Unemployment

Unemployment

Subject: Economy

Section: Employment

Context: The Bihar government has released some details about the state’s caste survey that was conducted this year

Concept:

• Labour Force Participation Rate (LFPR): Simply put, it gives a sense of how many Indians are “demanding” a job.
• The “Labour Force” consists of persons who are of 15 years of age or more and are either of the following two categories:
  1. are employed
  2. are unemployed and are willing to work and are actively looking for a job
• The LFPR is expressed as a percentage of the working-age population.
• Unemployment Rate (UER): It is nothing but the number of people in the labour force who are looking for a job but as yet unemployed. The UER is expressed as a percentage of the labour force.
• In India the UER often underestimates the joblessness because the LFPR itself keeps falling.
• Simply put, it has been found that if they do not get a job over time, a lot of unemployed people get discouraged and leave the labour force (that is, stop actively looking for a job).
• With unemployed people leaving the labour force, the ratio of unemployed to total labour force falls. As such, often in India, the UER falls not because more people have got jobs but because the LFPR itself falls (that is, when more people — who failed to get a job — stop looking for a job altogether).
• As such, the best metric to look at is Employment Rate (ER). The ER dispenses with the labour force calculation and simply looks at the total number of people employed as a percentage of the working-age population. By not basing itself on LFPR, the ER avoids the problem of a falling LFPR artificially dragging the unemployment rate.

Caste-wise Employment rate

• The ER has fallen for each and every caste group.
• In other words, the proportion of people belonging to a particular caste in the working-age population who are employed has been coming down for every caste.
• Again, while the upper castes have the lowest employment rate, the biggest drop in ER has been witnessed among OBCs and SCs.

Religion-wise Employment rate

• Reportedly, the Bihar caste survey looked at caste across religious identities as well. In other words, it categorised non-Hindus (such as Muslims) into different castes.
• As such, it might be relevant here to look at the religion-wise employment rates as well.