Even as there has been a steady decline in urban unemployment since the highly infective second Covid wave, joblessness in seven states of Rajasthan, Bihar, Kerala, Uttarakhand, Odisha, Chhattisgarh and Himachal Pradesh, besides Union Territory of Jammu and Kashmir, remained at very high levels, as per the periodic labour force survey (PLFS) data.
These states, where unemployment has consistently been higher than the national average, saw a more gradual decline of the bane, primarily because slower economic growth resulted in fewer job opportunities. Also, they showed much lower resilience to absorb the pandemic shock.
At the pan-India level, urban unemployment fell sharply from 12.7% in April-June 2021 (second Covid wave period) to 7.6% in April-June 2022, as per the PLFS. However, the seven states and J&K reported double digit unemployment rate all through the period.
Urban unemployment rate for all age groups across India was 9.1% in January-March 2020, but jumped to 20.9% in April-June 2020 owing to the Covid-induced lockdown.
It declined to 13.3% in July-September 2020 and further to 10.3% in October-December 2020 and 9.4% in January-March 2021, before rising again due to the second pandemic wave.
As per the PLFS yardsticks, the activity status of a person is determined on the basis of reference period of last seven days preceding the date of survey, as her current weekly status (CWS). Unemployment rate is defined as the percentage of the unemployed persons in the labour force.
Labour economist Santosh Mehrotra said most of the seven states and J&K are those with slower economic growth. Also, their health infrastructure was not adequate to deal with the pandemic. Of course, Kerala’s case is different as the state has its own problems.
“Kerala’s unemployment rate has always been the highest in the country, because the share of educated among the working age population in the state is very high. It also got additional surplus labour back from West Asia and other foreign countries where people migrated before Covid. Also, the MSMEs in Kerala are dependent upon workers from north and east India. They went back in 2020 and did not come back in 2021. So, MSMEs in the state have collapsed and they have not revived,” Mehrotra, who is a visiting professor at Bath University, UK, said.
Labour economist KR Shyam Sundar said, “The PLFS data shows that urban labour markets have not come out of the pandemic-caused labour market distress. High and stubborn urban unemployment rates indicate that either the construction sector or the urban informal sector or both have not been able to absorb the shocks. At the same time, producers have not been able to cope with the cost heat. That is why WPI is in double digits for a long time.”
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As per the latest PLFS report, 14 major states had urban employment rate in double digits during the April-June 2021. However, the rate came down since then to single digit in eight states — Haryana, Jharkhand, Madhya Pradesh, Maharashtra, Tamil Nadu, Telengana, Uttar Pradesh and West Bengal — till the April-June period of the current year. On the other hand, the rate has gone up from single digit to double digit since then in Bihar and Himachal Pradesh.
According to Centre for Monitoring of Indian Economy (CMIE), the urban employment rate reached its 12-month high in August this year at 9.57%. Of course, PLFS and CMIE data are not strictly comparable due to different methodologies adopted by the agencies.