How unemployment is measured

How unemployment is measured

Subject :Economy

Section: Employment and inflation

Definitions:

• Labour Force Participation Rate: It is the percentage of people in the labour force (those who are working or seeking or available for work) in the population.
• Worker Population Ratio is the percentage of employed people.
• Unemployment rate shows the percentage of people unemployed among the labour force.
• Unemployed The International Labour Organization (ILO) defines unemployment as being out of a job;being available to take a job; and actively engaged in searching for work. Therefore, an individual who has lost work but does not look for another job is not unemployed.

The PLFS

• The PLFS is an annual survey conducted by the National Statistical Office.
• It was started in 2017 and it essentially maps the state of employment in the country.
• It collects data on several variables such as the level of unemployment, the types of employment and their respective shares, the wages earned from different types of jobs, the number of hours worked etc.
• Earlier this job was done by Employment-Unemployment Surveys, which were conducted once in five years.

Calculation Methods

There are two ways and they differ in terms of the reference period.

1. The Usual Status (US)

• The survey ascertains whether a person had been employed for enough days in 365 days preceding the survey.
• The Usual Status is the only one that is showing a reversal in the unemployment trend
• The NSO unemployment number most routinely quoted is the one based on Usual Status.

2. The Current Weekly Status (CWS)

• The survey tries to figure out whether a person was adequately employed in the seven days preceding the survey.
• But this approach is not comparable with either the global norm (say the one followed by International Labour Organization) or the private sector practice (such as the surveys done by the Centre for Monitoring Indian Economy or CMIE).
• The CWS is closer to the global norm. The CWS method shows that unemployment didn’t really fall
• The CWS is also more relevant because it is this approach that the NSO uses for understanding quarterly changes in unemployment. So if we start looking at the unemployment rate and LFPR trends compiled using the CWS approach, the emerging picture is more in sync with either the data from CMIE or indeed all the other indicators of the broader.