Indian employment data generates both misconceptions and puzzles

livemint.com:

The recent release of the Periodic Labour Force Survey (PLFS) for 2022-23 has generated a considerable measure of interest and commentary, some of which has appeared in this newspaper. Reading these reveals that improvements in data can only be useful if they are accompanied by a better understanding of statistics. To paraphrase an exchange from an old British sitcom, with statistics you can prove anything, even the truth.

In today’s column, we will explore some of the common misconceptions which arise when reporting on employment, as well as some puzzles which would require deeper research. There are three principal ratios which are used in discussions of labour-market conditions, namely the labour force participation rate (LFPR), workforce participation rate (WPR) and the unemployment Rate (UR). If during the specified reference period, the person is working or otherwise engaged in economic activity for most of the time, then he is presumed to be employed.

Further, if not employed as above but still making tangible efforts to seek work, then the person is classified as unemployed. If not engaged in economic activity (work) and also not available for work, then s/he would be classified as not being in the labour force. From these, we derive the workforce participation rate, which is the number of workers as a proportion of the total population.

The count of workers plus the unemployed defines the labour force, which is also expressed as a percentage of the population. The unemployment rate refers to the unemployed as a proportion of the labour force. In using these numbers, we need to keep in mind that the absolute magnitude is determined also by the population of the relevant group.