Job creation slows again after uneven recovery | The Financial Express

Job creation slows again after uneven recovery

Amidst recent layoffs in the tech sector and slowing economy, experts believe that there is pain in certain pockets but more jobs have certainly been created.

Job creation slows again after uneven recovery
The bottom line is though there had been a decline in the unemployment rate after the pandemic abated, it may be beginning to spike again.

Job creation seems to have slowed pace again, after an uneven pick-up seen with the ebbing of the Covid-19 pandemic.

The 16th Periodic Labour Force Survey revealed that the unemployment rate for persons over 15 years of age in urban areas dipped for the fifth straight quarter to 7.2% in the July to September 2022 quarter. The CMIE All India Unemployment Rate, however, rose to 7.77% in October from 6.43% in September driven by a spike in rural unemployment. The all-India unemployment rate has remained well above 7% on most days on a 30-day moving average in November.

Another benchmark – the payroll data of the Employees’ Provident Fund Organisation – reveals that the number of new members joining the scheme has dipped in August and September after moderate increases witnessed in the previous few months.

The bottom line is though there had been a decline in the unemployment rate after the pandemic abated, it may be beginning to spike again.

As many as 9.33 lakh first time subscribers joined the EPFO in September 2022 compared to 10.26 lakh in August and a peak of 11.42 lakh in July this year. First time members of the EPFO rose by about 4.4% in September 2022 from 8.94 lakh members in September last year.

Amidst recent layoffs in the tech sector and slowing economy, experts believe that there is pain in certain pockets but more jobs have certainly been created.

“There is a net positive scenario in terms of job creation with a slowdown in some pockets. There is a wait and watch scenario and typically hiring slows down from October,” said Rituparna Chakraborty, co-founder and executive director, TeamLease Services.

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Santosh Mehrotra, labour economist and retired JNU professor said, “With economic recovery, there is some job creation in the organised sector as capacity utilisation has increased. However, CMIE data shows that unemployment is still very high and the labour participation rate is still falling.”

The PLFS data also reveals that there continues to be high unpaid family labour, especially in rural areas, he further said. In fact, one reason why PLFS data is suggesting that labour and workforce participation is increasing even during Covid is because unpaid family labour, especially of women has increased, which shows up in a fall in unemployment rate (according to PLFS), he said, adding that this is totally misleading, as unpaid family labour is distress-driven, not because of any dynamism in the economy.

“The reason why there is a difference between PLFS (showing falling unemployment) and CMIE (showing rising unemployment) is that the CMIE does not define unpaid family labour as employment at all, but PLFS does. The point is that unpaid family labour rising at a time when the economy has slowed, is simply a sign of distress, both rural and urban,” said Mehrotra.

The Monthly Economic Review of the Finance Ministry however, noted, “In India, too, the recovery in economic activities across sectors has improved the overall employment situation in the country.”

Referring to various high frequency indicators, the report further said that demand for work under MGNREGS has been declining since May 2022 and was at its lowest in October 2022 since the beginning of the current financial year. This signals a decline in the unemployment rate in rural areas and a rise in employment in agricultural and non-agricultural activities stemming from the normalisation of the rural economy and stabilisation in the rural job market, it said.

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First published on: 28-11-2022 at 03:30 IST