not only to developed countries but also several countries in East Asia.
- India’s female LFPR in 2021 was 19%, lower than the world average at 25.1%, and has been declining for long.
- The Indian government aims at 50% female workforce by 2047 in Amrit Kaal.
- Decline in female LFPR over time.
- Female LFPR vary in different states, as per rural/urban status, society and sector.
- Increasing gender gap in LFPR over time
What is the significance of higher Female LFPR?
- A 2015 report published by McKinsey Global Institute argued that if India achieved gender equality, there would be 700 billion US dollars of added GDP in 2025 and an increment to annual GDP growth by 1.4 per cent.
What are the limitations of enumerating LFPR?
- In any informal economy, employer-employee relationships are not uniform, hence arriving at LFPR numbers is difficult, limiting the effectiveness of enterprise survey.
- Also, despite increasing formalisation, encouraged by various government interventions, self-employment is large and even within the formal sector, informal contracts are the norm.
- For example, roughly 50 per cent of employment is self-employment and more than 20 per cent is wage employment with a regular contract and the rest is casual labour.
- Thus, it necessitates need for employment numbers to be generated through household surveys and not enterprise ones.
Economic Survey 2022-23: Highlighting Issues in FLFPR Computation
- Recent data: The Economic Survey 2022-23 claimed that the unemployment rate fell from 5.8 per cent in 2018-19 to 4.2 per cent in 2020-21.
- The survey also noted that FLFPR has gone up to 25.1 per cent in 2020-21 from 18.6 per cent in 2018-19.
- There is also a notable rise in Rural FLFPR from 19.7 per cent in 2018-19 to 27.7 per cent in 2020-21.
- As per the recent Economic Survey, the common narrative of Indian women’s low LFPR misses the reality of working females integral to the economy of the household and the country.
- The Survey flags the National Sample Survey Organisation (NSSO), and highlights three main measurement issues as follows:
- Overly broad categories: For instance, clubbing productive work (collection of firewood, poultry farming) with domestic duties can in one sweep shift a significant proportion of women in the labour force into the out-of-labour-force category.
- No recovery questions in the PLFS questionnaire: The periodic labour force survey (PLFS) design relies mainly on a single question for measuring the labour force status of an individual.
- This eliminates the scope to rectify any error in self-reporting, considering the large rural population and literacy levels.
- International Labour Organisation (ILO) on the contrary recommends using multiple probing or recovery questions as follows:
- “Whether the person helped in the family business”
- “Whether the person worked in own business in last one week/year” and
- “Whether person helped the family with job”.
- Hence no ‘recovery questions’ in the PLFS questionnaire to double-check individuals’ labour force status, leads to too much reliance on how the individual self-identifies in the first instance.
- Measurement of “Work” alongside “Employment”: The Economic Survey highlights narrow approach of limiting productive work to labour force participation, emphasizing need to broaden the horizon of measuring work.
- According to the latest ILO standards, limiting productive work to labour force participation is narrow and only measures work as a market product.
- It does not include the value of women’s unpaid domestic work, which can be seen as expenditure-saving work such as collecting firewood, cooking, tutoring children, etc., contributing significantly to the household’s standard of living.
- Thus, a wholesome measurement of “work” may require improved quantification through redesigned surveys.
- Also, ecosystem services, including affordable creches, career counselling/handholding, lodging and transportation, etc., can further help unlock the gender dividend for inclusive and broad-based growth.
Economic Survey 2022-23: Renewed Definition of Female LFPR
- The Survey re-computes female LFPR with a better definition.
- Adding the proportion of women (mentioned above) to the official LFPR yields an Augmented Female LFPR” of 2 per cent for FY21 for ages 15 years and above.
- This is much higher than the 32.5 per cent estimated by the conventional definition (PLFS data for usual status).
- The reference period for usual status approach is 1 year.
- A similar attempt was made in a 2014 ILO research paper that arrived at a female LFPR of 56.4 per cent in India for 2012, against the far lower official estimate of 31.2 per cent for 2012.
Conclusion
- The government (Ministry of Statistics and Programme Implementation (MOSPI)) needs to make a reassessment of the quality of data produced, as inferior statistics could impact our global rankings on various parameters impinging India’s image worldwide.
Q1) What is the objective of Periodic Labour Force Survey (PLFS).
The PLFS conducted by National Statistical Office (NSO) estimates the key employment and unemployment indicator in the short time interval of three months for the urban areas and in both rural and urban areas annually.
Q2) How is Labour Force Participation Rate (LFPR) calculated.
As per OECD, LFPR is calculated as the labour force divided by the total working-age population, hence estimating an economy’s active workforce.
- Labour force is the percentage of the population (in working age-groups) that is employed, or is looking for work, but is unemployed.
Source: Bibek Debroy writes: Counting the Female Labour Force Participation Rate accurately | Indian Express
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