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
CMIE
Established in 1976, Centre for Monitoring Indian Economy (CMIE) is a leading business information company functioning primarily as an independent think tank. The labour force participation rates are produced by CMIE using its Consumer Pyramids Household Survey machinery.
- The all-India labour force participation rate (LFPR) was 39.5% during Sep-Dec'22, a 0.3% increase over the prior 4-month period.
- Only 8.7% of Indian women and 65.8% of Indian men were either working or actively seeking jobs during Sep-Dec'22. This highlights the grim reality that 60% of India's working-age population is not contributing to any economic activity thus not effectively capitalizing on its demographic dividend.
- The rural labour force participation rate (LFPR) was 40.4% during Sep-Dec'22, while that in urban India was 37.8% during the same period.
- The participation of people holding graduate degrees and higher in the labour force between Sep-Dec'22 was the highest at 62.5%, followed by those educated between 10th-12th grade at 40%.
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