Urban unemployment rate falls below pre-pandemic levels but scars remain
NEW DELHI: India’s urban unemployment rate fell below pre-pandemic levels for the first time in at least two years in the quarter ending March according to the quarterly Periodic Labour Force Survey (PLFS) report released on June 16. Other statistics in the report, however, continue to reflect the post-pandemic scars in labour markets.
According to the quarterly bulletin of PLFS released on Thursday by the National Statistical Office (NSO), the headline urban unemployment rate in the quarter ending March was 8.2%. This is the lowest unemployment rate since the quarter ending December 2019, when it was 7.9% and the second lowest in all quarterly rounds since June 2018.
March is the third consecutive quarter that has witnessed a sequential fall in unemployment rate.
Quarterly PLFS bulletins only look at the urban market and unemployment rates are based on the current weekly status, which measures employment status in the week preceding the survey.
To be sure, a decline in unemployment rates does not necessarily mean that all is well with the labour markets. For example, an HT analysis of the 2020-21 PLFS report—it covers both the rural and urban markets and has more information than the quarterly rounds—pointed out that although unemployment rate was the lowest in 2020-21 since the PLFS started in 2017-18, the labour market continued to show other scars such as a qualitative worsening of employment and fall in real wages for a large number of workers (bit.ly/3mvmlki).
The March quarterly report, continues to show some of these trends. The share of salaried workers—they are best paid in the economy—has actually fallen further to 48.3% compared to 48.4% in the December 2021 round and 50.5% in the March 2020 round. Another worrying sign in the March report is a fall in labour force participation rate (LFPR) to 37.2% compared to 37.5% in the March 2021 and March 2020 quarters. Comparisons
in employment status are generally made for the same quarter across years because some jobs are seasonal in nature.
“The marginal decline in the headline unemployment rate is not a reason to rejoice. In our large informal sector, a lot of people may be statistically employed but are in precarious and unstable work. Given this employment structure, the 8% unemployment rate is very high. The unemployment rate among youth is an area of serious concern, which is reflecting on the streets. It is time to urgently think of an urban job guarantee programme to provide some cushion to the poorest,” said Ishan Anand, assistant professor at OP Jindal Global University.