Reliability of PLFS 2019–20 Data

The April–June (2020) quarterly data for the urban sector showed a massive decline in the workforce participation rate and a huge increase in the unemployment rate. Still, the annual average work participation rate rose sharply in 2019–20 compared to the earlier two rounds of the Periodic Labour Force Survey estimates, and the average unemployment rate declined somewhat. Given these patterns, the Centre for Monitoring Indian Economy data set, despite its own problems, seems to be casting a more realistic picture.

If we keep in view the quinquennial surveys (2004–05 or 2011–12) of the National Sample Survey Office (NSSO) (now NSO), the first Periodic Labour Force Survey (PLFS) (2017–18) witnessed a decline in the workforce participation rate (WFPR), particularly in the case of women, and a sharp increase in the unemployment rate among both males and females. This was interpreted as an outcome of demonetisation, which presumably reduced the scale of economic activities. Those who believe in the beneficial aspects of corruption and black money would especially envisage so. The deceleration in the aggregate demand led by the reduction in cash balances suppressed the volume of economic activities and labour demand, being reflected in a sharp rise in the unemployment rate. Thereafter, it was expected to pick up substantially. However, the next round of PLFS data for 2018–19 also did not show any marked improvement on the job front, except some marginal decline in the unemployment rate.

Following the pandemic and the lockdown, the quarterly data published for the urban sector showed a massive decline in the WFPR and a huge increase in the unemployment rate in the April–June quarter of 2019–20. Despite this, the annual average figures of WFPR rose sharply in 2019–20 compared to the earlier two rounds of PLFS estimates and the average unemployment rate declined by 1 percentage point from 5.8% in the previous year to 4.8% in 2019–20 (Table 1).