Employment scene in India - Latest numbers & facts

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  Employment scene in India - Latest numbers & facts

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• Scene in 2021: India had an unemployment rate of 6.9 per cent in February 2021, higher than January's 6.5 per cent rate but lower than December 2020's 9.1 per cent. The unemployment rate has ranged from 6.5 per cent to 9 per cent in the post-lockdown period since July 2020. 
• Trends: The unemployment rate has, therefore, recovered to its pre-lockdown levels. However, other more important labour market parameters have worsened. 

1. The two important labour market ratios are the labour force participation rate (LPR) and the employment rate (ER). 
2. Both remain significantly lower than their levels before the lockdown. 
3. A recovery in these two ratios to pre-lockdown levels is still a distant dream. Problems started much before the lockdowns.
4. In February 2021, the LPR was 40.5 per cent (lower than the 40.6 per cent in January 2021 and 42.6 per cent in February 2020)
5. This means that the proportion of working-age people who are employed or are unemployed and actively seeking employment has declined.

• Analysis of unemployment: The return of the unemployment rate to pre-lockdown times is not worth celebrating because it is more a reflection of a shrinking labour force than a decline in the count of the unemployed. 

1. During July-February FY 20, the unemployment rate of 7.6 per cent was a ratio of the 3.32 crore unemployed out of a labour force of 43.85 crore. 
2. During July-February FY 21, a similar unemployment rate of 7.3 per cent is a ratio of 3.12 crore unemployed out of a smaller labour force of 42.63 crore. 
3. The fall in unemployed does not imply that more people got employment, but that the unemployed just stopped looking for jobs. 

• Analysis of employment: The count of employed (larger component of the labour force) has declined sharply. 

1. For July-February of FY 20, 40.53 crore persons were employed. 
2. For July-February of FY 21, 39.52 crore persons were employed. 
3. So 1 crore less jobs this year than the previous!

• Add the two: The post-lockdown period is characterised by a 2.5 per cent fall in employment and 6.2 per cent fall in the count of the unemployed. This translates into a 2.8 per cent contraction of the labour force.
• GDP growth and jobs: Statistics show a small positive growth of 0.4 per cent y-o-y, in real GDP in the Q3. But, employment has not recovered similarly. It was down by 2.8 per cent. 

1. India has faced a multi-decadal challenge in generating employment commensurate with its real GDP growth. 
2. From here on, it would take a much faster GDP growth or a more labour-intensive GDP growth to bring employment growth into the positive zone.
3. Else, jobs will continue to decline. 

• Summary of data: Total employment in India declined from 41.3 crore in 2016-17 to 40.9 crore in 2019-20. This is a time when the economy was growing at about 6 per cent per annum on average. Today, it's crawling, after a huge shrinkage. 

1. The employment rate is the proportion of the working-age population that is employed. So, employment needs to grow at least enough to keep pace with the rate at which the working-age population is growing. That will keep things stable (not worse)
2. India’s employment rate has been falling steadily, from 42.7 per cent in 2016-17 to 41.6 per cent, 40.1 per cent and 39.4 per cent in the following three years till 2019-20. 
3. By February 2021, it dropped to just 37.7 per cent. The slide in the employment rate continues. 
4. The post-lockdown recovery in the employment rate is not to the pre-lockdown levels but to the earlier trend of a slow and steady fall.

• Road ahead: This is a dire situation. If the government does not proactively make pro-jobs policies, things will simply go downhill in coming years. Private firms cannot be expected to be jobs-generators on the scale desired. It's only government, through low-cost, low-tech, low-skills factories, that can make a big dent. That is nowhere in sight today.

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