Many Indians falling out of labour force

Aunindyo Chakravarty

Senior Economic Analyst

PEOPLE in poor countries are desperate to get paid work. Often, they send their children out to work well before they reach the legal working age of 15 years. The International Labour Organisation (ILO) says on an average 66 per cent of the working-age population of low-income countries is either working or wants to work. This proportion drops to 60 per cent for high-income countries. This is understandable: Poor people have to work, whatever their age may be, the affluent can afford to exit the labour force once they are older.

When it comes to India, this logic falls apart. Only 46 per cent of India’s working-age population works or wants to work. This is ILO’s data; if we take data from the Centre for Monitoring Indian Economy (CMIE), the numbers are even more shocking. In February 2020, before Covid hit us, only 44 per cent of Indians wanted work. This has dropped to just 40 per cent in October 2022. This means that 60 per cent of Indians, who fall in the working-age bracket, neither have paid work nor do they want it.

One big reason for this is that very few Indian women of working age want paid work. The ILO data tells us that between 1990 and 2006, about

32 per cent of the working-age women participated in the labour force — they either had paid work or were looking for it. This proportion dropped to just 22 per cent by 2019. The CMIE data is even bleaker; in February 2020, right before the Covid lockdowns, about 12 per cent of working-age women either worked or wanted work; in October 2022 that dropped to just 10 per cent. Compare that to China, where 69 per cent of the working-age women participate in the labour force.

The pundits explain India’s abysmal female labour-force participation rate as collateral damage from our growing affluence. Indians supposedly frown upon women working outside the home, but they have no option when they are in dire need of money. So, as more and more Indians have been supposedly lifted out of poverty, women have stopped working and gone back into their homes. We are told that affluence also has a “sanskritising” effect on the poor, where they turn more conservative about their women as they rise up the income ladder.

This cosy picture has two problems. The first is that there is no evidence to suggest that Indian households at the bottom of the pyramid have become any richer since 2005-06 when female labour-force participation was significantly higher. If anything, evidence suggests their conditions have become worse. Secondly, given that such few women want paid work, they should find it very easy to get employed. The exact opposite is true — the CMIE’s latest numbers for October tells us that women’s unemployment rate stands at a staggering 30 per cent, more than three times the 8.6 per cent unemployment rate among men. That means that out of every 100 working-age women in India, only 10 look for work, and out of that only seven get paid work.

In reality, women do not look for work, because they have lost all hope of getting work. As they return to running the home, the family’s income falls, forcing them to cut their household expenses. This is a double whammy for women employment. Lower-middle class families might employ part-time domestic helps if the woman of the house goes out to work. When these women leave the workforce, the first job to go is that of the domestic help. More often than not, this is likely to be a woman, which leads to a further rise in women unemployment.

But what about men? In 2019, before Covid, the ILO’s figures suggested that 73 per cent of working-age Indian men participated in the labour force, which was only marginally lower than the 74 per cent figure for low and middle-income countries. The CMIE data for male labour-force participation rate for mid-2019 was similar, ranging between 72 and 73 per cent. This has dropped to just 66 per cent in October 2022.

Between February 2020 (before the Covid lockdowns) and October 2022, the working-age male population in India increased by 46 million. If the labour-force participation rate had remained the same, an additional 33 million men would have been looking for work. Instead, that number has increased by just 1.3 million. In effect, nearly 32 million working-age men have fallen out of the labour force.

The most-likely explanation for this is that they are not physically capable of working, given the kind of jobs available for the poor in India. Agriculture, construction and trade account for nearly three-fourths of all jobs in the country. All three pay poorly and two of them involve back-breaking labour. Studies from Europe show that a farmer working for eight hours will lose around 4,500 Kcal, while a construction worker would use up roughly 4,000 Kcal in the same time. In India, construction is much more labour-intensive and is likely to require even more energy. That is way higher than the 2,400 Kcal per day that is recommended for rural Indians.

The Food and Agricultural Organisation (FAO) estimates that over 16 per cent Indians are undernourished, which means a large number of poor people in the working-age population do not even get half the calories they need to be able to do hard labour. They barely survive on free rations, handouts from the government and support from their village community. This is a vicious cycle; government rations are just enough to support a sedentary life, and the poor cannot get jobs that can be performed on their current level of nutrition. So, they have no option, but to be permanently dependent on what our media terms ‘freebies’.

This is a complete reversal of the path India was seeking when we became Independent. Instead of workers moving from hard labour to more mechanised work on factory floors, today most employment opportunities involve hard physical labour. The only way to get out of this is if the state guides the economy towards higher employment, better working conditions and employment-enhancing mechanisation, while sacrificing immediate profits. Without that, India will be a subsistence economy for a majority of its people.

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