Unemployment rate in India crosses 10 per cent in October, blame on slow post-Covid recovery

 CMIE survey pegged the rural unemployment rate at 10.82 per cent in October this year and the urban rate at 8.44 per cent

Basant Kumar Mohanty, TT, New Delhi, 03.11.23 : The unemployment rate in the country crossed 10 per cent in October, according to the private survey and research group Centre for Monitoring Indian Economy, with a labour economist attributing the situation to a slow post-Covid recovery.

According to the CMIE, which conducts household surveys in rural and urban areas, the unemployment rate in October was 10.05 per cent, up from 7.09 in September. Last year, the figure for October was 7.8 per cent.

The unemployment rate is the percentage of unemployed people in the workforce (those employed or looking for jobs).

The CMIE survey pegged the rural unemployment rate at 10.82 per cent in October this year and the urban rate at 8.44 per cent. The unemployment rate was around 7-8 per cent in the first six months of 2023-24.

Labour economist Santosh Mehrotra, a visiting professor at the University of Bath in the UK, said the organised sector had shaken off the effects of Covid but the unorganised sector, which provides livelihood to nearly 90 per cent of the country’s workforce, had not.

According to the government’s Periodic Labour Force Survey, the Labour Force Participation Rate (LFPR), the proportion of individuals employed or in search of jobs, increased from 49.8 per cent in 2017-18 to 57.9 per cent in 2022-23.

Mehrotra suggested the increase in the LFPR owed mainly to a rise in those looking for jobs rather than in the employed.

He said that when Covid struck, job creation was already low because of the impact of the demonetisation and the unplanned enforcement of the goods and services tax. Now, after the pandemic played havoc with employment, job creation is yet to rebound.

“We see that the non-farm sector, particularly the micro, small and medium-scale industries, have not returned to their pre-Covid performance,” Mehrotra said.

“There has been an increase in the LFPR (job seekers) but (even) the unorganised sector is unable to absorb them. Hence, the youth unemployment situation is still very grim.”

Mehrotra added that private investment was not picking up despite encouragement from the government.

“(That) private investment is stagnant (is shown by the fact that) manufacturing capacity utilisation remains at 75 per cent, which means that the demand for consumption is low. This has prolonged the revival of the non-farm sector,” he said.

A small glass-making firm in the Dwarka area of Delhi bore out Mehrotra’s claim. Its proprietor, who did not wish to be quoted, said the firm supplies glass to contractors who build small apartments on Delhi’s outskirts.

“The demand has fallen. Our supply (to contractors) has dropped by 50 per cent compared to the time before Covid,” he told this newspaper.

“Payments now are not quite regular. I used to receive the payments within one month before Covid; now I have to wait at least six months. The sale of flats has dipped.”

Tapojay Mukherjee, a member of the NREGA Sangharsh Morcha, a civil society group campaigning for the proper implementation of the national job scheme MGNREGA, said a lack of jobs was causing large-scale distress migration from Bengal’s districts.

“In Bengal, the situation is worse because the MGNREGA is not being implemented (because the Centre has frozen funds alleging irregularities),” he said.

“The scope for regular jobs remains limited, and farm work has come to an end (for this season). People, including educated youths, are migrating to other states in search of jobs.”