Employment: Unemployment and measurement

The PLFS was launched in April 2017 by the National Statistics Office (NSO) of MoSPI (formerly the NSSO). It replaced the NSSO's five-yearly employment-unemployment rounds as the main source of labour-force data. The Labour Bureau (Ministry of Labour and Employment) compiles other series such as the CPI for industrial workers and establishment surveys, but not the PLFS.

Both statements are correct. Discouraged workers have given up searching, so labour surveys place them outside the labour force. When jobless people move from 'unemployed' to 'not in the labour force', both the numerator and the denominator of the unemployment rate shrink, and the measured unemployment rate falls although employment has not risen.

Statements 1 and 2 are correct. The NSSO's quinquennial rounds ended with the 68th round (2011-12); the next large-sample survey was the PLFS, launched in April 2017, whose first annual report covered July 2017-June 2018. Statement 3 is wrong: the Labour Bureau's household Employment-Unemployment Survey has no published round after its fifth round for 2015-16 and was discontinued once the PLFS became the official household labour- force series.

All three statements are correct. The usual principal status (ps) uses the 'major time' criterion over the last 365 days. The subsidiary status (ss) adds anyone who worked for 30 days or more in a subsidiary role, so ps+ss counts more workers than ps alone. The current weekly status (CWS) uses a reference week and treats one hour of work on any day as employment. Because the reference periods differ, the same person can be employed in one approach and unemployed in another.

In the current daily status (CDS) the activity of each person is recorded for each day of the reference week in half-day units, so the result is a count of person-days of employment and unemployment. A casual worker who finds work on only three days of the week is employed under CWS but shows several unemployed person-days under CDS. That is why CDS unemployment rates are usually the highest of the three approaches.

The PLFS counts as workers all those engaged in economic activity: own-account workers and employers, unpaid helpers in household enterprises (both self-employed categories), regular wage/salaried employees and casual labourers. A person attending only to domestic duties in her own household is classified as not in the labour force, because such unpaid household services for own use fall outside the production boundary used for employment statistics.

Statements 1, 2 and 3 are correct. Under the revamped design (a rotational panel in which each household is visited in four consecutive months), the NSO released its first monthly bulletin for April 2025 on 15 May 2025; quarterly CWS results were extended to rural India from April-June 2025; and the PLFS Annual Report 2025 covered January-December 2025. Statement 4 is wrong: the number of households per first-stage unit was raised from 8 to 12, increasing the sample.

Statements 1 and 2 are correct. Workers are a subset of the labour force, so the WPR can never exceed the LFPR; the gap between them is the unemployed share of the population. The unemployment rate is that gap divided by the LFPR: (50 - 47) / 50 = 6 per cent. Statement 3 is wrong: the UR can fall simply because jobless people stop looking and leave the labour force (the discouraged-worker effect), with no rise in the WPR.

Marginal productivity of labour is zero is correct (c). In disguised unemployment, more people work on a job, often a family farm, than are actually needed. If some of them are removed, total output does not fall, so their marginal productivity is zero. They appear employed but are effectively surplus. (a) is wrong: it describes open unemployment. (b) is wrong: lack of alternatives may explain it but does not define it. (d) is wrong: low productivity is not the same as zero marginal product.

Notice the theory: Arthur Lewis's dual-sector model (1954) argued that surplus farm labour could move to industry without reducing farm output. India still has about 46% of its workforce in agriculture, a sign of hidden underemployment. Other types: seasonal, structural, frictional and cyclical. Trap: 'low' productivity is not 'zero'.

Answer as per the official UPSC answer key.

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Statements 3 and 4 are correct (b). The answer draws on the NITI Aayog paper on India's changing rural economy (2017). Statement 1 is wrong because worker productivity rose in both rural and urban areas after 1991, though faster in towns. Statement 2 is wrong because the rural share of the workforce fell, as people moved to cities and towns. Statement 3 is right because within villages the non-farm economy (construction, trade, transport, services) grew fast and now makes up most of rural output. Statement 4 is right because rural employment growth slowed.

Notice the term "jobless growth", used for India's high GDP growth with weak job creation. The PLFS (Periodic Labour Force Survey) is now the main source on jobs.

Answer as per the official UPSC answer key.

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Both statements are correct (c). The 2018 amendment to the Industrial Employment (Standing Orders) Central Rules allowed fixed-term employment in all sectors, not just apparel. Statement 1 is right because a fixed-term contract simply ends on its date. The employer need not follow retrenchment procedures or give compensation, which makes it easier to let workers go. Fixed-term workers still get the same wages and benefits as permanent workers. Statement 2 is right because the rules say no notice of termination is needed for a temporary workman, whether employed for a fixed term or not.

Notice the change since then: these ideas were included in the Industrial Relations Code, 2020. The four Labour Codes were brought into force in November 2025, and fixed-term workers became eligible for gratuity after one year.

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The Service Area Approach came under the Lead Bank Scheme (b). The Lead Bank Scheme, started by the RBI in 1969 on the Gadgil Study Group's advice, gave one bank the lead role in credit planning for each district. The Service Area Approach (SAA), introduced in 1989, went further. Each rural and semi-urban bank branch was given a set of villages and made responsible for planning and meeting their credit needs. It was relaxed in 2004, except for government-sponsored schemes. The IRDP (a), MGNREGS (c) and Skill Mission (d) are unrelated.

Notice the related bodies: District Consultative Committees and State Level Bankers' Committees. Today, financial inclusion relies more on Jan Dhan accounts and bank correspondents.

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Statements 2 and 3 are correct (c). Statement 1 is wrong because PMKVY, launched in 2015, is the flagship scheme of the Ministry of Skill Development and Entrepreneurship (MSDE), not the Labour Ministry. It is run through the National Skill Development Corporation (NSDC). Statement 2 is right because, besides trade skills, it trains people in soft skills, entrepreneurship, and financial and digital literacy. Statement 3 is right because its Recognition of Prior Learning (RPL) part tests and certifies informal workers against the National Skills Qualifications Framework (NSQF).

The scheme is now in PMKVY 4.0, with a focus on new-age skills such as AI, drones and coding. Notice the related Skill India Digital Hub and the PM Vishwakarma scheme (2023) for traditional artisans.

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Neither statement is correct (d). The National Career Service (NCS), launched in July 2015, is run by the Ministry of Labour and Employment, through the Directorate General of Employment, not by DoPT, so statement 1 is wrong. Statement 2 is wrong because it is not limited to uneducated youth. It is an online portal and a network of Model Career Centres that link all job seekers with employers. It also offers career counselling, skill information and job fairs, and it modernised the old employment exchanges.

Notice the related platforms: e-Shram for unorganised workers, Skill India Digital Hub, and the Employment Linked Incentive scheme from the 2024 Budget, which encourages formal hiring.

Answer as per the official UPSC answer key.

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