Labour Force Participation Rate
Labour force is that section of working population in the age group of 15-64 in the economy currently employed or seeking employment. People who are still undergoing studies, housewives and persons above the age of 64 are not reckoned in the labour force. The Labour Force Participation Rate (LFPR) is calculated as the labour force divided by the total working-age population of 15-64.
It is generally seen during recession that the labour force participation rate goes down. This is because, at the time of recession, the economic activity is very low which results in fewer jobs across the country. When there are fewer jobs, people are discouraged to focus on employment which eventually leads to lower participation rate. The participation rate is also important in understanding the unemployment rate in the economy. A higher LFPR shows that the working population is contributing to the nation's economic activity and thus effectively capitalizing on the nation's demographic dividend.
People who are not interested in working or getting some sort of employment are not included in the participation rate, but to understand the unemployment data better, participation rate is considered carefully. An ageing population may have a negative impact on any economy. That is when the labour participation rate comes into the picture. If the rate is on the higher side, it is a good sign. But if it is on the lower side, it can also act as a warning sign for any economy. For that reason, participation rate as well as unemployment data should be looked into simultaneously to understand the overall employment status in the economy.
Labour force is that section of working population in the age group of 15-64 in the economy currently employed or seeking employment. People who are still undergoing studies, housewives and persons above the age of 64 are not reckoned in the labour force. The Labour Force Participation Rate (LFPR) is calculated as the labour force divided by the total working-age population of 15-64.
It is generally seen during recession that the labour force participation rate goes down. This is because, at the time of recession, the economic activity is very low which results in fewer jobs across the country. When there are fewer jobs, people are discouraged to focus on employment which eventually leads to lower participation rate. The participation rate is also important in understanding the unemployment rate in the economy. A higher LFPR shows that the working population is contributing to the nation's economic activity and thus effectively capitalizing on the nation's demographic dividend.
People who are not interested in working or getting some sort of employment are not included in the participation rate, but to understand the unemployment data better, participation rate is considered carefully. An ageing population may have a negative impact on any economy. That is when the labour participation rate comes into the picture. If the rate is on the higher side, it is a good sign. But if it is on the lower side, it can also act as a warning sign for any economy. For that reason, participation rate as well as unemployment data should be looked into simultaneously to understand the overall employment status in the economy.
SUBJECT Variables
PERIODIC LABOUR FORCE SURVEY (PLFS)
PLFS, conducted by the Ministry of Statistics & Implementation (MoSPI), is India's first computer-based survey which gives estimates of key employment and unemployment indicators like the labour force participation rate, worker population ratio, proportion unemployed and unemployment rate in rural and urban households.
- The total labour force participation rate (LFPR) in 2022-23 registered a modest increase of 2.7% over 2021-22. The LFPR for males increased by 1.3% and that of females increased by 4.2% during the same period.
- Only 37% of Indian women and 78.5% of Indian men of working age were working or actively seeking jobs in 2022-23. This highlights the grim reality that half of India's working-age population is not contributing to any economic activity thus not effectively capitalizing on its demographic dividend.
- The participation of diploma holders across India in the labour force in 2022-23 was the highest at 79.2%, followed by those holding post-graduate degrees at 70.6%
- In 2022-23, Himachal Pradesh had the highest LFPR of 77.1% amongst all states, followed by Sikkim at 75.7%.
- Lakshadweep had the lowest LFPR amongst all states in India at 39.9%, followed by Delhi at 46.7%.
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