Unemployment in India has risen to its highest since the pandemic

A resilient farm sector is absorbing workers but that is just not enough
Unemployment in India has risen to its highest since the pandemic
Photo: DANISH SIDDIQUI (Reuters)
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Unemployment in India has increased to more than it was during the pandemic months when millions lost their jobs. What’s more worrying is that the pace of job addition has slowed down, too.

In the first three weeks to December, joblessness reached 8.85%, data published by Mumbai-based Centre for Monitoring Indian Economy (CMIE) show. This is higher than even the 6-8% observed during the covid-19 lockdown of 2020 when many Indians were pushed out of work.

At 10.9%, urban unemployment is higher than rural, CMIE data show.

The payroll data (pdf) released by Employees Provident Fund Organization (EPFO), which manages social security funds, show a deterioration in net contribution from the organized sector to 1.2 million in October from 1.5 million in September.

The number of people seeking jobs through government schemes like the Mahatma Gandhi National Rural Employment Guarantee Act has been increasing.

“Economic growth has not revived, exports have fallen. MSMEs have been doing poorly since 2016. People who have returned to urban areas from rural areas are still looking for work or are finding only low-level jobs,” labour economist Santosh Mehrotra told The Financial Express.

India’s labor participation rate, an estimate of an economy’s active workforce, meanwhile, rose to 42.2% in the first three weeks of December from 40.4% in November.

Agriculture may be of no help this time

Agricultural activity has remained resilient even as overall growth shrank, according to the Economic Survey of 2021-22.

The sector was less affected because it was a fallback option for many of those who lost city jobs, according to agricultural economist Sudha Narayanan.

“The recent rise in the unemployment rate cannot be explained by the seasonal movement of labour in and out of agriculture...” CMIE head Mahesh Vyas wrote in The Business Standard on Dec. 19.

However, agriculture’s ability to help the economy may be limited this time. The farm sector has already absorbed more workers than it can sustain amid a dearth of jobs, resulting in distress employment.