By Dr. Gyan Pathak
Unemployment rate in India rose in March 2023 to its highest level in the last three months. It rose from 7.14 per cent in January to 7.8 per cent in March. Over 26 lakh people have lost their jobs in the meantime, and many more are likely to lose theirs in the coming days. The highest job loss was in March which was about 22.7 lakh.
This frightening ground reality in the labour market contradicts the result of the recently released Consumer Confidence Survey of the Reserve Bank of India (RBI) that claimed a uptick in the current perception in the sentiments on employment which are nearing the levels seen around mid-2019. Consumers were reported optimistic about the employment outlook as more than half of the respondents expected employment scenario to improve over the next one year.
However, the latest data on employment by Centre for Monitoring Indian Economy (CMIE)has shown that hope that the RBI survey has emphasized was totally false. The CMIE report says that the Labour Force Participation has fallen from 40.5 per cent in December 2022 to 39.8 per cent in March 2023 reflecting the prevailing stressful condition in the labour market.
As for the employment rate is concerned, it fell from 37.1 per cent in December 2022 to 36.7 per cent in March 2023. In absolute terms, 26 lakh workers lost their jobs during this period. Most of the job loss, about 22.7 lakh was in March, which reflects the grim situation prevailing in the job market. Such a loss in a single month also indicates the volatility of the labour market, in which people somehow getting jobs of very low quality and then losing in the subsequent months.
Workers in the construction sector suffered the worst. The sector shed 95.8 lakh jobs in March. The sector employed 723.4 lakh workers in February, which declined to 627.6 lakh in March. It is a matter or serious concern, since the sector suffered worst fall since May 2021 in the midst of the second wave of the COVID-19 pandemic. At that time about 116 lakh workers lost their jobs in construction sector.
The second worst fall was witnessed in the retail trade. About 80 lakh jobs were lost in March, which was also worst since May 2021 during the second wave of COVID-19 pandemic. Retail trade sector was employing 757.5 lakh workers in February, which the number fell to 676.5 lakh.
There was very distressing scenario in the non-agriculture sectors was obvious. Unemployment rate in the urban areas have been even higher than in the rural areas since January 2023. It was because of this reason that large number of workers who lost their jobs un towns and cities in non-agriculture sector shifted again to agriculture sector, though it has been less remunerative. It resulted into swelling in the number of workers employed in agriculture was 172.3 lakhs in March. It means only a fraction of the workers lost their jobs in non-agricultural sectors could be able to get work in agriculture. The CMIE report says that such an increase in agriculture workforce was highest since 2016. Only about 150 lakh increase was registered in March 2023, a year ago.
It must also be understood in the backdrop that agricultural works are by and large very low paid jobs or the workers returning after losing jobs in other sectors just contributed in their family agricultural activities, which amount to almost joblessness. Moreover, by definition, if someone finds one hour of work in a week is counted as employed, and therefore the employment figures does not reflect the horrible ground level situation. The works found in MGNREGA even for a single day also increase the employment numbers. All these conceal real unemployment levels.
However, the agriculture sector has not the capacity to absorb the sudden increase of workers. For example, agricultural activities increased last year in March 2022 by 10.4 per cent, but 3 per cent lost their employment in April, 6 per cent in May and further 6 per cent in June. Therefore, the 12 per cent increase in March 2023 is temporary, and the agriculture sector is bound to shed lakhs of employment in coming months, because there would be little or no agricultural activities.
The labour participation rate which was 40.1 per cent in 2021-22 had fallen below 40 per cent in 2022-23, which fell further in March 2023 to 39.8 per cent is a serious concern. The fall in employment rate to 36.7 per cent in March is also an ominous sign.
Average monthly unemployment rate in 2022-23 had remained elevated at over 7 per cent in each quarter, while average monthly unemployment rate rose to 7.6 per cent, and for the March 2023, it was even higher at 7.8 per cent. Urban unemployment rate was 8.51 per cent in March 2023, while rural unemployment was 7.47 per cent.
The first week of April showed rising trend in urban unemployment at 8.74 per cent on April 7, 2023. Though rural unemployment is at present around 6.72 per cent, it is most likely to increase sharply, after sharp decline in agricultural activities in the summer. (IPA Service)
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