Unemployment measurement in India

Unemployment measurement in India refers to the process of estimating the number of people who are willing to work and available for employment but cannot find jobs during a given period. It reflects the extent of labour underutilisation and provides valuable insights into the overall health of the economy. Measuring unemployment is essential for economic planning, employment policy, and assessing the effectiveness of developmental programmes.
In India, unemployment is measured through comprehensive surveys conducted primarily by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI), along with data from other agencies and specialised studies.

Concept of Unemployment

Unemployment arises when individuals who are capable of working and are actively seeking work fail to obtain employment. It indicates an imbalance between the supply of labour and demand for labour.
Unemployment does not merely imply complete idleness; it also includes underemployment, where individuals work below their potential or for fewer hours than they are willing and able to work.

Major Agencies Measuring Unemployment in India

1. National Statistical Office (NSO):
   • The primary institution conducting national-level employment and unemployment surveys.
   • Earlier known as the National Sample Survey Office (NSSO).
   • Conducts the Periodic Labour Force Survey (PLFS), providing official estimates.
2. Labour Bureau (Ministry of Labour and Employment):
   • Conducts Annual Employment-Unemployment Surveys (EUS) and Quarterly Employment Surveys (QES) for the organised sector.
3. Centre for Monitoring Indian Economy (CMIE):
   • A private data organisation that provides high-frequency unemployment estimates based on continuous household surveys.

Methods of Measuring Unemployment

India uses three primary statistical methods for estimating unemployment, as developed through the National Sample Survey (NSS) and the Periodic Labour Force Survey (PLFS). These differ according to the duration and intensity of employment during the reference period.

1. Usual Status (US) Approach

• Measures the employment status of individuals over a reference period of one year preceding the survey.
• A person is considered unemployed if they did not work for a major part of the year but were available and seeking work.

Subcategories:

• Usual Principal Status (UPS): Based on the principal activity during the year.
• Usual Principal and Subsidiary Status (UPSS): Includes both principal and subsidiary (occasional or secondary) activities.

Nature of Measurement:

• Captures chronic or long-term unemployment.
• Useful for assessing structural unemployment and long-run trends.

2. Current Weekly Status (CWS)

• Based on a seven-day reference period prior to the survey.
• A person is considered unemployed if they did not work even for one hour on any day during the reference week but were seeking or available for work.

Nature of Measurement:

• Captures short-term and intermittent unemployment.
• Reflects labour market fluctuations on a weekly basis.

3. Current Daily Status (CDS)

• Measures employment on a day-to-day basis over the seven days preceding the survey.
• Each person’s activity is recorded for every day—classified as employed, unemployed, or out of the labour force.

Nature of Measurement:

• Captures both unemployment and underemployment.
• Provides the most detailed picture of labour time utilisation and productivity.

Periodic Labour Force Survey (PLFS)

Introduced in 2017, the Periodic Labour Force Survey (PLFS) replaced the earlier quinquennial Employment-Unemployment Surveys of the NSS. It provides annual estimates for rural and urban areas and quarterly estimates for urban areas.
Objectives:

• To provide regular, timely estimates of key labour market indicators.
• To assess trends in employment, unemployment, and labour force participation.

Key Indicators Reported:

• Labour Force Participation Rate (LFPR): The proportion of people working or seeking work to the total population.
• Worker Population Ratio (WPR): The ratio of employed persons to the total population.
• Unemployment Rate (UR): The proportion of unemployed persons to the total labour force.

Other Sources of Employment and Unemployment Data

1. Census of India:
   • Provides decennial data on workforce participation and employment categories.
2. Employment Exchanges:
   • Record job seekers registered for employment, although limited to the formal sector.
3. Annual Survey of Industries (ASI):
   • Provides employment statistics for the registered manufacturing sector.
4. CMIE Household Survey:
   • Offers monthly unemployment estimates based on consumer and employment data.

Types of Unemployment in India

1. Open Unemployment:
   • People willing to work but unable to find jobs; common among educated youth.
2. Disguised Unemployment:
   • More people are employed than necessary, particularly in agriculture; removal of some workers does not reduce output.
3. Seasonal Unemployment:
   • Occurs when work is available only during specific seasons, such as in agriculture and construction.
4. Cyclical Unemployment:
   • Arises from economic downturns or recessions when overall demand falls.
5. Structural Unemployment:
   • Results from a mismatch between available skills and job requirements.
6. Frictional Unemployment:
   • Temporary unemployment when workers change jobs or enter the labour market.
7. Underemployment:
   • Individuals work for fewer hours or at lower productivity levels than they are capable of.

Trends in Unemployment in India

• Rural vs Urban: Rural unemployment is often disguised or seasonal, while urban unemployment is typically open and skill-based.
• Youth Unemployment: High among educated youth due to skill-job mismatches.
• Gender Disparity: Female labour force participation is significantly lower than that of males.
• Recent Developments: Data from recent PLFS rounds indicate gradual improvement in employment indicators, with increasing participation and a slight decline in overall unemployment rates.

Importance of Measuring Unemployment

• Policy Formulation: Helps design employment generation schemes and social protection programmes.
• Economic Planning: Provides inputs for assessing sectoral growth and labour absorption.
• Monitoring Economic Health: Serves as a key indicator of inclusive growth and development.
• Programme Evaluation: Assists in evaluating the impact of initiatives such as MGNREGA, Start-Up India, and Skill India.

Challenges in Measuring Unemployment

• Informal Sector Dominance: Around 80–90% of India’s workforce is informal, making measurement complex.
• Underemployment Identification: Many are engaged in low-paying or part-time jobs that do not reflect true employment levels.
• Data Timeliness: Surveys are often periodic and may not capture real-time labour market changes.
• Regional and Sectoral Variations: Employment conditions differ widely across states and industries.
• Definitional Ambiguities: Difficulty in distinguishing between unemployment and inactivity, especially among self-employed workers.

Measures to Improve Employment Statistics

• High-Frequency Surveys: Expanding quarterly labour market surveys for more timely estimates.
• Integration of Digital Data: Using administrative and digital databases for labour market analytics.
• Strengthening Informal Sector Coverage: Developing frameworks to better capture self-employment and casual work.
• Skill Mapping: Linking education, skill development, and employment data for policy coherence.

Conclusion

The measurement of unemployment in India provides a vital understanding of the structure and dynamics of the labour market. Through the Periodic Labour Force Survey and other data systems, India has built a robust framework for assessing employment trends across regions and sectors.