It is generally assumed that a higher Work Participation Rate (WPR) is an indication of improved well-being of the population. But it is also observed that in a poor region, WPR is generally higher, which is not necessarily an indication of the improved economic status and well-being. In poor regions, people do not have an enduring source of employment and they are engaged in multiple activities for a short duration, often at low wages.

From the recent National Statistics Office’s (NSO) Periodic Labour Force Survey (PLFS) data released on July 23, 2021, an increase in the WPR at usual status (ps+ss) is reported from 35.3 to 38.2 per cent from 2018-19 to 2019-20, an 8.2 per cent growth.

In the rural areas, the increase has been 35.8 to 39.2 per cent (9.5 per cent growth) while in urban areas the rise is lower, from 34.1 to 35.9 per cent (5.3 per cent growth). Rural females registered a higher increase of 26 per cent (19 to 24 per cent share), whereas their male counterpart witnessed a much lower increase of 3.3 per cent (52.1 to 53.8 per cent share).

In urban areas too, female share saw an increase from 14.8 to 16.8 (15.8 per cent growth) while the male share rose from 52.7 to 54.1 per cent ( 2.7 per cent growth). The female WPR has risen significantly in 2019-20 over 2018-19 vis-à-vis the males. Female WPR rose across the social groups. Growth of rural female from the Scheduled Tribe (ST) (33.2 per cent) is recorded the highest, followed by Others (29.4), Scheduled Caste (25.4), and Other Backward Caste (24.3).

Urban areas registered a much lower rise in the WPR compared to rural areas. The share of self-employed workers has increased from 52.1 per cent in 2018-19 to 53.5 per cent in 2019-20. The rural females witnessed an increase in the self-employed category from 59.6 per cent to 63 per cent. Rural female work participation rate has improved, especially for women from the weaker sections (SC, ST and OBCs).

The increase in WPR as shown by the latest PLFS data, presents somewhat surprising and contrasting results. Such a sudden rise in WPR within one year calls for a detailed probe as to whether such a rise in the WPR has improved the well-being of people especially in the pandemic period.

The three-month nationwide lockdown in March 2020 coincided with the 4th quarter of PLFS 2019-20 (annual cycle being July to June) and crippled economic activities resulting in huge unemployment and income losses.

Pandemic impact

Livelihood losses were widespread among the migrants and those depending on casual form of employment during April to June 2020. It is surprising to see WPR rising at a time when economic activities stalled intermittently and GDP growth dipped continuously.

The plausible reasons for this may be, first, the regular wage/salary employment declined by almost one percentage point in 2019-20 after witnessing improvements in 2018-19 over 2017-18. Clearly, there is a decline of productive and good-quality employment opportunities, exhibiting deterioration in the wellbeing of the workforce.

Also, share of the employees who have no social security benefits among the regular wage/salaried employees has increased significantly from 51.9 per cent in 2018-19 to 54.2 per cent in 2019-20, the corresponding figure for the year 2017-18 was 49.6 per cent despite the fact that EPFO/ ESIC has taken policy intervention. The income from self-employment is not always certain, while in the casual mode of employment neither the duration is assured, nor the income in guaranteed.

Second, an increase in the self-employed rural females by 3.4 percentage points is reported in 2019-20 over 2018-19. This is principally due to an increase in the share of helpers in the household enterprises by 4.4 percentage points (or from 37.9 per cent in 2018-19 to 42.3 per cent in 2019-20), which is often unpaid form of labour. So counting them as ‘employed’ is spurious and deceptive.

Third, overall increase in loan account under the female share of MUDRA Scheme increased to 23.8 lakhs including all three categories (Shishu, Kishore and Tarun) in 2019-20 over 2018-19, of which female share is more than 85 per cent.

But a mere increase in the loan account especially in Shishu (loans up to ₹50,000) category does not necessarily lead to employment creation and sustainable income generation. The fallacy of counting them as employed is obvious and apparent.

Fourth, wages remained almost constant or registered a marginal increase in 2019-20 over 2018-19. This is true for monthly regular/salaried workers, monthly earnings from self-employment and average daily wages for casual workers (other than public works). In fact, male average monthly earnings (rural and urban together) in the self-employed category have declined, albeit marginally, in 2019-20 over 2018-19.

The year 2020 has witnessed a spike in food inflation which remained high throughout the lockdown period. If the wages are not adjusted to inflation, the relevance of wages or earning levels may indeed lead to an erosion of the purchasing power of workers. A mere rise in wages or income, without being adjusted to inflation, is a delusion and deception to the wellbeing of the workforce.

Awasthi is Professor at Institute for Human Development (IHD) New Delhi, and Shrivastav is Young Professional at Labour Bureau Chandigarh