How does India track Underemployment in its economy?

How does India track Underemployment in its economy?

This is the question I asked Gemini - How does India track Underemployment in its economy?. The following text is what I got as an answer for it.

In India, measuring underemployment is complex because the headline Unemployment Rate (UR) capturing those completely without a job is typically low (around 3.1%). Instead, the vast majority of the workforce is engaged in low-productivity, informal, or seasonal work.

The official metrics to capture underemployment are managed via the Periodic Labour Force Survey (PLFS)—conducted by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI). Underemployment in India is primarily measured through two distinct lenses: time-based (visible) underemployment and structural/qualitative underemployment.

1. Time-Based Underemployment Metrics

Time-based underemployment captures individuals who are technically employed but working fewer hours than they are willing and able to. The PLFS exposes this by tracking two different reference periods, as detailed in the official MoSPI PLFS Reports:

A. Current Weekly Status (CWS) vs. Usual Status (US)

• Usual Status (ps+ss): Looks at a long reference period of the last 365 days. If a person worked for even a minor period (30 days or more as a subsidiary worker), they are categorized as "employed."
• Current Weekly Status (CWS): Looks at a short reference period of the last 7 days. A person is considered "employed" if they worked for at least 1 hour on any single day during that week.
• The Underemployment Gap: The gap between the CWS unemployment rate and the Usual Status unemployment rate serves as an indirect indicator of underemployment. When CWS unemployment is notably higher than Usual Status, it reveals that many people who are "usually employed" over the year were actually underemployed or idle during specific weeks due to seasonal or irregular work availability.

B. Daily Activity Status (Employment by Hours)

The survey tracks the daily intensity of work within the reference week. A person is classified as:

• Employed for a full day: If they work for 4 hours or more in a day.
• Employed for a half-day: If they work for more than 1 hour but less than 4 hours. Economists use the aggregation of these half-days and low-hour tracking to evaluate the quantum of underutilized labor time, particularly in agricultural and casual labor sectors.

2. Structural & Quality-Based Metrics

Because people cannot afford to remain completely idle in the absence of universal social security, they accept sub-optimal employment. India tracks these qualitative underemployment elements using specific structural proxies outlined in data from the Press Information Bureau (PIB):

A. Share of Informal & Self-Employment

The NSO categorizes workers into three buckets. A heavy skew toward the first two points to high disguised underemployment:

• Self-Employed (Own-account workers & Helpers in household enterprises): This stands high at roughly 56.2% of the workforce. A massive portion of this includes unpaid family helpers (disguised unemployment where more hands are working than required, resulting in near-zero marginal productivity).
• Casual Labour: Workers paid daily wages based on erratic, short-term assignments (~20.2% of the workforce).
• Regular Wage/Salaried Employees: The formal standard (~23.6%).

My comment: It is very depressing to see the section structural/qualitative underemployment which actually measures educated unemployment. I hope the numbers change quickly. These people know that they can do more with themselves, but for some reason they are stuck with this job. For most, I doubt they had a job available that best fit their skills. This is the untapped potential that is going waste not only for them but also for the country's GDP.

Self-Employed(most of them are family helpers) and Casual Labour constitutes more than 70% of the workforce. If all of them are doing unskilled work, imagine how much potential skilled labour from them going to waste.

B. The Youth "NEET" Rate

The government tracks the proportion of youth Not in Employment, Education, or Training (NEET). For the 15–29 age bracket, this metric hovers around 25%. While some of this constitutes outright unemployment, a significant portion reflects discouraged young workers who have given up looking for active employment due to a lack of quality jobs matching their skills, signaling severe structural underutilization.

Summary Table of Official Indicators