Only 9.5% of Indian women and 67.4% of men were employed, reveal Dec'21 LFPR figures

The figures for the period September to December 2021 released by the Centre for Monitoring Indian Economy (CMIE) show that unemployment remains rampant in India with only 40.4% of the workforce between 15-64 years of age currently employed or seeking active employment.

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 overall LFPR has been falling for 5 consecutive years – from 46% in December 2016 to 40.4% in December 2021.

For the period September to December 2021, 67.4% of India’s male workforce were employed or seeking employment in comparison to 67.5% at the start of the year. However, only 9.4% of the female workforce during the same period was participating in nation-building through economic activities. The involvement of females in India’s workforce has been falling at a rapid pace over the years – from 14.4% in December 2016 to 9.4% in December 2021.

The rural labour force participation rate (LFPR) was 41.7% during Sep-Dec'21, while that in urban India was 37.8% during the same period.

The participation levels dip inversely with the worker’s academic qualifications. Workers with graduate degrees and higher were the more participative in India’s workforce at 61.2% while only 30.2% of workers without any education were in active employment.

Between Sep-Dec'21, Meghalaya had the highest LFPR of 59.4% across India, followed by Tripura at 53.8%. Uttarakhand had the lowest LFPR across India at 31.7%, followed by Kerala at 34.3%.

Reference Reading

What is Labour Force Participation Rate (LFPR)?

The Labour force is that section of the 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 the 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 a 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, the participation rate is considered carefully. An aging 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.