ILO‘s Unworkable Maths

The issue of low Female Labour Force Participation Rate (FLFPR) in India has been a matter of debate for some years now. The latest estimate published last month by International Labour Organisation (ILO) for India is 24% for 2022. This marks a small increase from 23% in 2021 (revised up from earlier estimate of 19.2%) but still among the lowest in the world. Is this a fair reflection of female labour-force participation in the country?

FLFPR is defined as the number of women in the labour force, both employed and unemployed, as percentage of working age female population (i.e. above 15 years of age). According to the ILO’s 2022 estimates, India’s FLFPR is much lower than the readings for developed countries: 58.5% in the United Kingdom, 56.5% in the United States and 53.9% in Japan.

However, India’s rate is also low compared to emerging economies like Vietnam (69.1%), and Indonesia (52.7%). Indeed, some of the highest FLFPR readings come from emerging countries in Africa such as Kenya (72.7%) and Tanzania (78.9%). The high FLFPR in many emerging economies reflects the participation of women in farming and traditional family occupations. Given that this is common in India, why does this not drive up the number for the country?

India’s own Periodic Labour Force Survey (PLFS) conducted by Ministry of Statistics and Programme Implementation estimates the country’s FLFPR at 32.5% for 2020-21. However, it is well known that this is a gross underestimate. The latest Economic Survey points out a number of measurement issues.

The most glaring flaw is that the PLFS categorisation does not include productive work done by women as part of their household duties (poultry farming, milking the cows and so on). This effectively pushes a significant proportion of women in the active labour force into the “out-of-labour-force” category. This is not only conceptually untenable, it is also against the internationally used ILO standards. The Economic Survey estimates that if the PLFS data is corrected for this, the “augmented FLFPR” rises to 46.2% from 32.5% for 2020-21.

Note that the ILO is fully aware of this issue and highlighted it in a research paper in 2014 (https://www.ilo.org/global/research/publications/papers/WCMS_250977/lang--en/index.htm). It defies common sense that the ILO then takes the trouble to model India’s FLFPR and then estimates it in the 23-24% range, a level far below the official PLFS estimate that it knows is an underestimate!

When we contacted ILO for an explanation, the reply acknowledged that the estimate for India was inaccurate, and added that “imputed observations are not based on national data, are subject to high uncertainty and should not be used for country comparisons or rankings”. This is a particularly odd response when the very first paragraph of their 2022 methodology note claims that “the resulting country level data, combining both reported and imputed observations, constitute a unique, internationally comparable data set of labour market indicators.”

The perpetuation of an incorrect estimate does not remain limited to this space alone but often ends up corrupting other indicators. Thus, the ILO’s pre-revision estimate of 19.2% for 2021 is a key reason that the World Economic Forum’s Gender Gap Index 2022 ranked India at 135 among 146 countries (and 143 in the sub-index for economic participation and opportunity for women). Similarly, UNDP’s Gender Inequality Index 2021 (as part of the Human Development Report) positioned India at 122nd out of 170 countries. Thus, poor data has become the basis of acrimonious debates on social issues.

This brings us to two broader problems that we had broached in our previous article in this series (see ET 10th Feb 2023). In that article, we had demonstrated how the use of an inappropriate global standard for childhood stunting has led to significant over-estimation of malnutrition in India. The first problem, therefore, is that much of debate about India’s socio-economic indicators is often based on questionable data. Both academics and activists should question standards and estimates from global agencies, especially those involving international comparisons.

Second, India’s data gathering agencies need to demonstrate greater application of mind. The previous article had illustrated a case of using inappropriate global standards, while this article shows an example of not using global definitions that are appropriate. In both cases we ended up with misleading estimates. Inordinate delays in publication are also a major reason that errors are perpetuated.

If our own data agencies came up with timely and well-considered estimates, it would leave less space for international agencies to foul-up. Indeed, we got the impression from our interactions with ILO that if the PLFS survey was upgraded to international quality, the institution would simply use the national agency’s estimate. In other words, we need to question international agencies but we also need to get our own house in order.

(Sanjeev Sanyal is Member, Economic Advisory Council to the Prime Minister; Dr. Srishti Chauhan is Young Professional, EAC-PM)