By Dr. Gyan Pathak
India’s labour market remains volatile. The month of January 2023 witnessed a large number of unemployed moving out from the labour market after they got frustrated after months of searching jobs. This act of the unemployed excluded their count as unemployed resulting in fall in unemployment rate from 8.3 per cent in December 2022 to 7.1 per cent though joblessness in reality increased. Even though unemployment rate at 7.1 per cent is unacceptably elevated.
According to the CMIE data, the unemployment rate has been rising again in February. The all-India average unemployment rate for the month of January was 7.14 per cent which rose to 7.37 per cent on February 9, indicating that labour market is far from being stable. Both urban and rural unemployment has again been rising, indicating that the little recovery in job market in January was only a temporary phenomenon, and concealing the ground reality of joblessness, because the decline was only technical on account of large number of workforce leaving the job market, and are not even searching for a job.
As of February 10, the CMIE data shows an all Indian average unemployment rate in the first ten days at 7.3 per cent, with urban unemployment at 8.3 per cent and rural unemployment at 6.9 per cent on 30 day moving average basis.
The volatility of India’s job market is not new. It has been well entrenched in the job market due to wrong policy preferences, that has further became deep rooted malaise ever since Narendra Modi became Prime Minister of India in 2014. His policy experiments killed millions of MSMEs and rendered millions of people jobless. Unemployment rate had reached 45 years high at 6.1 per cent long back in 2018.
In place of formalization of the jobs, the Modi regime witnessed large scale informalization. Large share of informal employment in unorganized sectors of he economy has been further increased, and the CTUs have been claiming that it rose from around 91 per cent to 97 per cent. Informal jobs are gained one month and lost in the next in large numbers contributing the volatility in the job market. Moreover, there is no social security coverage for them.
The elevated level of unemployment, over 7 per cent that has become a new normal, even at this point of time when Indian economy is recovering from the impact of the pandemic is worrisome. The average unemployment rate even during the pandemic was 7.3 per cent. It is a matter of serious concern that we have unemployment rate at this level even in February 2023. Ground reality is more worrisome because the unemployed who have left the job market are not counted as unemployed.
Moreover, a little decline in unemployment rate in January almost every year is a common seasonal phenomenon. December month usually registers higher unemployment rate, which tend to fall in January, since employment goes up. As per the last six year average number of employed rose by about 3.7 million in January as against a drop in unemployment by about 3.3 million. However, what happened in January 2023 is quite alarming. Employment declined by 0.95 million as per the CMIE data. It means December 2022 had witnessed a larger-than-normal increase in employment by 8.1 million.
About 409.3 million people were in job in January 2023, and against 410.5 million in 2020 just before the pandemic. The level of employment still at 3 years low shows that recovery from the pandemic shock is yet to be complete. India had never that level of employment since demonetization in November 8, 2016.
Number of unemployed persons declined sharply by 5.7 million in January, but this is not because they found jobs. Employment actually declined by 0.95 million. Thus, the labour force in India had actually shrunk in January by 6.6 million, which is a bad news.
The labour participation rate (LPR) fell from 40.5 per cent in December 2022 to 39.8 per cent in January 2023. It poses the real challenge to the country since Indian economy is set to decelerate in 2023. OECD has estimated GDP growth rate to come down to 5.7 per cent, and could be revised with downward risks if domestic and global economic challenges continue. The Economic Survey 2022-23 has estimated, the base line economic growth of India is likely to decline to 6.5 per cent and the nominal GDP is likely to reduce in the range of 6-6.8 per cent.
The Union Budget 2023-24 has not even fair to the workforce. Several direct job schemes including the rural employment guarantee scheme MGNREGA has suffered huge cut in allocation. Government has claimed that big provisions for capex would create new jobs, but experts doubt that Union Government could generate fund to support even the allocations. Cuts in allocations for several social sector programmes would make the working class more vulnerable in absence of employment or social security coverage. (IPA Service)
