Home / News / India /  India’s urban unemployment rate climbs up to nearly 10%

New Delhi: India’s urban unemployment rate and overall joblessness climbed up in August, reflecting a worsening jobs' environment in the formal sector and saturation in the farm sector.

The urban unemployment in India crept up to 9.83% in August as against 9.15% in July, according to monthly unemployment data released Tuesday by the Center for Monitoring Indian Economy (CMIE). In other words, roughly one in every 10 person in urban areas cannot find work.

Similarly, the overall national unemployment rate was at 8.35% in August as against 7.43% in July. It may be slightly lower than March, when India was gradually getting gripped in the pandemic, but is far higher in the pre-covid months like February, January and December, when the national joblessness rate was hovering between 7.22% and 7.76%.

Likewise, the rural unemployment rate in August increased to 7.65% as against 6.66% recorded in July. Among states, Haryana is the worst hit, with a whopping 33.5% unemployment rate in August, followed by Tripura (27.9%). Whereas Karnataka (0.5%) and Odisha (1.4%) were the better-off states in absorbing labour forces in August, CMIE data showed.

Economist and experts argued that it's worrisome as it comes in a month when most of the economic activities were permitted, and believed that the continuous cut in jobs by companies and sub-optimal demand in a weak economic environment is aiding the employment crisis.

Mahesh Vyas, managing director of CMIE, said the data indicates a “fatigue in the labour market. There was a slowdown in the recovery in July if compared to May and June, and we see a slight decline in August."

“We saw a decline in salaried jobs in July but there were additions in daily wage works and jobs in single-owner enterprises. We may have to wait till end of September to see whether the recovery is just stabilizing or there is a fall," Vyas said, further adding that “lay-offs in formal sectors and saturation in the farm sector must be contributing to the increase in unemployment."

Arup Mitra, a professor of economics at Institute of Economic Growth in New Delhi, said the economy is in bad shape and the general demand in the market has not revived much. “Besides, the labour force participation rate seems to have gone down as job creation slows and fear of the pandemic grows due to growth in daily positive cases," Mitra said.

India’s gross domestic product (GDP) contracted by a historic 23.9% in June quarter, and according to official data, some of the labour-intensive sectors contracted much higher in April-June period. For example the construction sector contracted by 50%, manufacturing by 39.3%, and trade, hotel and transport segment fell by 47%.

“We know it’s a tough environment and has impacted most of us. But everyone —big corporate houses, entrepreneurs, employees and authorities—will have to show a strong commitment. Then it will have a positive impact on job creation and revival of the economy," said Sachit Jain, vice-chairman of Vardhman Special Steel Ltd, a steel manufacturer in Ludhiana.

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