Just what is India?s unemployment rate?

Every month as the US economy has slipped further towards recession, the rate of job cuts has been the loudest indicator. The US unemployment rate for August and September stood at 6.1% and at 6.5% for October. However, as the Indian economy has slowed down on its rapid growth rate, from 9% to an expected 7% plus in 2008-09, there are no corresponding figures from the job market to tell the downturn story.

Sample this: The latest Government of India job data is four years old. The NSS 62nd round, published in January 2008 for the year 2005-06, deals with data as old as July 2005 to June 2006. Moreover, in place of clearly mentioning the exact status of employed and unemployed population, it hides behind jargons like ?usually status? (regular employment), ?current weekly status? (weekly employment) and ?current daily status? (daily labour). The figures are confusing too. It says the number of persons/person days worked per 1,000 persons/person-days as per the usual status, current weekly status and current daily status was 549, 524 and 491, respectively, for males, 310, 257 and 203, respectively, for females.

Besides the NSSO survey, other source of data are employment exchanges, which fail to represent the actual number of job seekers. As on December 31, 2005, approximately 3.93 crore people were waiting for jobs compared with 4.05 crore as on December 31, 2004. On an average, approximately 50-55 lakh job seekers are registering with employment exchanges per year from the last few years. The gravity of the situation can be judged from the fact that India?s labour force totals to approximately 40 crore, which is 10 times of the number registered in the exchanges.

One major headache for the government in the data collection exercise. Unlike West, there is no one place from where the statistics can be collected. Also, in countries like the US and the UK, there is an unemployment insurance for every unemployed individual registered. However, in India, people usually do not get themselves registered as there is no extra incentive. ?In a country like India where there is no such facility for unemployment insurance, why would anybody go to the employment exchange. In such a situation how can we get unemployment data when there is no structure for it?? says Ficci secretary-general Amit Mitra.

The Employment Exchanges (Compulsory Notification of Vacancies) Act was enacted in 1959 to provide for compulsory notification of vacancies to the Employment Exchanges and for the rendition of returns relating to employment situation by the employers.

This Act came in to force with effect from May 1, 1960. All establishments in public and private sector, excluding agriculture, where ordinarily 25 or more persons are employed, come within the purview of the Act. These establishments are required to notify all vacancies (other than those exempted) to the appropriate employment exchange as notified in the official gazette by the state government in the prescribed format. The Act will not apply to vacancies in any employment in agriculture (including horticulture), domestic service, unskilled office work , employment connected with the staff of parliament, and if the total duration of the vacancies are less than three months.

Even though it is mandatory for the private companies having more than 25 employees to inform the exchange on new employment opportunities ? they face prosecution by the for not sending the requisite information on new employment opportunities ? very few companies actually follow this.

To deal with the uncertainty regarding the employment in the country, the industry chambers want the government to plan out developing ?unemployment data? to keep a track of the rate at which labour is being absorbed by the companies, every month.

Ficci has said the index should been constructed on the lines of the Index of Industrial Production (IIP) that tracks industrial growth or the Centre for Monitoring Indian Economy (CMIE) data to know about the corporate standing. An employment data would help to know the real picture and would enable the government to take steps in the right direction.

Assocham has said that an increasing (decreasing) trend in the indicator would suggest a deteriorating (improving) labour market. Quarterly unemployment rate could serve as a good measure to gauge the strength of the job market having a direct link with the strength of the economy.

The solution that the chambers have come out with is that there should be quick and intensive surveys for that. The government of India should take initiative and pay money to research institutions.

Like the CMIE, IIP, the government should also maintain a service for the unemployed people so that the government gets a fair idea related to the unemployment, in which sectors is it and is able to take steps accordingly.