Counting the Female Labour Force Participation Rate accurately

Source– The post is based on the article “Counting the Female Labour Force Participation Rate accurately” published in The Indian Express on 8th February 2023.

Syllabus: GS3- Indian economy and employment

Relevance– Measurement of statistics related to employment

News– Economic Survey tries to address a longstanding policy problem by developing a better method to count women’s participation in the labour force

What is PLFS?

It is defined as the percentage of persons in the labour force in the population. LFPR is the percentage of the population that is employed, or is looking for work, but is unemployed.

What is the importance of women participation in the workforce?

As per a McKinsey report, if India achieved gender equality, it would add 700 billion US dollars to GDP in 2025. Annual GDP growth will increase by 1.4%. There are other such studies with other such numbers.

What are the issues with calculation of PLFS by official estimates?

In any informal economy, arriving at numbers like LFPR is difficult. An enterprise survey won’t work. Despite increasing formalisation, self-employment is large.

Even within the formal sector, informal contracts are the norm. Roughly 50% of employment is self-employment. More than 20% is wage employment with a regular contract and the rest is casual labour.

Hence, employment numbers have to be generated through household surveys, not enterprise ones.

Economic survey observations– Economic Survey 2022-23 highlights an important measurement issue. The common narrative of Indian women’s low LFPR misses the reality of working females integral to the economy of the household and the country.

Measurement of employment through the survey design and content can make a significant difference to final LFPR estimates. This matters more for measuring female LFPR than male LFPR.

Three main measurement issues have been highlighted: Overly broad categories, reliance on a single question to categorise labour force status, and the narrow approach of limiting productive work to labour force participation.

Use of overly broad categories that clubs productive work like collection of firewood, poultry farming with domestic duties can shift a significant proportion of women in the labour force into the out-of-labour-force category.

For example, unless the production of primary goods is identified as the main activity by the respondent, the PLFS would categorise women who do both domestic activities and primary goods production as out-of-the-labour-force.

Using the improved methodology, the Survey recomputes female LFPR with a better definition. Female LFPR ia counted 46.2% for FY21 for ages 15 years and above. It is much higher than the 32.5% estimated by the conventional definition.

ILO estimates– A similar attempt was made in an International Labour Organisation research paper published in 2014. It arrived at a female LFPR of 56.4% in India for 2012, against the lower official estimate of 31.2% for 2012.