The annual Periodic Labour Force Survey conducted for the period July 2022-June 2023 shows that the jobs creating capacity of the economy has picked up considerably since the Covid upheaval, which is good. The key takeaways are: labour force participation rate (those employed or seeking work as a proportion of the total population) has improved across rural and urban India and for men and women since 2017-18 (July-June for all years), although the gender gap remains very large; the unemployment rate has dropped from 6.1 per cent of the population to 3.2 per cent; and a greater proportion of jobs are being created in the 29-plus age group.

Data suggest that jobs are being created more in sectors with low educational requirements, and in agriculture, construction and trade and restaurants. A falling unemployment rate does confirm that the economy has been limping back to normal, contrary to what many critics have claimed. Jobs certainly are being created. The disparity in job creation between the rural and urban economy stands out. The labour force participation rate (LFPR) for rural India was 43.4 per cent in 2022-23 and for urban India it was 39.8 per cent, making up an all-India level of 42.4 per cent, against 36.9 per cent in 2017-18. The faster rise in rural LFPR (from 37 per cent in 2017-18 to 43.4 per cent in 2022-23) than its urban counterpart (36.8 per cent to 39.8 per cent) can be explained by Covid-induced reverse migration. The rise in female LFPR has been driven by the rural economy.

What, in fact, comes as a surprise is that the LFPR was just marginally affected in 2020-21 and 2021-22 (with unemployment almost unchanged), despite the GDP having contracted 6.6 per cent in FY21 and having grown 8.7 per cent (but still below pre-Covid levels) in FY22. The question is whether signs of higher employment generation in the rural areas are a healthy development, or one that needs to be regarded with scepticism. This would depend on the kind of jobs being created in rural and urban India. While it is not very surprising that about 80 per cent of those working in rural India are self-employed or casual workers, the proportion is over half even in urban India. Seen against the educational profile of those in the fray, one can infer that these are low-wage earners.

In terms of sectoral composition, two or three sectors account for most of the employment. In rural India, 58.4 per cent of the jobs are in agriculture, while construction, manufacturing, trade and restaurants account for 13.9 per cent, 8.2 per cent and 8.3 per cent, respectively. In urban India, trade and hotels, at 23.8 per cent, is the largest employer, followed by manufacturing and construction. There can be no denying the Covid setback to skilling in India. The PLFS points to the need to upgrade skills across rural and urban India to cater to India’s growth ambitions. A 13-percentage point gap between the LFPR for the 15-29 age group and the ‘15 years and above’ in recent years implies that unemployment is prevalent among the young, which is a socio-economic problem.