Unemployment figures worrying

The latest unemployment figures in the country, as per data released by the Centre for Monitoring Indian Economy (CMIE), are disconcerting as they show that the rate rose to 8.30 per cent in December, the highest in 16 months. It was 8 per cent in November. The data also showed that urban unemployment rate rose to 10.09 per cent in December from 8.96 per cent in November, while rural unemployment fell to 7.44 per cent from 7.55 per cent. The data also showed the unemployment rate for states. Haryana had the highest rate at 37.4 per cent, followed by 28.5 per cent in Rajasthan and 20.8 per cent in Delhi. Karnataka, with 2.5 per cent, was among states with the lowest unemployment rate. It was thought that unemployment was declining by the middle of 2022. According to quarterly data compiled by the National Statistical Office (NSO), it had declined to 7.2 per cent in the July-September quarter from 7.6 per cent in the previous quarter. But it seems it was temporary relief.

Rising unemployment has been a continuing feature of economic growth for many years. It meant that economic development was not producing a proportionate increase in the number of jobs. About 7.5 million new non-farm jobs were created each year between 2005 and 2012 but the number of new non-farm jobs generated between 2013-2019 was only 2.9 million, according to NSO data. Employment is especially important in a country with a growing population where millions of people are joining the army of unemployed people every year. While demonetisation in November 2016 caused large-scale job losses, bringing the unemployment rate to a 45-year high by the end of 2018, Covid worsened it since 2020, with at least 10 million more jobs lost during the pandemic.

The latest figures show that the recovery of the economy after the pandemic has not contributed much to the employment situation. The decline in rural unemployment is not a healthy indicator. A rise in rural employment amounts to a reversal of the trend, as economic growth typically creates more urban jobs. But between 2019 and 2020, the number of workers in agriculture increased from 200 million to 232 million, probably because of the return of migrant workers to farms from their host states. This also depressed rural wages. There was a fall in farm employment of 37 million between 2005-2012, when non-farm jobs grew at 7.5 million annually. This had led to a rise in real wages and a fall in the number of poor. This trend needs to be recaptured with a boost for manufacturing and other non-farm sectors. There is a need for special attention and strategies for this in view of the fresh challenges emerging globally and domestically.