Outline of Indian Labour Market

Population
Unemployed Employed
Self-employed

Not in Labour Force

Regular Wage/ Casual Labour Salaried

National Sample Survey Organization Survey

The National Sample Survey is conducted by the National Sample Survey Organization The NSS began conducting nationwide surveys on employment and unemployment from 1955 (Ninth Round) The NSS survey provides data on both, the extent of and the pattern of employment and unemployment in the country The 62nd Round survey - 4,798 villages and 5,125 urban blocks covering 78,879 households (37,975 rural and 40,904 urban) The survey enumerated 377,377 persons, of which 186,571 were rural persons and 190,806 were urban persons. The methodology makes use of three approaches to calculate the employment and unemployment rates: 1) Usual status with a reference period of one year 2) Current weekly status with a reference period of one week prior to the survey and; 3) Current daily status based on the daily activity pursued during each day of the reference week.

The labour supply in India is examined using five indicators: i. Work Participation Rate (WPR) ii. Labour Force Participation Rate (LFPR) iii. Unemployment Rate iv. Employment Status v. Nonparticipation in the labour market. Following equations express composition of population and labour force. P = L+ NL (1) where P=Population, L=Labour Force, NL=Not in Labour Force L= E + UE (2) where E=Employed, UE=Unemployed E= SE+RE+CE (3) where SE = Self employed, RE = Regular wage/salaried, CE = Casual labour From these equations, WPR, LFPR, Unemployment Rate, Employment Status and non-participation in labour market is derived.

Survey Findings
Comparing results of 1999-01 and 2005-06
There are three approaches to employment: i. Usual Status (US) basis A person is unemployed if he/she was not working, but was either seeking or was available for work for the major part of the year. ii. Current Weekly Status (CWS) - A person is considered unemployed by if he/she had not worked even for one hour during the week, but was seeking or was available for work. iii. Current Daily Status (CDS) - It is in terms of total person days of unemployment, and is the aggregate of all the unemployment days of all persons in the labour force during the reference week. It was found that the proportion of not in labour force is more than the proportion in labour force in all the three approaches.

 The proportion of labour force is more in the principal and subsidiary (PS+SS) category, than in the usual principal status (UPS) because a non-worker on the basis of UPS is someone whose major part of time in the preceding year was spent as either unemployed or not in the labour force. Nevertheless, the person could still be involved in some economic activity and is referred as subsidiary worker in the labour force. Growth rate of labour force is more than the growth rate of not in labour force. In the PS+SS category 97.3 percent of the labour force is employed, while 3.7 percent is unemployed. The growth rate of unemployed (2.5) is more, compared to the growth rate of the employed (1.4). Further, the percentage of unemployed labour force increases considerably from the UPS to the Current Daily category (CDS). The CDS criterion describes the nature of activity on a typical day of the reference week and therefore is defined as flow measure of work possibilities.

 Conversely, the reference period for UPS category is the preceding year. This leads to the significant difference in the proportion of unemployed in the two categories. It was found that the self-employed are maximum in proportion, followed by casual labour, and regular salaried. Casual labour has a negative growth rate for all the categories (The growth rates are -0.3 for UPS, -0.1 for PS+SS, -0.2 for CDS and -0.4 for CWS). Certain important trends emerge from the above findings: the proportion of self-employed increases to an extent, from the UPS category, to the PS+SS category. Whereas, the proportion of regular salaried and casual labour decrease from the UPS category to PS+SS category. The WPR and the LFPR rates are highest for the PS+SS category. The unemployment rate is highest for the CDS category.

Different dimensions of Indian Labour Market

Certain important changes have taken place in the Indian Labour Market during 1999-01 and 2005-06. Rate of growth of economy and growth rate of employment have accelerated. However, in terms of social security and other amenities, the quality of employment remains poor and the conditions of work have deteriorated for a major portion of the workers. This is evident from the fact that the portion of regular salaried workers is way less than self-employed and casual workers. The increase in the growth rate of employment, can be attributed to the rapid increase in labour force because of the favorable age distribution of increased population during this period. The unemployment growth rate is much higher, than the employment growth rate. Therefore, on the whole it is essential to realize that, productive employment opportunities for the growing labour force in India have to encompass both quality and quantity of employment available to individuals.

 The following dimensions of the Indian labour market have been analyzed a) Regional Dimension b) Unemployment Dimension c) Employment Segment Dimension d) Gender Dimension

Regional Dimension
The regional dimension analyzes the labour force participation condition, and the employment and the unemployment situation of the rural and urban regions. NSS defines Labour Force Participation Rate (LFPR) as, a measure of the proportion of population, which is in the working age. In both 62nd and 55th rounds, the compound annual growth rate (CAGR) of labour force is notably higher for rural persons, than for urban persons, across all the status categories. However, for not in labour force, the growth rate is positive for rural persons, although it is considerably negative for their urban counterparts. The situation remains the same when compares the growth rates of labour force of urban males and their rural counterparts. Agriculture is the dominant economic activity in the rural areas and has the maximum proportion of employed in the labour force, thus leading to a higher labour force growth rate.

 Studies have pointed out the persistence of unorganized low wage, low productivity and insecure employment, in Indian agricultural sector. Agriculture constitutes of self-employed workers and casual labourers, but they do not receive any social security benefits. Rural areas = labour intensive economic activity => high employment rate. But at the same time, most of them are primarily engaged in the agricultural sector which is seasonal. This leads to high unemployment rates. The proportion of unemployed is higher in urban regions, since they have more formal sector jobs and hence the option of being either employed or unemployed. The scenario is different in the rural areas, where there are more informal sector jobs. Accordingly, the proportion of self-employed and casual workers is more in the rural areas, than in the urban areas. Similarly, the regular salaried are more in the urban areas, as compared to the rural areas.