India recorded an unemployment rate of 6.9 per cent in February 2021. This was higher than the 6.5 per cent unemployment rate recorded in January 2021 but it was lower than the 9.1 per cent India had touched in December 2020. The unemployment rate has ranged from 6.5 per cent to 9 per cent in the post-lockdown period since July 2021. The February 2021 rate is a little lower than the 7.6 per cent average during this period. It is also lower than the February 2020 unemployment rate which was 7.8 per cent.

The average unemployment rate during the post-lockdown period since July 2020 at 7.3 per cent is a little lower than the 7.6 per cent average unemployment rate recorded in the corresponding months of the previous year.

According to the latest analysis made by the Centre for Monitoring Indian Economy (CMIE), unemployment rate has, recovered to its pre-lockdown levels. However, other more important labour market parameters have worsened. The two other important labour market ratios are the labour force participation rate and the employment rate. Both remain significantly lower than their levels before the lockdown. A recovery in these two ratios to pre-lockdown levels is still a distant dream. More realistically it may not be misplaced pessimism to lament that given the secular decline in labour market indicators even before the lockdown, a recovery in the LPR and ER to pre-lockdown levels may not be just distant dream but, it could be an elusive dream.

This observation of the CMIE means that the adverse effects of demonetisation in November 2016 followed by unplanned GST implementation on the economy led to the process of decline much before the lockdown and these along with the impact of lockdown in the first three phases, have kept many of the sector still vulnerable. That is why, even though the growth has started taking place, the companies are not taking back all their laid off workers even after the normal operations started. That is how, some companies were able to show higher profits in the first three quarters of the current fiscal taking benefit of reduced workforce.

In February 2021, the labour participation rate was 40.5 per cent. This was slightly lower than the 40.6 per cent LPR recorded in January 2021 and 42.6 per cent it was in February 2020. This means that the proportion of working age people who are employed or are unemployed and are actively seeking employment has declined.

In fact as CMIE sees it, the return of the unemployment rate to pre-lockdown times is not worth celebrating because it is more a reflection of a shrinking labour force than a decline in the count of the unemployed. During July-February last fiscal, the unemployment rate of 7.6 per cent was a ratio of the 33.2 million unemployed out of a labour force of 438.5 million. During July-February this fiscal a similar unemployment rate of 7.3 per cent is a ratio of 31.2 million unemployed out of a much smaller labour force of 426.3 million. The small fall in the unemployed we see does not imply that more people got employment. It means that the unemployed just stopped looking for jobs. It reflects an exodus of labour from the labour markets in the face of lack of jobs.

Count of the employed, which is the larger component of the labour force, has declined quite sharply. . During July-February of the previous fiscal, on average, 405.3 million persons were employed. In comparison, during the corresponding period of the current year, 395.2 million persons were employed. This implies over 10 million less jobs this year than the previous year.

So, the post-lockdown period is characterised by a 2.5 per cent fall in employment and 6.2 per cent fall in the count of the unemployed. This translates into a 2.8 per cent contraction of the labour force. This is a dangerous sign and it is so disquieting that the Prime Minister and the other senior people of the finance ministry talk regularly of big plans and the building of a U4 5 trillion economy by 2024 forgetting that the entire growth process is being pursued without adopting a crash programme for the creation of jobs. This myopic policy will lead to an explosion among the jobless youth in the coming period, if not tackled properly.

The CMIE study has correctly mentioned that employment needs to grow at least to keep the employment rate constant. The employment rate is the proportion of working age population that is employed. So, employment needs to grow at least enough to keep pace with the rate at which population of the working age people is growing. This could ensure that the situation wouldn’t get worse from where India stands today. But in practice what is happening is that the huge number of young new entrants are looking at a dismal future as most of them are finding no avenues to get absorbed. Prime Minister who promised to organise two crore jobs every year in his election campaign in 2014, is not mentioning that any more. The country is being made prepared for a jobless growth, whatever that might impact on the country’s youth.

India’s employment rate has been falling steadily. It fell from 42.7 per cent in 2016-17 to 41.6 per cent, 40.1 per cent and 39.4 per cent in the following three years till 2019-20. As of February 2021 it dropped even further to 37.7 per cent. It seems that the ruling establishment will step to their promised goal for a New India with the employment rate continuing to fall to the chagrin of the jobseekers. (IPA service)