With the urban unemployment rate close to the 10 per cent mark, job seekers in the urban areas are suffering more than those in the rural areas.
Amid stress in the major economic sectors and slowdown in consumption, demand and investment in the economy, rising unemployment has added to the worry. Unemployment in India has shot up to a 3-year high of 8.3 per cent, as on August 20. With the urban unemployment rate close to the 10 per cent mark, job seekers in the urban areas are suffering more than those in the rural areas, according to CMIE unemployment database. Jobs in Tripura, Haryana and Himachal Pradesh has faced the worst hit, with the unemployment rate climbing as high as 23.3 per cent in Tripura in July.
“Unemployment rate has significantly surged in the rural and urban India, with the steep rise in joblessness in urban areas in the last few weeks. The worsening job scenario is likely a reflection of stress in the corporate sector, largely in the automotive industry,” Mahesh Vyas, MD & CEO, CMIE, told Financial Express Online.
Textiles, tea, automotive and a few other industries are facing a severe slowdown. Reports suggest that around 3.5 lakh jobs have been cut in auto and related industries in the current financial year so far. There has been as an estimate that the job cuts in the sector may reach up to 10 lakh down the line.
Depleting rural demand has also affected the sales of the corporates in the urban areas. One recent example has been India’s largest biscuit maker “Parle,” which has indicated towards a possibility of laying off up to 10,000 employees due to poor sales amid falling demand in the rural heartland.
Other industries like textiles and tea are also struggling to survive. Exports of cotton yarn halved in June, as compared to the same month last year. The tea industry, accountable for providing jobs to over 10 lakh people, is also suffering heavy losses due to the spike in production cost and low selling price. These factors have affected the profitability of these industries, eventually becoming a reason for the job cuts.