India’s Labour Force Participation Rate:
Data from the Centre for Monitoring Indian Economy (CMIE) shows that India’s Labour Force Participation Rate (LFPR) has fallen to just 40% from an already low 47% in 2016.
- This suggests not only that more than half of India’s population in the working-age group (15 years and older) is deciding to sit out of the job market, but also that this proportion of people is increasing.
- According to the CMIE, the labor force consists of people who are 15 years or older, and belong to either of the following two categories:
- Are unemployed and are willing to work and are actively looking for a job.
- These two categories have people “demanding” jobs. This demand is what LFPR refers to.
- Thus, the LFPR essentially is the percentage of the working-age (15 years or older) population that is asking for a job.
- It represents the “demand” for jobs in an economy.
- It includes those who are employed and those who are unemployed.
- The Unemployment Rate (UER), which is routinely quoted in the news, is nothing but the number of unemployed (category 2) as a proportion of the labor force.
- In India, the LFPR is not only lower than in the rest of the world but also falling.
- In India, it has been sliding over the last 10 years and has shrunk from 47% in 2016 to just 40% as of December 2021.