Urban jobless rate rises to double digit

“The high unemployment rate reflects an increase in demand for jobs and the economy’s inability to create jobs in adequate numbers. It is, however, a welcome sign that as the unemployment rate has increased, so has the employment rate,” CMIE’s MD & CEO Mahesh Vyas told FE.

The urban unemployment rate spiked to the double-digit rate for the first time in 17 weeks, to be 10.09% for the week-ended December 12, pushing the country’s overall jobless rate to a nine-week high of 8.53%, according to the Centre for Monitoring Indian Economy (CMIE). The rural jobless rate was also at a nine-week high of 7.42% during the week.

“The high unemployment rate reflects an increase in demand for jobs and the economy’s inability to create jobs in adequate numbers. It is, however, a welcome sign that as the unemployment rate has increased, so has the employment rate,” CMIE’s MD & CEO Mahesh Vyas told FE.

The urban jobless rate had remained elevated in the past few weeks and was rising in November. Employment in cities and towns fell by 0.9 million in November even as it increased in rural areas by 2.3 million over the October level.

In a recent article, Vyas wrote, “Urban jobs arguably provide better wages and have a greater share of what are called the organised sectors. Their decline implies a decline in the overall quality of jobs in India.”

While official data showed last week industrial production was stagnating in October, the finance ministry said during the weekend that the gross domestic product, which grew 8.4% in the September quarter, would gain further traction in the remaining quarters of this fiscal.

The strong recovery is evident from 19 of 22 high-frequency indicators in September, October and November, as they crossed the pre-Covid (the corresponding months of FY20) levels, the department of economic affairs said in its report for November. The jobs data by CMIE, which the ministry has contested, is not strictly in agreement with the rosy picture of the economy being painted by the government managers.

Rachit Mathur, founder & CEO, Avenue Growth, an on-demand work platform, said job losses in travel and hospitality sectors seem to be behind the spike in urban unemployment rate in recent times followed by the education sector. Information technology sector, however, has been witnessing a huge boom.

Amidst the rise in rural unemployment rate, there has also been a fall in employment generation under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MG-NREGS).

The MG-NREGS dashboard shows that person days of work generated under the government’s flagship scheme fell from its peak of over 45 crore in June to 21-22 crore in October-November this year. In the first 13 days of the current month, it fell even further to just 1.5 crore, according to provisional figures (which are often revised upweards). MG-NREGS offers a fallback option for the rural workforce, when jobs are not available elsewhere.

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