India's joblessness reaches 3.1 crore, or 7.1% of those seeking jobs, highest in the last 17 months: CMIE
The Centre for Monitoring Indian Economy (CMIE), which India’s leading business information consultancy firm and think tank, has estimated that the unemployment rate in the country has reached 7.09 per cent in the week ending February 25, 2018, the highest in the last 71 weeks. Exactly a year ago, on February 26, 2017, the country’s unemployment rate was just 4.35 per cent.
A CMIE report by the consultancy firm’s managing director Mahesh Vyas, even as pointing out that this is “the highest unemployment rate in the last 15 or 16 months”, says, “The unemployment rate has been rising steadily since July 2017.”
Pointing out that the labour rate participation rate – an indicator of proportion of people entering the job market – in February 2018 reached 44 per cent, the highest over the last one year, the report, however, says, “Those who are actively looking for a job almost touching 31 million in the week ended February 25, 2018.”
The report regrets, the high 7.09 per cent unemployment rate also goes to show that the “labour that is entering the labour markets in search of jobs is not finding them in sufficient numbers.”
Suggesting that Prime Minister Narendra Modi’s demonetization misadventure of November 2016 led to a sharp deceleration in the number of people entering the job market, as people stopped entering the job market, not sure of getting jobs, the report believes this is a major reason why unemployment reached its lowest ebb, 3.4 per cent, in July 2017.
“The labour force shrunk by 30 million – from about 450 million before demonetization to close to 420 million within six months of demonetization”, the report states, adding, “Now, more than a year later, we see a labour force that is close to 430 million.”
Shrinking labour force also led to fall in unemployment, the report says, adding, “The unemployment rate had been falling steeply and almost steadily since the demonetization in November 2016. The rate rose in August 2017 and continued to rise till it stabilized around 5 per cent between October 2017 and January 2018.”
Perceiving a “pick-up in the labour participation rate during February 2018”, believes the report, “However, the increase in labour participation seen in the weekly estimates shows up in higher unemployment.” It adds, “The only redeeming feature is that labour is returning to the markets after they had left it in a big way after demonetization.”
The report laments, “The labour force has still not recovered entirely. Remonetization by the RBI was not enough to bring labour participation to its earlier level. The economic shock was deeper than can be measured merely by the injection of liquidity back into the system.”
Predicts the report, “The coming months are not the best for employment”, adding, “In rural India, activity will slow down after the rabi crop is harvested. Employment opportunities will be limited till the preparation for the kharif season begins around mid-May.”
As for the urban areas, the report says, “As the academic year comes to an end in the summers, new graduates will start offering themselves for jobs”, even as noting that the aggregate values of the labour force include not just new entrants and some natural exits because of age, but also those “who quit because of the shock of demonetization.”
Perceiving a “pick-up in the labour participation rate during February 2018”, believes the report, “However, the increase in labour participation seen in the weekly estimates shows up in higher unemployment.” It adds, “The only redeeming feature is that labour is returning to the markets after they had left it in a big way after demonetization.”
The report laments, “The labour force has still not recovered entirely. Remonetization by the RBI was not enough to bring labour participation to its earlier level. The economic shock was deeper than can be measured merely by the injection of liquidity back into the system.”
Predicts the report, “The coming months are not the best for employment”, adding, “In rural India, activity will slow down after the rabi crop is harvested. Employment opportunities will be limited till the preparation for the kharif season begins around mid-May.”
As for the urban areas, the report says, “As the academic year comes to an end in the summers, new graduates will start offering themselves for jobs”, even as noting that the aggregate values of the labour force include not just new entrants and some natural exits because of age, but also those “who quit because of the shock of demonetization.”
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*Freelance writer
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