Festive season brought no joy to the common man

Unemployment surged from 6.43 per cent in September to 7.77 per cent in October while labour participation rate (LPR) fell from 39.3 per cent to 39 per cent during this period

Festive season brought no joy to the common man

Gyan Pathak

The month of October this year in which fell the two great Indian festivals – Dussehra and Diwali – failed to bring much happiness to the common people of India. Rather, India’s job market turned much more perilous that only a month ago in September.

Unemployment surged from 6.43 per cent in September to 7.77 per cent in October while labour participation rate (LPR) fell from 39.3 per cent to 39 per cent during this period.

The 30 day moving average, as calculated by the Centre of Monitoring Indian Economy (CMIE), shows that the surge in rural unemployment was even more disturbing compared to the urban unemployment which rose from 5.84 per cent in September to 8.04 per cent in October.

However, the festival market in urban areas improved a little and thus there was some improvement in urban unemployment level which fell to 7.21 per cent in October from 7.7 per cent in September. Thus, the disturbing trend in urban unemployment continued at an unacceptably high level.

The sharp rise in unemployment, coupled with the fall in labour participation rate (LPR), presents a dismal picture, especially at a time when the economic recovery is supposedly underway. The situation is indicative of the economic growing without proportionate job creation. Rather, the reduced number of available jobs indicated that employers are resorting to job cuts in a bid to cut operation costs to maximise profit.

Therefore, any fall in LPR, even a small decline, is a matter of serious concern.

The CMIE finds LPR falling 0.3 per cent, unemployment rising 1.34 per cent, and rural unemployment rising 2.20 per cent just in 30 days.

Though the fall in LPR is small in October compared to September, it cannot be ignored since the fall is persistent. It indicates that an increasingly smaller proportion of the working age population is willing to be employed. The disenchantment among the working age people towards searching for jobs in increasingly smaller number is a matter of grave concern for several reasons. One of them is it brings down the unemployment rate while actual unemployment is much higher than it is calculated on the present formula.

CMIE has interpreted this phenomenon of falling LPR combined with an elevated unemployment rate as implying a falling employment rate. It means there is a distortion in the job market in which the employment rate stood at only 36 per cent in October, with total number of employed coming down from 404 million in September to 396.4 million in October. It is clear therefore clear that about 78 lakh people lost their jobs in October.

In absolute numbers, the headcount of unemployed persons rose by 56 lakh, while 22 lakh workers had to go out of the labour market in October. India’s labour force shrank from 432 million in September to 429.8 million in October.

The fall in employment in rural India in October was essentially due to deterioration in non-agricultural activities despite the festival season. The reason behind this may be unavailability of money in the hands of people because of joblessness. Moreover, the recovery in agriculture sector has been very slow.

CMIE data shows that the recovery in employment in agriculture in October 2022 was lowest in the month of October of the last four years. It had peaked at 164 million in November 2021 and since then it has fallen rapidly to a low of 134 million in September. In October, it could slowly recover to only 139.6 million.

The total job loss in October was nearly 15 million, in which the predominant loss was of the daily wage earners. Agricultural labourers and non-agricultural employments have thus significantly declined.

Employment in urban India increased only a little, from 126 million in September to 127.4 million in October. It was a net addition of only 1.4 million. Salaried jobs increased by 2.26 million to cross 51 million. This little gain in urban areas was too little to offset the jobs losses in rural India.

The services sectors lost 7.9 million jobs in October 2022. Of these, 4.6 million losses were incurred in rural India and 3.3 million were in urban India. There is a concentration of the job losses in the services sector in rural retail trade.

Retail trade is the largest employer among the services industries. It accounts for nearly half of all services sector jobs. Of the 4.6 million rural services jobs lost in October, 4.3 million were in the retail trade industry. In urban India, retail trade recorded a small increase of 0.8 million jobs during the month.

The industrial sector saw a loss of 5.3 million jobs in October. Here again there is a concentration of the losses in manufacturing industries in rural India. These saw employment shrinkage by 8.4 million. Urban manufacturing industries added 4.2 million jobs at the same time. Construction, which is the largest employer, shed a little over a million jobs in October. Most of these were in rural India.

The data shows that volatility in the labour market of India continues, even as finding quality salaried and secured jobs is still a dream for the majority of the unemployed in India.

(IPA Service)

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