Surge in Farm & Female Labour Force Participation: PLFS

In Context

• The recent Periodic Labour Force Survey (PLFS) Report mapping till the first three months of the pandemic (April-June 2020) has indicated 2 specific trends:
  • Reversal of the falling share of agriculture
  • A decisive turnaround in declining female participation
  • Both of these trends signify a break from the steady structural transformation in the labour market over the last 2 decades.

Source: PIB

Key Findings of PLFS, their Significance and Misleading Nature

• Based on the “usual principal status” and the “subsidiary status” approach following trends were observed:
• Surge in Female Labour Force Participation Rate
  • It can be interpreted as a positive sign but there is a catch.
    • Much of this increase is in the most sub-optimal category of unpaid family workers. 
• Rise in Employment in Agriculture
  • In agriculture,, the PLFS data show that in 2019-20, there has been an increase in the percentage of those reported to be working in the sector (45.6%). 
  • This comes after decades of a progressive fall that signalled movement to high productivity jobs outside.
    • Agriculture constitutes about 16 percent of the GDP
  • The rise in agriculture, too, is mostly in this category- those working in household enterprises without drawing wages.
• Decline in Manufacturing Employment
  • The surge in Agriculture for 2019-20 corresponds to a decline in manufacturing and construction in the latest survey.
• Signs of Distress before Pandemic
  • GDP had slowed down, demand had declined and manufacturing was not expanding even before the pandemic. 
  • Between 2004-05 to 2011-12, many exited agriculture to join the construction sector with a big push to infrastructure

Source: IE

Reasons Behind such Controversial Trends

• Household distress precipitated by the steady fall in GDP growth rates over the past years.
• Farm labour surge to a “hard lockdown” in urban areas due to Pandemic during April-June
• The Twin Balance Sheet problem affected growth after 2011-12.
• With the inability of the construction sector to absorb and slowdown in the manufacturing sector, workers got pushed back into agriculture.
• Demand-side constraints, viz., that women’s participation is falling due unavailability of steady gainful employment.
  • Women are likely to be displaced from employment by male workers, especially when there are negative economic shocks e.g. demonetisation or the pandemic.
• Industries that employ women haven’t done well. 
  • Unlike Bangladesh, we did not have labour intensive manufacturing. 
  • Even though rising education levels have been seen among females, there aren’t enough good jobs for them

Conclusion and Way Out

• Lot of people lost jobs during the pandemic and agriculture became the employment of last resort.
• The PLFS estimates are instead an early warning of a structural crisis.
• The first three quarters also suggest that a structural retrogression in the economy was underway before the pandemic.
• There is a huge need for the creation of productive and remunerative jobs.
• Also, a better indicator for the extent of joblessness in the economy would be the number of hours worked.

Source: PIB, IE