By Dr. Gyan Pathak
Data from various sources, both government and private, clearly indicate that the unemployment crisis in India is worsening, and is set to worsen further in 2023. Unemployment rate in the country rose from 7.14 per cent in January to 7.45 per cent in February. On 30 day moving average, unemployment rate stood at 7.5 per cent on February 28, which rose to 7.63 per cent on March 3, according to CMIE data.
The latest data on GDP also shows that economic growth is declining, and hence the unemployment rate would further worsen. The labour market condition is deteriorating fast and the employment rate is also set to fall further, with companies resorting to lay off in large scale. The rising temperature has further threatened agriculture, industrial, and other economic activities and thereby likely to impact job opportunity in both rural and urban areas.
The rise in rural unemployment rate from 6.48 per cent in January to 7.23 per cent in February is a matter of serious concern, due to price rise and higher level of food inflation. Large number of MGNREGA workers are not even paid regularly, and not getting work that was guaranteed under Nation Rural Employment Guarantee Act of 2005. The year 2023 so far have been worse for them and this situation is most likely to continue, since the Union Budget has reduced the MGNREGA budget by almost 33 per cent. As on March 3, 2023, according to CMIE data, rural unemployment rate on 30 day moving average was 7.5 per cent.
Urban unemployment rate marginally came down in February to 7.93 per cent from 8.55 per cent, but is still high. On 30 days moving average basis, the urban unemployment, however, showing a rising trend on March 3, at 7.9 per cent.
There is an allegation that unemployment crisis and the employment challenge are being understated by the Modi government in a bid to conceal the ground reality as the country is nearing heading towards the Lok Sabha election 2024. It cannot be dismissed as allegation since we had seen this government doing the same thing before the Lok Sabha election 2019, when the NSSO data was suppressed leading to resignation of an official in protest. At that time the leaked report revealed the unemployment rate to be highest in the last 45 years at 6.1 per cent.
Union Ministry of Labour and Employment had recently warned the people not to rely on the private data, and now its annual report of the Periodic Labour Force Survey (PLFS) released on February 24 says that unemployment rate fell in 2021-22 to 4.1 per cent. Giving such impression does not reflect the ground reality turning worse this year. It is simply understating the unemployment crisis and the employment challenge in the country that will have dangerous consequences.
People must not be misled by such statement of the government into believing that the unemployment rate is falling. We must understand what actually the government was saying when it said “unemployment rate fell in 2021-12 to 4.1 per cent”. It was actually “usual status” calculated on yearly basis. There is another status called “current weekly status” (CWS) which reflect the current ground reality. On CWS basis, according to PLFS, the unemployment rate was 6.6 per cent, even higher than 6.1 per cent in the beginning of 2018.
Therefore, the government statement that unemployment rate fell in 2021-22 should be interpreted more carefully. The CMIE’s Consumer Pyramids Household Survey (CPHS) conducted during the same period from July 2021 to June 2022, for which the government’s PLFS data has now been published, shows the unemployment rate at 7.5 per cent. The current unemployment rate as per the CMIE data as on March 3, is even higher at 7.63 per cent.
The method of estimation of the unemployment rate also conceals the ground reality that one must take into account. For example, when an unemployed person becomes hopeless in getting a job and therefore stop searching for a job, such a person discontinued to be counted as unemployed, and hence unemployment rate falls. Such a fall in unemployment rate does not reflect the real unemployment rate on the ground level.
There are other issues too. For example, if a person spends even an hour in a week working in the family business or its own agriculture field, the government PLFS considers such a person employed. However, in reality such a person is unemployed. Such unpaid employments are in reality unemployment but counted as employed. It must be noted that the majority of persons who declare themselves self-employed or employed in agriculture and family’s economic activities are in fact concealed unemployment.
The PLFS data counts the persons as employed according to the “usual status” even when a person is employed in a “subsidiary” activity for only 30 days in a year. However, under “current weekly status” a person is counted as employed if found working for as least one hour on at least one of the seven days preceding the date of the survey.
Thus, the reliability of both the employment and unemployment data of the government is questionable and probably concealing the ground reality of the worsening unemployment crisis and understates the employment challenge that would certainly lead to disastrous consequences with labour and social unrest. (IPA Service)