In News
- Recently, the Centre for Monitoring the Indian Economy (CMIE) released data stating that India’s unemployment rate in August 2022 rose to 8.3%.
Key Findings
- Highest Unemployment Rate:
- This is the highest unemployment rate in the past 12 months. In August 2021, the unemployment rate was 8.35%.
- Unemployment rate in rural and urban areas:
- In August, urban unemployment was 9.6% and rural was 7.7%.
- Only in two months — February and June — has the rural unemployment rate been higher than the urban unemployment rate.
- State-wise unemployment rates:
- There is a significant variance in the unemployment rate across states.
- Haryana, J&K and Rajasthan have the highest levels of unemployment rate — each with over 30% of the unemployment rate.
- In sharp contrast, there are many states with remarkably low unemployment rates as well.
- Chhattisgarh has an unemployment rate of just 0.4%.
- Maharashtra, Madhya Pradesh, Odisha and Meghalaya — all have unemployment rates well below 3%.
- Reasons for High Unemployment rate
- Since the unemployment rate is essentially a ratio between the total unemployed and the total labour force, it can go up whenever the number of unemployed increases more than the increase in the total labour force.
- while the labour force increased by 4 million, the economy instead of creating new jobs, actually shed 2.6 million existing jobs.
- In August while the total number of unemployed went up by 6.6 million, the labour force only went up by 4 million. Hence the spike in the unemployment rate.
Unemployment Rate
- About:
- The unemployment rate is essentially the percentage of working-age people (15 years and above) who are demanding work but not able to get a job. Both aspects of the definition are important.
- Calculation:
- It is calculated by looking at all the people of the working age who are demanding work and then finding out what percentage of them are unable to land a job. That percentage is the unemployment rate.
- Unemployment rate = [Total unemployed / Total Labour Force]
- In other words, unemployment rates are expressed as a percentage of the labour force, not the total population.
- Labour Force Participation Rate (LFPR):
- The underlying size of the labour force — that is, the percentage of working-age people demanding work — itself varies over time and is measured by the Labour Force Participation Rate (LFPR).
Challenges/Impacts of Jobless growth
- For Working women:
- Between 2010 and 2020, the number of working women in India dropped to 19% from 26%, according to data compiled by the World Bank.
- CMIE estimated that female labour force participation plummeted to 9% by 2022.
- Affects Demographic Dividend:
- A growing reserve of frustrated, unemployed youth threatens to turn India’s demographic dividend of having a young population into a curse.
- Declining Agriculture Employment:
- The proportion of Indians employed in agriculture had been falling for decades, but this process flattened some years ago and was reversed by the covid crisis.
- Those who move out of farming mostly find themselves in low-paying construction work and informal services.
- Skill shortages:
- India’s economic growth has been largely services led, with a small pool of skills at the upper end, given a glaring failure in mass education.
- India presents a paradox of skill shortages while being labour surplus.
- Trucks are idle because of the shortage of drivers. The steel industry needs more metallurgists.
- The healthcare sector is short of nurses and technicians.
- The construction sector needs civil engineers, hi-tech welders, bricklayers, and so on.
Way Ahead
- It is the government’s responsibility to take initiative and create adequate roles for unemployed people within the main economy.
- Government support for enhancing infrastructure is particularly essential for small and medium-sized enterprises.
|
Employment Generation Schemes/ Programmes of Government of India
|
Source: IE
Previous article
World Dairy Summit 2022
Next article
2021 Global Estimates of Modern Slavery