India unable to produce enough jobs for swelling labour force

'The joblessness rate in the first three weeks of December was over 8 per cent of the available labor force'

By Anup Roy

India’s unemployment rate in December climbed to its highest point since a nationwide pandemic lockdown, as the country struggles to produce enough jobs to absorb a growing workforce.

The joblessness rate in the first three weeks of December was over 8 per cent of the available labour force, Mahesh Vyas, head of the Centre for Monitoring Indian Economy Pvt. Ltd, wrote in a column for the Business Standard newspaper. Since India’s first lockdown in 2020, the rate hasn’t strayed beyond 6-8 per cent.

Vyas said weekly data shows that more people are entering the workforce, but job growth hasn’t kept up. Joblessness in urban areas jumped to a record 10.9 per cent in the week that ended on December 18. Rural unemployment was at 8.4 per cent during the same period. That compares with 7.6 per cent in November.

Also Read | India’s economic activity looks set to slow as resilience wanes

Rising unemployment in the past few months “is a bit worrisome,” Vyas wrote, as it “cannot be explained by the seasonal movement of labour in and out of agriculture.” India’s harvesting season has been better so far compared to the previous three years.

Vyas said quality of jobs is one factor. While rural unemployment is high, so too is the employment rate. “The latter implies that rural India is able to provide more jobs than earlier, but the former implies that it is not able to provide adequate jobs,” he wrote.

The average rural employment rate in the first three weeks of December was 38.6 per cent, compared with 37.5 per cent in November, but labour force participation increased from 40.4 per cent to 42.2 per cent in the same period.