The Centre for Monitoring Indian Economy (CMIE) has just released its data about status of workforce in India in March revealing that employment rate in the country has declined from 36.7 per cent in February to 36.5 per cent in March. Consequently, the labour participation rate (LPR) in the economy fell to 39.5 per cent in March from 39.9 per cent in February, beating even the record of the steep fall to 39.6 per cent during the second wave of COVID-19 in June 2021. Only a few days ago, the Union Ministry of Statistics and Programme Implementation had revealed that inflation rose sharply to about 7 per cent in March, the highest in 17 months, which was an underestimate since their data did not reflect the rise in prices of petroleum towards the end of March.
The workforce in the country is thus being sandwiched between the falling income and the rising prices. The entire labour market of the country is undergoing a great distortion, so much as it is even recording a fall in unemployment rate along with fall in employment, a phenomenon that need to be understood in correct perspective, and with indicates only a great economic distress. The CMIE data show a fall in unemployment rate to 7.6 per cent in March from 8.1 per cent in February, while India’s labour force shrunk by 3.8 million during March to 428 million, the lowest in eight months. “This is for the first time in over three years, i.e., since the quarter of June 2018, that we have seen such a decline in labour force,” CMIE said. “A decline in labour force in absolute terms reflects a shrinkage in employment opportunities in absolute terms,” it said.
It must be noted that when a worker fails to get a job and starts believing that there are no jobs available in the market, he simply stops searching for a job — a process that is in itself too costly to bear for an unemployed person. As soon as the worker stops searching for a job, he or she is no longer counted as unemployed. In this way, absolute counting of unemployed falls and thus falls the unemployment rate. This phenomenon of fall in unemployment rate without giving employment, or even after shrinking jobs has been more pronounced in the data of recent months.
One can see the great distortion in the labour market though the data. Employment has shrunk by 1.4 million to 396 million in March while the count of the unemployed also fell by 2.4 million. People are losing jobs, employment not available, but unemployment rate is falling! This anomaly from the labour market must be tackled, rather than telling the country that the unemployment rate is falling which gives only a skewed picture, not the reality of true unemployment.
Though the net employment in March fell by only 1.4 million, it should be treated as red alert for the economy in general and labour market in particular due to the disturbing trend in both non-agriculture and agriculture sector employment scenarios.
Non-agriculture sector jobs fell by 16.7 million which included a fall in industrial sector jobs by 7.6 million, while in the manufacturing sector 4.1 million jobs were lost. Construction sector jobs loss was 2.9 million while 1.1 million jobs were vanished from mines sector. It means that industries, manufacturing, construction, and mines sector are undergoing a great distress which needs urgent redressal.
Agriculture sector jobs increased by 15.3 million in March. It means a large number of labour force, who got kicked out from the non-agriculture jobs, returned to find some work in agriculture offsetting the huge job loss in non-agriculture sector. That is why the net job loss remained only 1.4 million.
However, one should note that migration of workers from agriculture to non-agriculture sector happens only because the wages in agriculture is too low compared to non-agriculture activities. The reverse migration from non-agriculture to agriculture sector shows that the workers had left with no option but to accept even pittance available as wage as an agriculture labour. In reality it is just unemployment in disguise.
The CMIE report said, “Such a large increase in employment in agriculture is likely a seasonal demand for workers preparing for the rabi harvest. But, March is a tad too early for the rabi harvest,” adding that a significant portion of the increase in employment in agriculture is March was disguised unemployment.
“What the labour market statistics of March 2022 shows is India’s biggest sign of economic distress,” CMIE said. (IPA Service)
VANISHING EMPLOYMENT MAKES DEADLY COCKTAIL WITH RISING INFLATION
AS NON-AGRICULTURE JOBS DISAPPEAR, DISGUISED UNEMPLOYMENT GOES UP
Gyan Pathak - 2022-04-16 10:55
March 2022 has given a clear indication of a deadly cocktail brewing in India with rising inflation, vanishing employment but falling unemployment rate, disappearing jobs from the non-agriculture sector, and the workforce losing jobs in non-agriculture sector returning to agriculture where unemployment is disguised under very low earning. In brief, the symptoms are the manifestation of a great economic distress, both for individuals and the country.