TN's unemployment rate rises again after two months

Tamil Nadu’s unemployment rate has increased again in August after declining for the preceding two months. In August, the unemployment rate for Tamil Nadu stood at 6.3 percent against 4.8 percent in July.

Sources said that since the number of positive cases has started to increase in some districts, the state government closed temples and other religious places, as well as many hotels and restaurants closed due to losses the management faced, following the continuous lockdowns in 2020 and 2021.

Centre for Monitoring Indian Economy (CMIE) chief Mahesh Vyas said that more than 15 lakh people across the country have lost jobs in August compared to July. CMIE also said that there is reverse migration of labour from factories to farms as per its Consumer Pyramids Household Survey (CPHS).

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“The latest PLFS report shows a sharp increase in employment in agriculture from 42.5 percent of the total employment in 2018-19 to 45.6 percent in 2019-20. This shift of labour to agriculture is larger than estimated by CPHS. Such a large shift of labour in favour of agriculture cannot be voluntary,” said Vyas.

“It is a sign of distress in the labour market where non-agricultural sectors are unable to provide employment and labour is forced to shift to agriculture,” Vyas said.

Salaried jobs provide wages of the order of ₹16,780 per month. Self-employment provides wages of the order of ₹10,454 per month. These translate into wage rates of ₹558 per day and ₹349 per day, respectively.

“In comparison, casual labour, which is the type of employment provided by agriculture, yields much lower wages of the order of ₹291 per day. Labour would not voluntarily shift to this lowest wage-rate sector unless it has no better option,” said Vyas.

The biggest increase in employment in 2019-20 was in agriculture and within agriculture, the increase was largely among women. Nearly 60 percent of all employed women were engaged in agriculture. “This shows the domination of poor quality of employment that women get in India,” Vyas said.

“We know anecdotally that the manufacturing sector and the construction sectors waited for the return of the migrant workers to resume work. But, 2020-21 (July to June) panned out differently. This period saw the second wave of COVID-19. India reacted differently to the second wave,” said Vyas.

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The share of agriculture in total employment jumped to 39.4 percent in the year 2020-21 from 38 percent in 2019-20. More importantly, the share of manufacturing dropped sharply from 9.4 percent to 7.3 percent. But construction has recovered. Its share in total employment, which had fallen from 15.4 percent in 2018-19 to 13.5 percent in 2019-20, shot up to 15.9 percent in 2020-21.

“Apparently, government efforts to boost manufacturing through production linked incentives or liquidity support to medium and small-scale enterprises have not been effective in stemming the decline of manufacturing in India,” the CMIE chief said.