Concepts Related to Labour Force

Labour Force refers to the number of persons actually working or willing to work. However, workforce refers to the number of persons actually working. Thus, workforce does not account for those who are willing to work. The difference between labour force and workforce is the total number of unemployed persons.

Number of Persons unemployed = Labour Force – Workforce

Workforce does not takes into account the wage rates. On the other hand, labour supply refers to supply of labour corresponding to different wage rates.

Labour Force Participation Rate

Labour Force Participation Rate (LFPR) is defined as the number of persons in the labour force per 1000 persons.

For example, if population is 1000, and there are 400 people actually working while 300 people willing to work; then, LBPR would be 700. LBPR can also be shown in percentage, whereby the above figure would become 70%.

Worker Population Ratio

Worker Population Ratio (WPR) is defined as the number of persons employed per 1000 persons.

As per NSSO 68th round, India’s worker population ratio is 537.

Usual approach

A main worker is the person who has worked more than 183 days in a year. Marginal worker is the person who has worked less than 183 days in a calendar year. The major time spent by a person (183 days or more) is used to determine whether the person is in the labour force or out of labour force. This is called Usual approach in determining the participation rate.

Other Facts

  • Unemployment is an economic situation marked by the fact that individuals actively seeking jobs remain unhired. Unemployment may be voluntary in nature also as individuals sometimes not interested to work at the prevailing wage rate due to various reasons. They are not included among the job seekers.
  • As ability to work is one of the important indicator in calculation of unemployment, people of the age 15 – 60 excluding sick people are included in the workforce.
  • In India, a person working 8 hours a day for 273 days in a year is considered as employed on a standard person year basis. An employed person should contribute to the growth of GDP of the country. Employment can be either self-employment or hired employment. Hired employment is either on casual basis or regular basis.