Low and declining economic participation and surging unemployment

Reimeingam Marchang *

Labour force participation rate (LFPR) remains relatively lower in the State of Manipur when compared to the country’s level. Unsurprisingly, the lower LFPR in the State is due to the low economic participation rate.

It is evident from the Periodic Labour Force Survey data (usual status–principal status plus subsidiary status) that LFPR was recorded lower at 37.5% in Manipur than 40.1% of India in 2019-20 before the outbreak of the COVID-19 pandemic.

It remains lower in Manipur (32.4%) than India (41.6%) in 2020-21 during the pandemic induced lockdown and restrictions of functioning of economic activities that have resulted in job loss and livelihoods uncertainty as establishments were closed, workers were retrenched, laid off and regaining of lost jobs was uncertain.

The LFPR had declined by around five percentage points in the State against a marginal increase in the country. This implies that Manipur, unlike India, had failed to generate adequate employment for those who have lost their job due to the pandemic induced economic activities standstill and disruption.

As per the Economic Survey (2023) the Indian economy has revealed a full recovery in the Financial Year 2022 which portrays that the labour market was marching towards the pre-pandemic period. Similar situation was expected for the BJP ruling State of Manipur. However, in 2021-22, the LFPR remained, almost as low as in 2020-21, at 32.8% and was considerably lower in the State than the National average (41.3%).

It signifies that the swift economic recovery of the Nation did not trigger the pace of economic recovery rather stumbled and entangled with severe unemployment problems in Manipur. That the LFPR showed slight improvement in the country, which is not the case for Manipur is a matter of concern.

The decline of LFPR was owing to the decline of the economic participation rate. The work participation rate (WPR) of the State declined from 33.8% in 2019-20 to 30.5% in 2020-21 and further dropped to 29.8% in 2021-22. Whereas WPR increased from 38.2% to 39.8% between the first two periods but insignificantly declined to 39.6% in 2021-22.

It shows that Manipur, unlike the rest of the country, was incessantly incapacitated to generate and supply sufficient job opportunities for the bulging job demand that has propelled out-migration for jobs. Labour supply was staggeringly high in Manipur.

Evidence shows that severity of unemployment problem was almost double in Manipur with 9.7% unemployment rate, against India’s only 4.8%, in 2019-20 before the outbreak of COVID-19 pandemic. During the pandemic in 2020-21, unemployment problem eased with the decline of unemployment rate in the State (5.6%) as in the country (4.2%).

In Manipur, the decline in the unemployment rate by four percentage points and the decline of WPR by three percentage points in 2020-21 from 2019-20 indicated that the ease of unemployment problem was due to the non-entry of fresh labour entrant into the labour market and withdrawal from seeking or available for work; and pandemic induced job losers have refrained from re-entering the labour market due to the job and salary uncertainties and avoiding the risk of contraction from the COVID-19.

Later, in 2021-22, unemployment problem soared again at 9.0% as the number of job seeker increased in search of livelihood sustenance and security as their opportunity cost to remain idle was extremely high in Manipur; at times India’s unemployment rate slipped to 4.1%.

Employment remains mostly informal as self employed in the State as in the country. However, Manipur continues to have a larger share of self employment of 60.4%, 56.0% and 64.3% in 2019-20, 2020-21 and 2021-22 respectively, against India’s 53.5%, 55.6% and 55.8% in the same period respectively.

Presumably, self employed people are equally vulnerable during economic uncertainty caused by the pandemic disaster that did not distinguish between jobs. In Manipur self employment declined by around four percentage points with the outbreak of the pandemic in 2020-21 from 2019-20.

It has sharply increased by eight percentage points in 2021-22 from previous year partly contributed by the reversed migrants who have engaged in self employment and also limited availability of regular or causal wage employment opportunities.

A relatively more secured job is the regular wage or salary job. Regular wage or salaried employment has slightly increased from 31.8% in 2019-20 to 32.5% in 2020-21 showing its job stability and security amidst the pandemic; but declined considerably to 27.8% in 2021-22 as self employment sharply surged in Manipur.

The State, in comparison to country’s 22.9%, 21.1% and 21.5% in the same period respectively, continue to have a substantially larger share of regular jobs indicating of having regular income security. The proportion of self employment and regular employment is affected by the size of the casual wage labour including public and other types of works.

The share of casual employment remains considerably lower at 7.8%, 11.6% and 7.9% in Manipur when compared to India’s 23.6%, 23.3% and 22.7% in the same period respectively. It suggests that Manipur was incapable of generating adequate casual wage employment in public or otherwise work, as competitive as India to provide jobs and livelihood security and concurrently to accelerate the pace of development.

Government of Manipur need to introspect to create casual wage employment, as much as in India, to raise wage employment, increase purchasing power and make partly an engine of economic growth.

The temporary increase of the casual employment by about four percentage points in 2020-21 from the previous period, then later a drop, is mesmerising because of the decline of self employment, but highlights a temporary surge of possibly the casual wage employment in public work during the peak of the pandemic in the State.