Employment- Gender gap and skill mismatch remain alarming

The latest Periodic Labor Force Survey (PLFS), released on 16 August 2024 by the National Statistical office (NSO), provides some useful insights into the current employment conditions in the country. The following are some of the key observations from the Survey report.

The Good

·         The employment conditions have improved during 1QFY25. The WPR-U improved for all ages and both genders. The Youth WPR-U improved from 39.3% (1QFY24) to 40.8% (1QFY25). For all workers, WPR-U improved 38.4% to 39.3% during this period.

·         The LFPR-U male workers improved from 57.2% in (1QFY24) to 58.9% in (1QFY25) for youth (15-29yrs) and from 73.5% to 74.7% for all workers above 15yrs of age.

·         Self-employed female workers increased in urban areas from 39.2% to 40% while the number of self-employed male workers in urban areas increased from 39.5% to 40%.

·         Unemployment rate in urban areas has reduced marginally from 6.7% (1QFY24) to 6.6% (1QFY25).

The Bad

·         The percentage of regular wage/salaried employees fell marginally from 49.2% in 1QFY24 to 49% in 1QFY25. There was a corresponding increase in the own account and self-employed workers.

·         The employment in the secondary sector (manufacturing, mining etc.) was lower in 1QFY25. More people were employed in the tertiary sector. Worker employed in the secondary sector reduced from 33.1% in 1QFY24 to 32.1% in 1QFY25.

·         The employment for female workers in “household enterprise helper” category also witnessed decline. Female employed in this sector reduced from 11.9% in 1QFY24 to 11.4% in 1QFY25.

·         The proportion of female workers declined both in agriculture and secondary sectors.

The Ugly

·         LFPR-U for female workers remains very low at 18.2% (1QFY25) vs 54.7% for males; even though it has shown improvement from 16.8% in vs 54.1% in 1QFY24. Even for Young females (15-29yr age) it remains materially lower at 16.4% (vs 50.2% for males).

·         Youth (15-29yr) unemployment in urban areas remains very high at 16.8% (23% for young females); even though it came down from 17.6% a year ago.

·         J&K (29.8%), Odisha (28%), Rajsathan (25.5%) and Assam (23.9%) had the worst youth unemployment in the country in 1QFY25. For young female workers unemployment Himachal (41.6%), Kerala (41.9%), Jharkhand (40.6%) and J&K (52.7%) were the worst state.

Conclusion

The huge gender gap in the labor force continues to be a cause of serious concern. Female workers, especially young (15-29yr) females, are getting much fewer employment opportunities. The gender gap in the workforce is persisting at alarming levels and does not augur well for the acceleration in the growth rate. If we juxtapose this data with the education statistics, we find the bridging of the education gap between male and female population has not resulted in equal opportunity for females in employment.

Another cause of concern is that the unemployment remains materially higher amongst the young workers (16.8%) as compared to overall unemployment level in urban areas (6.6%). The reason could be multifold like unemployability (skill mismatch and/or sub-standard education), reducing employment intensity of GDP, and poor employment growth in manufacturing sector. Nonetheless, it substantially diminishes the demographic dividend for the Indian economy.

Persistently, high ratio of self-employed and casual labor (over 40%), inter alia, indicates (i) lower employment elasticity in the organized sector and (ii) skill mismatch.