Labour Force Participation Rate

Reviewed by Anjaneyulu | Updated on Sep 30, 2020

Introduction

The labour force participation rate is the portion of the working population in the 16-64 years' age group in the economy currently in employment or seeking employment. The labour force does not count people who are still doing research, homemakers, and people over the age of 64.

How to Calculate?

The rate of participation of the labour force is the metric for determining the working-age population in a country. The participation rate refers to the total number of persons or individuals either in jobs or looking for a job.

Those who aren't looking for a job like full-time students, homemakers, people over the age of 64 etc. won't be part of the data which is used for calculation. This rate is an important metric when the economy is not rising or is in the recession process. It's that time when people look at the data on unemployment.

Formula= Labour Force/Total Eligible Population

It is common that, at the time of recession, the labour force participation rate will go down. This is because the economic activity at the recession time is minimal, resulting in fewer jobs across the world.

When there are fewer jobs, people are discouraged from concentrating on employment which ultimately leads to lower participation rates. The participation rate is also essential when it comes to an understanding of the economic unemployment rate. It's vital to evaluate the unemployment rate regularly in the economy.

Labor Force Participation Rate in India

The Labor Force Participation Rate in India stood at 49.80% in the fiscal year 2017-18, as per the National Sample Survey Office (NSSO) Periodic Labor Force Survey (PLFS) report.

Labor Force Participation Rate in India from 2005 until 2018 averaged 53.90%, reaching an all-time high of 63.70%in 2005 and a record low of 49.80% in 2018.

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