Unemployment rate climbs to a 23-week high as jobs remain elusive
3 min read 14 Dec 2020, 05:04 PM ISTThe urban unemployment rate stood at 11.62%, while rural joblessness rose to 9.11%, reveals CMIE dataThe Dec figures are highest since the week ended 14 June, when the covid-19 pandemic was raging
PremiumNEW DELHI : India’s overall joblessness rate has climbed significantly to close to 10% in the week ended 13 December, at least a 23-week high, reversing a trend where the unemployment rate was hovering largely between 6% and 8% for the last few months.
The urban unemployment rate touched 11.62% in the same week against the 8.15% recorded in the previous week, according to data released by Centre for Monitoring Indian Economy (CMIE). The rate or rural joblessness also climbed to 9.11% in the week to 13 December against the 8.56% reported in the previous week, recording a consecutive growth in joblessness in the past four weeks.
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These are the highest joblessness rates after the week ended 14 June, when the covid-19 pandemic was raging and several parts of the country were still under partial lockdown. India’s overall unemployment rate in that week was 11.63%, while urban unemployment was 13.1% and rural unemployment 10.96%. In the week ended 21 June, overall joblessness was 8.48%, while urban unemployment was 11.19%, which is lower than the rates recorded on 13 December.
Economists and experts argue that a visible growth in unemployment rate is a worrying sign and indicates poor demand in the labour market.
However, they also say that it indicates that the labour force participation rate (LPR) may be gradually increasing in December compared to the past few months. This means that people who were staying away from the labour market despite having no jobs are gradually becoming active employment seekers, thus putting extra pressure on a struggling jobs market.
“Early indications are that there is a growth in the LPR in the past couple of weeks over what was observed in the last few months. We have two problems. We have an employment problem and people are staying off the labour market. At least, one part, LPR, is improving now…People who were jobless but were staying off are now coming back to the labour market," Mahesh Vyas, chief executive officer and managing director, CMIE, said over the phone. The all-India LPR was 40.03% in November and 40.66% in both October and September, according to CMIE data. This was much lower than the LPR of 42.9% in January.
The LPR hovered between 43.02% and 42.3% in the August-November 2019 period.
An increase in LPR should not be seen as the primary reason for growth in unemployment rate, said Arup Mitra, a professor of economics at the Institute of Economic Growth in New Delhi.
“LPR is gradually coming back to pre-covid levels but it is still far from the average of the last financial year. If a slight recovery from low LPR is pushing up the unemployment rate, it shows the lack of appetite in the market to absorb workers. After a massive reverse migration, people are coming back to cities and possible work belts, but are they getting jobs? No. The demand in the market is low, the economy is down and till the economy and consumer demand is revived at least to the pre-pandemic time, you will see a high unemployment rate. A sizable section of people especially in the informal sector who are reporting employed are actually part of disguised employment, busy in petty and unproductive work for a sustenance," Mitra said.
“Labour is getting discouraged by the lack of jobs on offer and is exiting the active labour markets… The sustained loss of jobs and also the apparent falling wage rates or income levels is discouraging workers from remaining in the labour markets," CMIE had said in a post on its website.
