Millennium Post

Undeniable wounds

Undeniable wounds

According to the Centre for Monitoring Indian Economy (CMIE), India's unemployment rate shot up to 7.8 per cent in June, up from 7.1 per cent the previous month. The increase in the rate is termed as 'seasonal' and is chiefly attributed to the rise in rural unemployment figures. The unemployment rate in rural India increased from 6.62 per cent in May to 8.03 per cent in June. This was partly compensated by the decline in urban employment from 8.21 per cent in May to 7.3 per cent in June. Employment rate, on the other hand, declined from 37 per cent in May to 35.8 per cent in June and the labour force participation rate shrank from 40 per cent to 38.8 per cent. Labour force participation rate, it may be noted, is the total proportion of the population aged 15 or above that is either employed or is actively looking for employment. A decline in LFPR means that more eligible people have decided to sit out of the job market. Furthermore, the total number of employed persons in India, after increasing by seven million in April and one million in May to reach 404 million, has declined to 390 million in June. Despite admitting that the deterioration in employment figures is sharp, CMIE's CEO Mahesh Vyas sounded optimistic. He attributed the rise in unemployment, and the fall in employment and labour force participation rate to below-the-mark monsoon rainfall — 32 per cent less, to be precise. It may be noted that in its May report, the CMIE had expected a surge in agricultural labour in June with the onset of Kharif season — speculating an increase in labour force participation rate and employment. Thanks to the inconsistency in monsoon rains, these speculations have now reversed in a sense. Decline in agricultural labour is still not much of a concern for the CMIE. In its May report, the leading economic think tank, believing that "industry and services harness labour more productively than agriculture", had celebrated the shift from agriculture to industry and services. The May report had highlighted that, during the April-May period, agriculture shed 14.7 million jobs while industry and services added 15.6 million and 7.2 million jobs respectively. These estimates should, however, not put us in complacency. India's labour force participation rate — among the lowest in the world — is fast shrinking. India's LFPR declined from 47 per cent in 2016 to a mere 38.8 per cent in June this year. This is way lower than neighboring countries like China (68 per cent in 2021) and Bangladesh (56.97 per cent in 2021). The outlook appears more problematic as India's female labour force participation rate, somewhere around 25 per cent, is struggling to catch up with the global average of 47 per cent. In terms of unemployment rate also, countries like Bangladesh, China, the US, the UK etc. are faring much better than India. This slippage doesn't bode well for a nation that aspires to be a global superpower. Not just India is falling far behind developing and developed nations in terms of unemployment, it is also struggling to hold on to what it had been a decade earlier. As late as in 2017, the National Sample Survey Office (NSSO) had pegged India's unemployment rate at 6.1 per cent. If anything, the situation has only deteriorated over the years — both in pre-pandemic and the pandemic phase. Statistics apart, how can one forget horrible instances when post-graduates and PhD-holders madly rushed for much low-qualification jobs like that of gardeners and peons in disproportionate numbers — forcing those on the lower rung to compete against highly qualified candidates. Evidently, unemployment among educated youth is now trickling down to uneducated or ill-educated grade workers. Apart from improving the quality of the country's human resources by investing more on education and health, the government also needs to drastically restructure the way labour market operates in India — both in the formal and the informal sector. More emphasis on the informal sector is required where the employee largely works under immense job insecurity, on the discretion of the employer. Focus on reforming informal work culture also becomes pertinent as the formal sector appears to be shifting more towards contractual jobs. To sum up, rather than being content with slight statistical monthly improvements, there is a need to look at the larger problem through a practical lens and take the needful actions.

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