Going by National Statistical Office's (NSO's) Periodic Labour Force Survey 2017-18, the all-India unemployment rate stands at 6.1%. This not only means that unemployment is on the rise, but also that it’s at an all-time high - the highest since 1977-78 among men, and the highest since 1983 among women.
At 10.8%, the rate is higher among urban women than their male counterparts (7.1%). In rural India, the male unemployment rate at 5.8% exceeds that for women at 3.8%. That the rate is highest among urban women shouldn’t come as a surprise, since many are educated and not principal earners, and can afford to wait longer for a more desirable job. In 2017-18, the number of unemployed have more than doubled from 10.8 million in 2011-12 to 28.5 million. Before 2011-12, this number was hovering around 10 million since 1999-2000. This spike is also due to the addition of about 18 million in the labour force from 2011-12 to 2017-18, even as only 0.5 million net jobs were added during this period.
Rural and urban dynamics show very different pictures. Between 2011-12 and 2017-18, there was a decline of about 17.7 million jobs in the rural sector, while about 18.3 million have been added in urban India. About 26.4 million people have been added to the urban labour force, while there is a decline of eight million in the rural sector during this period. With the lack of rural diversification resulting in shrinking job opportunities, it is more likely for rural women to quit the labour market. On the other hand, the public distribution system (PDS) and schemes for the rural population may not have allowed rising unemployment to cause much economic deterioration in households.
Two features stand out in this scenario of joblessness. One, acceleration in the unemployment rate has taken place across states. Goa, Manipur, Kerala, Mizoram, Nagaland, Haryana, Assam, Punjab, Jharkhand, Tamil Nadu, Uttarakhand, Bihar, Odisha, Tripura, Uttar Pradesh, Arunachal Pradesh, Himachal Pradesh, Jammu & Kashmir and Rajasthan have crossed the 5% unemployment rate. In fact, the unemployment rate in Goa, Manipur, Kerala, Mizoram and Nagaland has reached double digits. In 2011-12, there were only three states and Union territories — Tripura, Nagaland and Lakshadweep — which had double-digit unemployment rate.
Two, across states, variation in unemployment has narrowed down since 2009-10, indicating that deterioration on the employment front is very much evenly distributed region-wise. However, there could be another side to this story that need not be, in RBI Governor Shaktikanta Das' description on Monday, all gloom and doom.'
In a country like India, it’s difficult to afford staying unemployed for long. Given the availability of consumption support schemes, particularly in rural areas, the rising opportunities for the educated young and school dropouts to migrate have raised remittance flows that, in turn, may have reduced the compulsion for non-migrants to pick up petty and low-productivity jobs. For a long time, the situation of 'excess supplies, limited demand' was prevailing in the informal industry, leading to large-scale underemployment and a residual absorption of labour in low-productivity activities. The wages varied widely across activities, leading to a multi-modal wage distribution within this sector, but with an average low productivity, meagre earnings, poor hiring conditions and lack of upward mobility. Possibly, within the informal sector, some of the jobs are now fetching higher earnings. Given the well-knitted support structure, a desperation to strive hard is on the decline.
Though per-capita income, as such, isn’t seen to be related to the unemployment rate across states, structural change and educational attainments do unravel a strong effect. A declining dependence on the farm sector is also associated with this spike. The association of the unemployment rate with educational attainments, and the urbanisationunemployment nexus observed are testimony to the brighter side of India’s development story.
Also, the share of the informal sector in total employment has declined, compared to earlier National Sample Survey Office (NSSO) data. The rise in the unemployment rate, when seen in this context, could suggest reduction in the desperation of workers to join the informal sector, keeping the open unemployment rate low.
While pessimism regarding joblessness indeed needs to be tackled, it is also important to pay attention to the larger issue of employment creation. Since wage employment can’t be provided on a large scale, entrepreneurship must be promotedby creating a facilitating environment for startups, innovations, etc. Keeping in view the skill gaps in various activities, emphasis has to be given to vocational education and training, which can be integrated with the general education system. Instead of confining training to the initial entry level in jobs, up-skilling and re-skilling need to adjust to the requirement of the changing economy.