Job flux: Unemployed opt to wait rather than look for jobs, says data

Hit by a pandemic of unassuming proportions, the country is undergoing its worst ever economic phase since Independence with rising unemployment being the most prominent indicator. However, the employment rate has improved visibly in September compared to last month, giving some reason to cheer.

The Centre for Monitoring Indian Economy (CMIE) data shows overall job loss rate for September at 6.67% as against 8.35% in August, while urban unemployment rate was at 8.45% against 9.83%. However, the CMIE says it isn’t time to celebrate yet.

In the week till September 20, the national unemployment rate was 6.35% and urban unemployment rate was 8.83%. The monthly September data shows deterioration in national unemployment rate (6.67%) and improvement in urban unemployment rate (8.45%).

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“Other weekly labour market metrics for the month of September so far indicate deterioration in conditions compared to the situation in August, and also compared to the earlier months since the recovery. The month of August itself had seen stagnation in the recovery process from the precipitous lockdown-induced fall of April,” CMIE said in a post on its website.

“The Deterioration from the August-stagnation implies a possible slipping away of the recovery process seen till recently. This is what emerges from the trend in the labour participation rate and the employment rate.”

“The 30-day moving average of labour-force participation rate (LPR) as of September 20, was 40.3%. These compare poorly with the 40.96% penciled in August. The LPR seems to have peaked a month ago in the week ended August 16. Since then, it has dropped…the average LPR from June through mid-August was almost 40.9 per cent. This average has dropped to 40.45% for the period mid-August through mid-September,” CMIE chief executive Mahesh Vyas said.

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A drop in labour participation rate means a smaller proportion of the working age population is employed. The labour force includes employed people and those unemployed, who are actively looking for employment.

In retrospect, a shrinking labour force compared to the total working age population is a sign of a deteriorating labour market. It means the job-seekers are disappointed by the prevailing conditions that they prefer to sit home and not look for a job at all, the CMIE report says.

“The fall in unemployment rate seen in recent weeks is meaningless and misleading in the face of a falling labour participation rate and a falling trend in the employment rate,” CMIE wrote in its post.

Post the nationwide lockdown to curb the spread of the coronavirus, India saw one of its worst phases of employment with April and May witnessing an unemployment rate of 23.52% and 21.7%, respectively. In the same period, urban unemployment rate was 25% in April and 23.14% in May, as per CMIE data.