LABOUR FORCE PARTICIPATION RATE

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Context

Only 40% of Indians of legal working age were employed or were looking for jobs in 2021-22.
In comparison, the labour force participation rate was above 46% in 2016-17, according to data from The Centre for Monitoring Indian Economy.

Important Definitions

Labour force refers to the part of the population which supplies or offers to supply labour for pursuing economic activities for the production of goods and services and therefore, includes both employed and unemployed persons.

Labour Force participation rate: The LPR is an age-specific proportion between persons either working or actively seeking work or the total population in the working age group, usually 15 years and above.

Some Key Findings of the Centre Monitoring Indian Economy

Labour Force in absolute terms

In absolute terms, India’s labour force has shrunk from about 445 million to 435 million in the six years.
Currently, just about 1,085 million Indians are aged 15 or above and can be legally employed.

Labour force participation among women and men

Labour force participation among women, who were already a small part of the workforce, has declined further.
In 2016-17, about 15% women were employed or looking for jobs. This metric dipped to 9.2% in 2021-22.
Among men, the participation rate declined from more than 74% to 67%.

Urban vs Rural participation

The reduction in the participation rate was higher in the urban areas than in the rural parts of the country. The rate slid from 44.7% to 37.5% in urban areas — a more than seven percentage point drop. Rural areas saw the figure dropped from 46.9% to 41.4%.

States-wise participation

States-related analysis show that in 23 of the 24 States with data, the participation rate declined in March 2022 compared with March 2016. The rate dropped in all the States, except in Rajasthan. The drop was more pronounced among two southern States, which had a high participation rate, to start with.
Andhra Pradesh and Tamil Nadu, whose participation rates were 54% and 56% respectively in March 2016 — occupying the top two slots at the time — also witnessed the sharpest declines.
Between 2016 and 2022, the participation rate fell by 20 percentage points and 17 percentage points for Tamil Nadu and Andhra Pradesh respectively — the sharpest declines among all States.

Causes of Poor Labour Force Participation in India

Jobless growth

In India, since independence, the rate of growth of employment has been considerably less than the rate of economic growth.
Moreover, the rate of economic growth has not been adequate enough to absorb the increasing labour force in India. As a result, there is widespread unemployment.

Increase in the labour force

Over the years, the mortality rate has declined rapidly without a corresponding fall in birth rate and the country has, thus, registered an unprecedented population growth.
This was naturally followed by an equally large expansion in the labour force.

Use of machinery

In India, manpower is available in large quantities. Under these circumstances, the country would have a labour intensive technique of production.
However, in India, not only in' industries but also in agriculture, the capital-intensive technique of production is being used. This policy results in large scale unemployment.

Lack of skill

In India, vocational skill development courses which are compatible with the Indian industry are comparatively less in number. So, there is a dearth of skilled manpower needed by the industry.

Expectations towards employment

Educated youth in India aspire for a white-collar job.
There is a lack of innovative and entrepreneurial spirit to organize economic activities where they can be self-employed.
In India, most of the graduates prefer to remain unemployed till they get a job which is up to their expectations in terms of salary and nature of work.

Seasonal nature of agriculture

Agriculture in India is seasonal by nature. It depends on monsoon.
Lack of irrigation facilities, poor soil fertility, outdated production techniques, non-availability of certified seeds and fertilizers are the factors that reduce the capacity of agriculture for other gainful employment throughout the year.
The labourers are employed only for a few months in a year. For the rest of the year, the labour force remains jobless.

The slow rate of economic development

The overall economic development of India is very slow.
Inadequate irrigation facilities, fertilizers, unsatisfactory growth of infrastructure are all due to inadequate industrial expansion.
As a result, employment opportunities have not increased enough in the rural sector to absorb the growing labour force.

Migration of rural population

There has been a continuous migration of people from rural to urban areas in search of jobs. This has increased the problem of unemployment in urban areas.

Initiatives taken by the Government to improve labor force participation

Aatmanirbhar Bharat package

This is to provide stimulus to business and to mitigate the adverse impact of pandemic.
Under this package, the Government is providing fiscal stimulus of more than Rs. Twenty Seven lakh crore.
This package comprises of various long term schemes/ programmes/ policies for making the country self-reliant and to create employment opportunities.

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

It is a demand driven wage employment programmewhich provide for the enhancement of livelihood security of the households in rural areas of the country by providing at least one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work.
Under MGNREGS wage has been increased to Rs. 202 a day from Rs. 182.

Aatmanirbhar Bharat Rojgar Yojana (ABRY)

It was launched in 2020as part of Atmanirbhar Bharat package 3.0 to incentivize employers for creation of new employment along with social security benefits and restoration of loss of employment during Covid-19 pandemic.
This scheme being implemented through the Employees’ Provident Fund Organisation (EPFO),seeks to reduce the financial burden of the employers and encourages them to hire more workers.

Pradhan Mantri Mudra Yojana (PMMY)

It is being implemented by the Government for facilitating self-employment.
Under PMMY, collateral free loans upto Rs. 10 lakh, are extended to micro/small business enterprises and to individuals to enable them to setup or expand their business activities.

Garib Kalyan Rojgar Abhiyaan

It was launched in 2020to boost employment and livelihood opportunities for returnee migrant workers and similarly affected persons including youth in rural areas, in 6 States of Bihar, Jharkhand, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh.

PM GatiShakti

Launched in 2021, it is an initiative aimed at coordinated planning and execution of infrastructure projects.
The objective is to bring down logistics costs.
The approach is driven by seven engines, namely, Roads, Railways, Airports, Ports, Mass Transport, Waterways, and Logistics Infrastructure.This approach is powered by Clean Energy and Sabka Prayas leading to huge job and entrepreneurial opportunities for all.

National Pipeline Infrastructure

The National Infrastructure Pipeline (NIP) for FY 2019-25 is a first-of-its-kind, whole-of-government exercise to provide world-class infrastructure to citizens and improving their quality of life.
It aims to improve project preparation and attract investments into infrastructure.

Other

The Government of India is encouraging various projects involving substantial investment and public expenditure on schemes like –

Prime Minister’s Employment Generation Programme (PMEGP) of the Ministry of Micro, Small & Medium Enterprises,

Pt. Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) of the Ministry of Rural Development,

Deen Dayal Antodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) of the Ministry of Housing & Urban Affairs etc. for employment generation.

Besides these initiatives, various flagship programmes of the Government such as Make in India, Digital India, Smart City Mission, Atal Mission for Rejuvenation and Urban Transformation, Housing for All, Infrastructure Development and Industrial Corridorsare also oriented towards generating employment opportunities.

All these initiatives are expected to collectively generate employment and boost output in the medium to long term through multiplier-effects.

Remedial Measures

The measures that can help us in eradicating or minimizing Unemployment:

Expanding Volume of Work

Solution to the problem of unemployment lies in enlarging the opportunities for work. This needs to be completed to clear the backlog of unemployment and to provide jobs to the large additions being made to labour-force.
The work to be expanded has to be both in the sphere of wageemployment and self-employment.
The ultimate avenue of more employment has to be found in the industrial sector, as also in the service sector.

Raising Capital Formation

It is also necessary that the accumulation of capital is stepped up.
It helps employment expansion in two principal ways: One, it becomes possible to maintain the existing activities, as also to expand the current activities and to set up new ones.
Secondly, capital formation directly generates employment in the capital goods sector. This also provides capital goods for the production of consumer goods and services.

Appropriate Mix of Production Techniques

It is also necessary to choose such a combination of capital-intensive and labor-intensive technologies of production may generate maximum employment.
Labour-intensive activities such as cottage/household activities and also many agricultural operations, provide employment but capital-intensive technologies, are, by and large, more employment-creating, labour when employed in capital intensive industries, give rise not only to capital goods but also generate employment in industries which provide inputs to them.
Hence, the right mixes of technologies which may provide maximum employment at a higher wage rate and provide a surplus for further investment.

Special Employment Programmes

Till the economy matures to a level where everyone finds the job as described above, it is necessary, as an interim measure, to undertake special employment programmes for those who do not get benefit from this type of growth in the short run.
The need for supplement programmes is all the more important for poor people, residing mostly in rural areas and small towns.
Specific employment programmes to suit specific group of people and specific areas.

Reasons for the fall in women’s Labour Force Participation in India

Occupational segregation

Between 1977 and 2017, India’s economy witnessed a surge in the contribution of services (39 percent to 53 percent) and industry (33 percent to 27 percent) to GDP.
The proportion of rural men employed in agriculture fell from 80.6 percent to 53.2 percent, but rural women only decreased from 88.1 percent to 71.7 percent (NSSO data).
Between 1994-2010, women received less than 19 percent of new employment opportunities generated in India’s 10 fastest-growing occupations.

Increased mechanization

In agriculture, and as the use of seed drillers, harvesters, threshers and husking equipment increased, men displaced women. In textiles, power looms, button stitching machines and textile machinery phased out women’s labour.
Nearly 12 million Indian women could lose their jobs by 2030 owing to automation, according to a McKinsey Global Institute report.

The income effect

With increasing household incomes, especially over the last three decades, the need for a “second income” reduced. Consequently, families withdrew women from labour as a signal of prosperity.
This “income effect” can explain approximately 9 percent of the total decline in the female labour force participation rate between 2005 to 2010.

Gender gaps in higher education and skill training

Tertiary-level female enrolment rose from 2 percent in 1971 to only 30 percent in 2019 (World Bank data).
As of 2018-19, only 2 percent of working-age women received formal vocational training, of which 47 percent did not join the labour force (NSSO, 2018-19).
Consequently, women form only 17 percent of cloud computing, 20 percent of engineering, and 24 percent of data/artificial intelligence jobs (WEF, 2020).

Social norms

Unpaid care work continues to be a women’s responsibility, with women spending on average five hours per day on domestic work, vs. 30 minutes for men (NSSO, 2019).
Women face inordinate mobility restrictions such that only 54 percent can go to a nearby market alone (NFHS, 2015-16).
Women regularly sacrifice wages, career progression, and education opportunities to meet family responsibilities, safety considerations, and other restrictions.
In this context, the COVID-19 pandemic has come as a shock, resulting in massive job losses for women, especially informal workers, and slower recovery of women-led microbusinesses.
It has also increased domestic work, deepened gender digital divides, disrupted girls’ schooling and placed millions of female health workers at risk.

· Low female Labor Force Participation Rate is a drag on GDP growth and a higher growth path.

· China has 64% of its women working, which is one of the highest rates in the world. In theUS, the rate is over 56%.

· Even countries like Nepal and Bangladesh are doing much better than India.

· While the number of women employed in salaried jobs in the country has increased by 8 percent (from 13 percent in 2011-12 to 21percent in 2017- 18) with the addition of 0.71 crores new jobs for female workers, the overall participation of women in India’s workforce in on the decline, revealed the Economic Survey 2018.

· According to NSO-EUS and PLFS estimates, the female labor force participation rate for productive age-group 15- 59 years

shows a declining trend in the country. The female labor force participation declined by 7.8 percentage points from 33.1 percent in 2011-12 to25.3 percent in 2017-18.

· Though the female labor force participation rate is higher in rural areas than in urban ones, the rate of decline has also been sharper in rural areas compared to urban areas, resulting in increased gender disparity in India’s labor market.

· In urban areas, female labor force participation more or less remained constant.

· According to the PLFS, the female workforce population ratio for the productive age group (15-59 ages) stood at 23.8 percent (25.5 percent in rural areas and 19.8 percent in urban areas) in 2017-18 as compared to 32.3 percent in 2011-12.

· The number of self-employed women in the country has decreased from 7.2 crores in 2011-12 to 5.54 crores in 2017-18.

· Women casual laborers have decreased from 3.97 crores in 2011-12 to 2.86 crores, while the share of women employers has remained constant at 0.6percent over the years.

· At 17% of GDP, the economic contribution of Indian women is less than half the global average and compares unfavorably to 40% in China.

Other challenges faced by Women Workforce in India

More women in the rural area in the labor force Compared to Urban areas.
Gender wage gaps remain in every employment.
Double burden on women: Balancing employment and domestic responsibilities (including household chores and care giving).
Safety concerns, Sexual harassment at work place.
Migration, Unfair Sex ratio, Environmental degradation have added to the women’s vulnerability.
India is a male dominated Society in which the Economic, Political, Religious, Social and Cultural institutions are largely controlled by men.
Control over women’s livelihood Choices and Sexuality has existed and evolved over Centuries through various discriminatory Social Practices and Institutions.
Despite laws, gender based discrimination against women Continue in Indian Society. Clearly shows the laws and gaps in their implementation.
Structure of Judicial remedies is still insufficient to serve the needs of women, Particularly Poor and marginalized women, in accessing justice.
Development Programmes introduced to bring gender equality have Produced mixed results. Legislative Changes have faced resistance in their implementation due to Social, Cultural and religious Custom.
There is no comprehensive policy support and there is a lack of its effective implementation.
There is a lack of match between the aspirations of more educated women and the quality and availability of jobs. Further,

there is a lack of salaried opportunities available for women with moderate levels of education.

Increased attendance and higher participation of women in education.
Insufficient formal wages and poor job opportunities are other reasons for the decline.
While social norms and family commitments are important issues, factors such as terms of employment, working

conditions, mobility limitations, and hiring practices also make things difficult.

Women’s workforce participation is declining in rural India and is low and stagnant in urban India, primarily due to the

shrinking of the agriculture sector.

Lack of formal enterprises and the absence of having 200 cities with 30-minute safe commutes explain a lot, if not most, of

this tragedy.

A large proportion of the women who left the labor market are married.
Many women who join the workforce are unable to re-join after having a child.
If women's perceived productivity at home is greater than their returns in the labor market, women are likely to withdraw

from the labor force.

Barriers to migration for women, Discrimination, Sexual Harassment at the Workplace are other factors.

Steps taken by Government to improve women labour force participation

Scheme for Adolescent Girlsaims at girls in the age group 11-18, to empower and improve their social status through nutrition, life skills, home skills and vocational training
Pradhan Mantri Mahila Shakti Kendra scheme, promote community participation through the involvement of Student Volunteers for the empowerment of rural women
National Crèche Schemeto provide daycare facilities to children of the age group of 6 months to 6 years of working women who are employed.
Rashtriya Mahila Kosh (RMK)to provide micro-credit to poor women for various livelihood support and income-generating activities at concessional terms
Working Women Hostelsfor ensuring safe accommodation for women working away from their place of residence.
SABLA Scheme, Providing life Skills and Supplementary nutrition to out of School girls
Sexual Harassment of Women at Workplace Act 2013 -Cover all women, of all age , both in public and private sector, whether organized or unorganized.
The Government enhanced paid maternity leave from 12 weeks to 26 weeks, provision for mandatory crèche facilities in the establishments having 50 or more employees, permitting women workers in the night shifts with adequate safety measures, etc.
The Equal Remuneration Act, 1976 now subsumed in the Code on Wages, 2019 provides that there shall be no discrimination in an establishment on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of similar nature done by any employee.
To enhance the employability of female workers, the Government is providing training to them through a network of Women Industrial Training institutes, National Vocational Training Institutes and Regional Vocational Training Institutes.
'Mission Shakti'.

The Mission Shakti, includes the components such as;

National, State and District level Hubs for Empowerment of Women.
Women Hiplines, One Stop Centres.
Beti Bachao Beti Padhao, Sakhi Niwas (Working Women’s Hostels).
Palna (crèches for children of working women) etc.

The schemes of One Stop Centres and Universalization of Women Helpline are implemented by the Ministry of Women and Child Development to support women facing violence or distress of any kind which may adversely affect their participation in the workforce.

Importance of Women in the workforce for India

IMF: India’s GDP could expand 27%if the number of female workers increases to the same level as that of men.
India could boost its growth to 9% per year if around50% of women could join the workforce.

Micro-level:

Financially independent and greater control over their own lives.
They will stand against physical and emotional abuse.
They will handle social issues and pressures on their own.

Macro-level:

Good for the overall economy.
McKinsey Global Institute report 2016: increasing gender parity, India can add $700 billion to the global GDP.

Because women bring new skills to the workplace, the productivity and growth gains from adding women to the labor force are manifold.
Men’s wages will also increase as a result of greater inclusion of women in the labor force since productivity will increase.
Women help build an inspiring work culture by bringing in healthy competition, fostering teamwork, bonding and thereby

helping the company grow to its full potential.

Suggestions to increase women workforce

Need to Integrate Policy of Work, Livelihoods, Earnings and Poverty, Re‐think and Integrate macroeconomic Policy with Social Policy.
Convergence with programs for adult education, literacy, and advanced skill training and higher education.
Using tax policies to incentivize women into the labor market on both the demand and supply side.
Communication and Behavioural Change.
Support Services for Entry and Continuation: eg- child care facilities, migration facilities, forums for informal and formal mentorship and connections.
Infrastructure and norms play a crucial role in impeding women's sentry and sustenance in the workforce. The gender-sensitive infrastructure included full-time creches for children, affordable and safe working women's hostels, and basic public provisions such as piped water, hygienic washrooms at public places and safe public transport for enabling women to access decent and dignified livelihood opportunities.
Formulate Integrate Policy of Work, Livelihoods, Earnings and Poverty.
Improve women’s access to Credit, skills, marketing.
Pay regular wages to Asha workers, Anganwadi teachers and helpers, cooks for mid‐day meals and regularize their employment.
Improve working conditions for women.
Investments in childcare facilities and toilets for women at all workplaces.
Sensitisation on issues such as sexual division of labour within the home through large scale media advertisement.
Implementation of minimum wage laws.
Enable universal access to high quality public health care facilities and support for women's care.
All women workers should have identity cards and be covered under Unorganized Sector Social Security Act, 2008.
Secure and uphold women’s ownership rights over basic productive resources like land - Create equal rights to property.
Focus on primary health so that private expenses and indebtedness on account of health and hospitalization can be eliminated.
A minimum social security package available to all citizens that include life insurance, disability insurance, health insurance, and pensions offered through multiple distribution channels.
Safer transport and cities, Change at home with an equitable distribution of work traditionally done by women.
Change in Social norms and mindsets towards girls and women can be brought about through institutional initiatives. This involves the family, Community, religious and educational institutions.
Strengthen and ensure implementation of economic and Social Policies for gender equality.

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