By Dr. Gyan Pathak
The labour market situation in India is going beyond comprehension of the common people. Everybody was hoping for good days amidst the revival of economic activities after the lockdowns and containments measures were eased up further in August 2021, but about 15 lakh workers lost their jobs, though the labour participation witnessed a marginal increase. How and why these are happening simultaneously, and how we are to interpret it correctly for better policy decisions so that the labour force should not suffer in the midst of economic revival for with we have been awaiting for a long time?
In the data released by NSO has just revealed that GDP grew by 20.1 per cent in the first quarter April-June of the current financial year 2021-22. Indian economy has also been reported reviving in July and August. Government is claiming improving performance across various high-frequency industrial and service sector indicators, mobility etc. No doubt economic activities are gaining momentum albeit slowly.
Everyone have been obviously thinking that labour participation in the economy might have risen along with the level of employment. However, the latest CMIE report has revealed that 15 lakh workers from formal and informal sector of the economy has lost their jobs in August reversing some of the gains in July and unemployment rate rose from 6.95 per cent in July to 8.32 per cent in August. As against this, labour participation rate rose from 40.2 per cent in July to 40.5 per cent in August. It presents a paradox and we must not allow it to remain mystery.
The CMIE report revealed that unemployment scenario has worsened both in the urban and rural areas. Urban unemployment rose almost 1.5 per cent and has reached to 9.78 per cent in August. In July it was 8.3 per cent better than 10.7 per cent in June, 14.73 per cent in May, and 9.78 per cent in April. It must be noted here that between April and June, Indian economy grew by 20.1 per cent, claimed one of the highest recoveries in the world. However, just before the second wave of the pandemic hit India urban unemployment rate was 7.27 per cent.
As for the rural unemployment, it rose 1.3 per cent in August to reach at 7.64 per cent. In July it was 6.34 per cent. It may be due to low level or agricultural activities, after the peak in July sowing season. July had witnessed 15 million people joining the labour force primarily in low productive agricultural activities led by sowing season which was over by August. In fact, job additions in July was mostly poor-quality informal jobs, and many of them lost them in August. It shows that employment scenario still remains volatile. Moreover, employment rate also fell from 37.38 per cent in July to 37.3 per cent in August.
Though unemployment scenario worsened in August, CMIE data shows marginal improvement in the labour participation in the labour market. It not only indicated the improvement in economic activities but also indicated that people have regained their lost hope and have been actively searching for jobs in the labour market. Earlier, the many of the people had become so hopeless that they were not even searching for jobs and had resigned to their fate. In July, only 30 million people were actively looking for jobs, but in August their number rose to 36 million. It was one of the reason of the marginal rises in labour participation.
The data also revealed that the total labour force rose to 433.86 million in August, almost four million more than in July. It means we have reached the level of March 2020, just before the lockdown of the country. It may be a matter of little relief if we try to forget the overall distressing employment scenario of that time which was the result of dismal performance of our economy, showing only a growth rate of 4 per cent, as against 6.5 per cent of 2018-19. India’s growth rate had been suffering for several years due of policy experiments without preparation, such as implementation of demonetization in November 2016, and GST in July 2017.
This level of labour participation is therefore a matter of greater concern now, because the pandemic has further crippled the labour force economically. Economic activities are gradually returning to normal, but job market is showing abnormal behaviour and job seekers are struggling for jobs and who are in jobs losing then in lakhs every month. As many as eight states, including Haryana and Rajasthan, are still reporting unemployment rates in double digits.
The struggle for jobs continues, and is most likely to continue in the time to come, unless the revival of the economic activities are channelled in a right direction. It can only be reversed if the government changes its policies encouraging informality in the economy and providing greater freedom to the formal sectors to reduce their formal workers in the name of labour reforms. Unless the formal sectors are strengthened, the quality of jobs is bound to deteriorate day by day. (IPA Service)