What about students, volunteers?: Centre on report claiming slump in labour participation

In a recently released report, CMIE claimed that only 40 per cent of Indians in the legal working age were found to be working or seeking employment in 2021-22

Representative photo: Stock

The Centre has dismissed a report by the Centre for Monitoring Indian Economy (CMIE) which claimed that India has witnessed a fall in the Labour Force Participation Rate (LFPR).

LFPR is an estimate of a country’s active workforce (either working or seeking work).

In a recently released report, CMIE claimed that only 40 per cent of Indians in the legal working age were found to be working or seeking employment in 2021-22. This in turn is a slump from the LFPR rate of 47 per cent in 2016-17. In other words, India’s labour force has come down from 435 million in 2016-17 to 445 million in 2021-22. The country has over 1,085 million employable Indians.

Rejecting the report in a statement released on Tuesday, the Ministry of Labour and Employment said that providing jobs remains the government’s top priority and every measure was being taken to generate employment opportunities in the country.

Also read: Over 45 crore Indians are not even looking for jobs: CMIE data

The ministry also questioned the methodology adopted by CMIE for the Consumer Pyramid Household Survey that it conducts thrice a year.

The ministry said that it is not possible for the entire working-age population to be engaged in jobs or looking for employment as many may be “either pursuing or engaged in unpaid activities like the production of goods for own consumption, unpaid domestic activities or caregiving services for household members, volunteering, and training among others.”

For instance, around 10 crore people in the working age population were pursuing secondary, higher secondary, higher or technical education during 2019-20, the government said. Forty nine per cent of this population was female.

“The quarterly labour force data indicates that though labour force declined during the 1st wave of COVID-19 pandemic, however, with the revival of economy in the subsequent quarters of 2020-21, the labor force showed a swift recovery,” the ministry said in the statement.

The CMIE’s Consumer Pyramid Household Survey, which aims to gauge the employment rate based on several parameters including household wellbeing, has come under scanner for its sampling practices that the government says are not in line with international standards.

“The survey by CMIE covers 1,78,677 households (rural: 63,430 and urban:1,15,247) which shows a distorted sample coverage and are not true representative of the Indian economic scenario,” a government official told Economic Times.

The organization bases its study on a fixed panel of households over a span of four months.

Also watch: Lack of good jobs making Indians leave workforce

Officials say the methodology is fraught with errors as CMIE doesn’t prepare any frame of households of a sample village or block before embarking on the survey.

Government officials say the CMIE doesn’t follow international standards when it comes to defining an “employed individual”. According to another official whom ET spoke to, the CMIE “counts a person as employed if he or she is engaged in any economic activity either on the day of the survey, or is generally regularly engaged in an economic activity.”