Elements of the low Indian labour force participation rate: The elderly

by Subhamoy Chakraborty, Renuka Sane and Ajay Shah.

India has a remarkably low rate of labour force participation. The Periodic Labour Force Survey (PLFS) carried out under the Ministry of Statistics and Programme Implementation estimated the labour force participation rate (LFPR), for individuals of age 15 and above, at 49.8% in 2017-18. The CMIE CPHS survey, which has more recent information, has shown a decline in the LFPR by 2019. These numbers suggest that a large part of India is not in the labour market. These magnitudes of non-participation are much larger than the rates seen with unemployment. The grand question of Indian labour economics is that of understanding the low LFPR. The grand question of Indian economic policy lies in obtaining a 50 per cent gain in GDP through a 50 per cent increase in the labour force.

One big element of this LFP problem is women's LFP. The women's LFPR has been falling. In 2011-12, India was already one of the countries with the lowest female labour force participation. This has gotten worse with time. In 2017-18, the female LFPR fell to a historic low of 23.3%. A remarkable feature of the Indian women's LFPR is the comparison against countries like Pakistan (24%) or Bangladesh (36%). For those of us who believe that women's agency in India is ahead of that in Pakistan, this is a bracing fact. The examination of women's LFP is an important crossroads between labour economics and gender studies. It also emphasises the importance of gender studies in thinking about India.

The other two big elements of the LFPR problem are the young and old. In this article, we delve into labour supply of the elderly and establish some basic facts of this field. The positive and normative economics of elderly LFP is an important element of labour economics, given the large and growing share of the elderly in the population. It is also a major issue in ageing studies. High labour force participation by the elderly is well known to contribute to emotional and physical well being. It is generally better for a person to work for a wage of Rs.50 a month rather than obtain a pension of Rs.50 a month. The puzzle of the field lies in devising labour market arrangements that will harness labour supply of the elderly, and avoid the abrupt event of retirement.

The elderly are defined as those above the age of 55. The 55-64 age group is also part of the conventionally defined working age group (age 15 to 64). The 65+ age group constitutes the old elderly.

Data

We study the Consumer Pyramids Household Survey (CPHS), a pan-India panel household survey of about 170,000 households carried out by the Centre for Monitoring Indian Economy. The survey asks about the present employment status of each member above 15 years of age. The response to the employment question is recorded as a 4 point status:

1. Employed
   
2. Unemployed, not willing and not looking for a job
   
3. Unemployed, willing and looking for a job
   
4. Unemployed, willing but not looking for a job
   

Individuals whose employment status is either Employed (1) or Unemployed, willing and looking for a job (3) are considered to be a part of the labour force. In this article, we examine the data for January - April, 2019.

Overall

Table 1 provides estimates of the labour force participation by age group. There are approximately 375 million workers in the 15-54 age group, giving a LFPR of 45%. The LFPR drops slightly to 44% for the 55-64 age group with 51 million workers. The LFPR drops dramatically to 12% for the 65+ age group with only 8.4 million workers.

Table 1: Labour Force Participation: Age Group

Age Group	Population (in millions)	LFP (in millions)	LFPR(%)
15-54	828.3	375.0	45.3
55-64	115.6	50.8	43.9
65 and above	69.1	8.4	12.1

Figure 1 presents the labour force participation rate (LFPR) of those above the age of 55. The labour force participation was a little over 55% at age 55, and fell to about 10% by age 70.

Figure 1: Labour Force Participation (55 and above)

Withdrawal by the elderly from the labour force generally happens for one of the following reasons: (a) people are required to leave their main job at a specific retirement age, (b) are unwilling to work because they value leisure more and access to pensions at a sharply defined age which makes it feasible to stop working (c) are unable to work because of health constraints or (d) the labour market is unfriendly to older workers. In the US, for example, sharp drops in participation are seen at the age of 62 and 65, when access to social security benefits becomes available.

In India, formal pension arrangements are only in place for a small part of the population. Hence, factors "(a)" and "(b)" above should not matter much in India. And yet, we see a sharp drop at age 60. This suggests that reasons such an unfriendly labour market might explain the large drops in labour force participation at older ages.

Changes over time

Figure 2 presents the labour force participation rate in 2016 and 2019. We see that there has been a small increase in the participation rate for the 55-59 age group between 2016 and 2019. However, for all other age categories, there has been a remarkable fall. For example, about 42% of the 60-61 age group participated in the labour market in 2016. This had fallen by about 10 percentage points in 2019. Similarly, in the 65 plus age group, labour force participation was at 28%. By 2019, this had fallen to 12%. This suggests that that stress in the economy has hurt the elderly more than prime-age working males. This may be part of a larger phenomenon, where prime age working males are protected in economic downturns, while all other parts of the labour force (women, the young, the old) seem to lose employment at higher rates.

Figure 2: Labour Force Participation: Over time

International comparison

It is useful to ask how these compare to the numbers in the OECD countries, where formal pension systems shape the decision to retire. Table 1 presents the elderly labour force participation rate (LFPR) in India, US and Japan.

Table 2: LFPR: Comparison with US and Japan

Age Group	India (%) (Jan-Apr 2019)	US (%) (2018)	Japan (%) (2018)
55-59	52.7	72.3	83.4
60-64	29.4	57.1	70.6
65 and above	12.1	19.6	24.7

In 2018 according to the Bureau of Labor Statistics in the US, 72.3% of those in the 55-59 age group were in the labour force. The participation rate fell to 57.1% for age group 60-64 and further declined to 19.6% for those above 65. Meanwhile the labour force participation rate in Japan, as reported by Statistics Bureau of Japan, was 83.4%, 70.6% and 24.7% for age groups 55-59, 60-64 and above 65 respectively. Japan has, in fact, seen a resurgence in elderly labour force participation in recent years owing to better health and education, as well as reduced generosity of social security programs.

Japan is considered one of the best countries in terms of integrating the elderly into the labour market. Suppose we treat Japan as a frontier: the outer limit of what is possible with labour market participation by the elderly. How much would we in India gain if we moved up to this frontier?

If the LFPR of the 55-64 age group in India (which is 43.9%) were to become the same as that of Japan's (77%), then the overall working-age LFPR would go up to 49.15%. This is a 4 percentage point increase in the LFPR owing to increases in the labour force participation of the "young old", and would mean that an additional 38 million individuals would be in the labour force.

An additional 9 million people, of age 65+, would also join the labour force, by matching the Japanese LFPR for the age group of 65+.

Totally, 47 million people would enter the Indian labour force if we moved up to Japanese levels of LFP from age 55 and above. This is an economically significant number. This magnitude of impact will go up in the future as India ages.

Conclusion

The Indian labour market has a remarkable feature: of low labour force participation. In this article, we examine one facet of this problem: the low LFP for the elderly. Despite the prevalence of a large informal sector, and the absence of a formal age of retirement, we find that the elderly labour force participation is low, and has actually fallen between 2016 and 2019.

Withdrawal from the labour market is bad for the elderly and bad for the economy. The examination of the LFP of the elderly is an important crossroads between labour economics and ageing studies. Further research is required in identifying the causes behind the low LFPR of the elderly.

 

The authors are researchers at the National Institute of Public Finance and Policy.

Author: Rajeeva Karandikar

Rajeeva Karandikar is Director at Chennai Mathematical Institute.

On this blog:

• The EVM – VVPAT saga, 24 May 2019.
• Early trends in election results and financial trading , 10 November 2016.
• Going from vote share estimates to seat estimates, 10 May 2014.
• Small samples from big populations shouldn't bother us, 16 December 2013.
• Pre-election polls: Do they work, do they influence voters, and should they be banned?, 13 December 2013.

Towards an administrative framework for building public trust in vaccination

by Siddhartha Srivastava.

In January 2019, the Delhi government published a notification mandating the administration of the Measles-Rubella (MR) vaccine to all children between 9 months to 15 years of age. The vaccine was meant to be delivered as a booster shot irrespective of the previous vaccination status of the child. The notification did not provide any information with respect to the manner in which the MR campaign was to be carried out. Instead, it stated that since the "Measles-Rubella (MR) campaign is a National Policy like the Pulse Polio Programme...no consent is required from the beneficiaries/their parents". This led to widespread panic among parents who eventually filed a petition before the Delhi High Court challenging the notification. The notification was challenged on the grounds that the express consent of the parents was not a requirement for administering the booster shot.

In response to the challenge, the Delhi High Court ordered a stay on the administration of the MR vaccine in the city and directed the Delhi government to ensure that express parental consent was obtained before the measles vaccine could be administered to children. The court also directed the Delhi government to publish advertisements with respect to the procedure of administration of the vaccine as well as information with respect to the side-effects of the booster dose such that parents can provide their informed consent for vaccination.

Background

The judgment comes at a time when there has been widespread opposition to the introduction of the MR campaign in several states across India. Punjab, Karnataka, Kerala, Tamil Nadu and New Delhi have all witnessed vaccine hesitancy in different forms in relation to the administration of the MR vaccine. While the judgment poses significant questions about the role of individual consent in the delivery of public health goods by the state, this article is limited in scope to proposing a streamlined administrative framework for vaccination in India, one that contains internal controls to discourage vaccine hesitancy. Using the MR campaigns conducted in three different Indian states as case studies, we offer insights into the establishment of a proposed administrative framework such that the gains from immunisation are not offset by the growing threat of vaccine hesitancy in the country.

Methodology

We examine MR campaigns conducted by the state governments of Delhi, Tamil Nadu and Kerala by using primary and secondary legal sources:

1. Notifications/circulars issued by central and state governments with respect to the implementation of the MR campaign (see, here and here).
2. Judgments arising out of litigation against vaccination campaigns and vaccine liability (see, here and here).
3. Legal papers and journal articles on mechanisms to deal with issues of vaccine hesitancy.
4. News articles reporting cases of vaccine hesitancy in the chosen states.

We reviewed these materials with a view to understand the current framework of vaccine administration in these states with a specific focus on the processes present in these frameworks (or lack thereof) to deal with vaccine hesitancy. We compare India's approach to vaccine administration to that of the United Kingdom, Canada, Australia and the United States. Accordingly, we attempt to derive best practices that can contribute to a model administrative framework for vaccine delivery specific to India with inherent checks and balances to address vaccine hesitancy. (see, here, here, here and here).

Analysis

A study of the MR campaigns undertaken in Delhi, Tamil Nadu and Kerala suggest that vaccine opposition in these states can be broadly attributed to the following causes:

1. Shared beliefs about safety, efficacy, potency and manner of delivery: Parents in Delhi are apprehensive about the effects of a booster dose of the MR vaccine given that their children have already been vaccinated for measles.
2. Difficulty in accessing and understanding credible scientific information on vaccination: With the internet having become a repository of health-related information and in the absence of a framework for regulation/monitoring of such content, South Indian states such as Tamil Nadu and Kerala have witnessed the spread of erroneous, non-scientific information regarding vaccines over the internet and other media. Widespread misinformation and rumour-mongering on the internet, especially social media, has been a common characteristic of the MR campaigns across the country.
3. Difficulty in accessing and understanding the legal/regulatory framework governing vaccination: Parents in Delhi and Kerala have raised concerns about scattered and often incomplete rules framed by state governments to undertake the actual administration of the MR vaccine.
4. Reliance on religious, cultural and personal beliefs rather than proven facts and evidence: Opposition to the introduction of the MR campaign in Delhi, Kerala and Tamil Nadu suggests that vaccine hesitancy is not uniform across communities in each state but tends to occur in specific clusters (such as specific religious communities or groups that believe in non-traditional medicine). The identification of vaccine hesitant subgroups is imperative to understand the causes of their hesitancy and develop targeted interventions to increase vaccine uptake.

Towards a Trust Based Framework

Keeping in mind the causes of vaccine hesitancy in India, it may be helpful to design an administrative framework to streamline vaccine delivery with built-in checks for tackling vaccine hesitancy. The presence of an administrative machinery may be useful in addressing the public trust deficit in vaccination, in terms of:

Building greater credibility around vaccines: The administrative framework must be approved by a body of public health experts including vaccination professionals in order to allay fears relating to potency, efficacy and safety of the dose being administered. The United States Advisory Committee on Immunisation Practices (ACIP) and the United Kingdom Joint Committee on Vaccination and Immunisation (JCVI) are examples of such expert committees that provide recommendations for vaccine administration and monitoring. The ACIP is subject to the Federal Open Meetings Act of the United States which requires all meetings of the ACIP to be carried out in public as a trust building measure. In India, the National Technical Advisory Group on immunization (NTAGI) advises the central government on technical issues related to vaccination. The meetings of the NTAGI are close-door and infrequent. NTAGI sub-groups and expert advisory groups are constituted on an ad-hoc basis to address specific issues, and industry representatives are invited to present data but do not participate in discussions. Therefore, there is an urgent need for the functioning of the NTAGI to be made more transparent. Moreover, in addition to advising on the technical aspects of vaccination, there is a critical need for the NTAGI to consider issues such as vaccine access and coverage, safety, and hesitancy more frequently. Measures recommended by the NTAGI to strenghten monitoring and supervision, reduce immunisation drop-out rates and improve VPD and AEFI surveillance should be more heavily advertised with a view to address the fears of the public.

Formalising an awareness/communication strategy for vaccines: The administrative framework should contain strict rules for engaging with the public. This includes provisions for ensuring frequent awareness campaigns, dialogue with members of different communities, public campaigns by doctors, vaccinators and other public health experts, media outreach through public figures etc. Rules for engagement with the public during the introduction of new vaccines, changes in immunisation schedules and experimental vaccine trials can prove useful in reducing public fear at the outset. A compelling example of the effect of a well-formulated communication strategy can be found from within India itself in it's pulse polio campaign of the late 1990s. Targeted communication played an important role in raising awareness and building trust in the polio campaign with popular media figures and sports personalities advocating the benefits of vaccination over various media such as film, television, radio and print.

Formalising the procedure for vaccine delivery: Organised and accessible rules of procedure with respect to time, place and manner of vaccination can strengthen public confidence in vaccines. Specific information with respect to vaccine description, quality, indications, contraindications, side effects, dosage, age group, manner and place of delivery, catch-up immunisations etc. can provide a measure of certainty to parents and make them more comfortable in engaging with vaccination campaigns of the government. For example, each state in the US has it's own set of immunisation laws and regulations. These laws are procedural in nature and set out the administrative mechanisms through which schools, universities, pharmacists, and health-care facilities etc. are required to administer the various vaccines prescribed by the ACIP. In India, we find that the exact mechanism/process of vaccine delivery changes constantly based on where the vaccine campaign is being carried out and the nature of the campaign itself. For example, certain states prescribe that immunisation take place only in schools while others allow for vaccination at schools, public health centres, home-visits etc. As such, there is a need for consistency in the procedures followed to administer vaccines, one which can be addressed by having a set of codified procedural rules for vaccination in each state.

Monitoring, evaluation and reporting: The administrative framework may specify reporting requirements. Requirements with respect to monitoring and reporting the incidence of vaccine preventable diseases, coverage rates and adverse effects following vaccination (AEFIs) can assist in the formulation of stronger mitigation strategies for vaccine preventable diseases. Australia has adopted a national surveillance system that reports instances of adverse events following immunisation from state and territory registries as well as data sent directly from consumers, health professionals and vaccine manufacturers. These reports are regularly reviewed by the regulator and referred as required to expert committees, such as the Advisory Committee on Vaccines, to ensure ongoing safety assessments. In India, an AEFI surveillance framework has been in place since 1998. The national AEFI guidelines provide a set of standards for undertaking the investigation and assessment of cases reported as AEFIs. All states and districts are required to constitute AEFI committees, which assist in streamlining AEFI surveillance at the local level. However, the number of serious AEFIs reported in India are still far lesser than expected numbers. A large number of AEFI committees established at the state and district level are not functional, as a consequence of which there is insufficient real-time AEFI data being generated and stored accross the country. Recent reports suggesting the presence of the polio type 2 strain in oral samples of polio vaccines expose the inadequacies in our current monitoring and evaluation systems while further making the case for a standardised administrative framework for vaccine delivery.

Establishing a mechanism for accountability: The administrative machinery should include a mechanism for empowering communities to question vaccination practices, introduction of new vaccines, reasons for the occurrence of AEFIs etc. This will be a useful departure from the current practice of placing blame on state governments, without having any recourse to an institutional/administrative mechanism for grievance redressal. In order to ensure accountability, more than 15 countries around the world have instituted compensation mechanisms for vaccine related incidents. In these countries, compensation is dispersed either through courts or a compensation scheme pay-out for individuals that have suffered injury or death following vaccination. Even in India, consumer protection forums have considered and indeed ordered compensation for vaccine-related injuries and deaths in the past. However, an institutional apparatus similar to the US (which lists the nature of vaccine-related injuries that can be compensated under the National Childhood Vaccine Injury Act and requires the claimant to show a demonstrable link between the vaccine and the injury) can help provide a platform for vaccine accountability while at the same time evading frivolous claims.

Providing positive incentives for vaccination: Various countries seek to achieve their vaccination mandates by conditioning benefits, such as access to public/private services, on compliance with state vaccination requirements. Mandatory vaccination for enrollment in public schools falls within this category. However, rather than benefits, it is viable to condition incentives on compliance. For example, The Patient Protection and Affordable Care Act (ACA) of the United States requires insurers to fully cover the cost of recommended vaccines, relieving consumers of the entire expense of vaccination. The proposed administrative framework may contain additional incentives in order to discourage vaccine hesitancy in different subgroups in India.

Given the recent declaration of the WHO that vaccine hesitancy is one of the top 10 global health threats in 2019, and amidst the resurgence of measles outbreaks in different parts of the world, it is imperative that we start developing, implementing and evaluating measures to better address the complex problem of vaccine hesitancy. A well formulated and transparent administrative machinery can be a useful starting point for addressing this problem and fully realising the gains from immunisation in India. Moreover, the presence of such a framework can also act as a foundation for engaging in separate debates around the viability of individual consent vis-a-vis mandatory compliance with respect to legal/ administrative interventions designed to deliver public health goods.

References

Gopichandran, Vijayprasad, Public trust in vaccination: an analytical framework, Indian Journal of Medical Ethics, 2017.

Kumar et al., Vaccine hesitancy: understanding better to address better, Israel Journal of Health Policy Research, 2016.

Nadimpally et al., An idea whose time has come: compensation for vaccine-related injuries and death in India, Indian Journal of Medical Ethics, 2017.

Jarret et al., Strategies for addressing vaccine hesitancy - a systematic review, Vaccine, 2015.

 

The author is a researcher at the National Institute of Public Finance and Policy. The author thanks Prof. Ajay Shah, Dr. Renuka Sane and Mr. Shubho Roy for their useful comments and guidance.

Announcements

Azim Premji University, Bangalore and the National Institute of Public Finance and Policy (NIPFP), New Delhi are pleased to announce a new collaborative initiative, a workshop “Strengthening the Republic”.

India has completed more than seven decades as an independent nation and a constitutional republic. When India set upon this path it was seen as a brave unconventional path for a new post-colonial nation. Seven decades on, most political scientists would characterize India as a 'miracle' democracy - one that has defied extant political theory on constitutional survival and democratic transitions. However, too much of this Indian exceptionalism avoids careful attention to the specifics of Indian institutional design and the granularity of Indian institutional practice.

Indian academic scholarship in law, politics, economics and the social sciences more generally must invest considerable resources and intellectual energy in unpacking the institutional grammar of India’s success as a republic. The failure to do so may result in a misdiagnosis of our success while simultaneously failing to uncover the flesh and blood that has kept our institutional scaffolding in place. This seminar is dedicated to in depth empirically rigorous investigations into public institutions - legal, political and social - that enhance our common understanding and generate keen insight into their contemporary successes and failures.

About the Workshop:

Drawing on the high quality, interdisciplinary research work carried on by Azim Premji University and NIPFP, this workshop aims to generate active, sustained conversations and academic scholarship on themes related to the law, society and public institutions in India.

The workshop is designed to be an intensive, one-day session aimed at encouraging scholarship and debate among individual researchers, academics and practitioners belonging to disciplines like law, politics, economics and sociology to engage in thoughtful discussions with peers on pressing contemporary issues under these broad themes.

The workshop is being hosted by Azim Premji University and NIPFP in New Delhi.

Format of the Workshop:

Interested applicants should submit an abstract of not more than 1000 words on topics of their interest under the broad themes. The proposals could be based on their ongoing research or new research that they would like to be engaged in. Two copies of the abstract, in word, pdf, LaTeX or any similar formats should be emailed to varsha.aithala@apu.edu.in, with details of full name, designation and employment/institutional affiliation of the applicant.

All abstracts will be reviewed by an independent jury selected by the organisers who will shortlist the abstracts based on relevance to the theme, novelty and academic merit. Authors of selected abstracts will receive an email notification of the exact date and venue of the workshop and should submit their completed research paper to varsha.aithala@apu.edu.in, by 15 December, 2019.

The workshop session will host five paper presentations from the shortlisted abstracts. Every paper selected for presentation will be allocated a committed discussant/ respondent.

Illustrative list of papers:

The following is an illustrative list of papers that reflect the broad topics of interest and rigour of analysis that is expected of papers in the workshop:

1. Building State capacity for regulation in India by Shubho Roy, Ajay Shah, B.N. Srikrishna, Somasekhar Sundaresan. In Devesh Kapur and Madhav Khosla (eds.), Regulation in India: Design, Capacity, Performance. Oxford: Hart Publishing, 2019 (forthcoming).

2. Protecting Citizens from the State post Puttaswamy: Analysing the Privacy Implications of the Justice Srikrishna Committee Report and the Data Protection Bill, 2018 by Vrinda Bhandari and Renuka Sane. Socio Legal Review 14(2), (forthcoming).

3. How to Modernise the Working of Courts and Tribunals in India by Pratik Datta, Mehtab Hans, Mayank Mishra, Ila Patnaik, Prasanth Regy, Shubho Roy, Sanhita Sapatnekar, Ajay Shah, Ashok Pal Singh and Somasekhar Sundaresan. NIPFP Working Paper 258, March 2019.

4. Challenges of Competition and Regulation in the Telecom Sector by Smriti Parsheera. Economic & Political Weekly, Vol. 53, Issue No. 38, September 22, 2018.

5. Legislative strategy for setting up an independent debt management agency by Radhika Pandey and Ila Patnaik. NUJS Law Review, Volume 10, Issue 3, 2017.

6. Misled and Mis-sold: Financial Misbehaviour in Retail Banks? by Monika Halan and Renuka Sane. Journal of Comparative Economics, 45(3), August 2017.

7. Karnataka Crime Victimisation Survey: 2019 report by Sudhir Krishnaswamy, Asha Venugopalan and Varsha Aithala (forthcoming).

8. Commercial Courts in India: Three Puzzles for Reformers by Sudhir Krishnaswamy and Varsha Aithala (forthcoming).

Other arrangements:

The presenter’s travel, accommodation and incidental expenses will be provided for by Azim Premji University.

We welcome proposals for research papers which are unpublished, recently published or of publishable quality in academic journals of international repute, though preference would be given to previously unpublished papers. The research papers may employ the reference and citation style used in standard social science practice, or the style used in legal periodicals. Simultaneous submission of papers to the workshop and other publications is permitted. Authors are expected to disclose any commercial or other associations that may result in a conflict of interest in connection with the research.

All submitted research papers will be published as open access working papers and available on the websites of both organisers. Organisers reserve the right to make editorial comments to the papers prior to publication.

Important dates to remember:

• Deadline for submission of abstracts: 31 October, 2019.
• Deadline for research paper submission: 15 December, 2019.
• Workshop: 11 January, 2020 (Saturday).