India’s Unemployment Rate Falls In September Led By Rural Jobs
September was a remarkable month in terms of labour market, says CMIE’s CEO. But there’s a catch.
India’s unemployment fell from a three-year high in August as rural India employed more labourers in the agricultural sector.
The unemployment rate fell to 7.2 percent in September from 8.2 percent in August, according to data released by the Centre for Monitoring Indian Economy Pvt. Ltd. At the same time, the labour force increased to 44.1 crore in September from 43.9 crore in August. A year ago, the labour force stood at 43.1 crore. The employment rate increased from 39.5 percent to 40.1 percent during the one-month period.
“The drop in September is very welcome given that the unemployment rate has been rising sharply since several months now. Equally important or more important than that is the labour force participation rate. This is a number that should be tracked as closely as the unemployment rate,” Mahesh Vyas, managing director and chief executive officer of CMIE, told BloombergQuint in an interview. The labour force is an indication of how much working-age population is willing to work—both employed and looking for a job. Even a small increase in this metric is a very healthy sign, he said.
Most of this increase in employment—60 lakh of the total 70 lakh—was from the rural agricultural sector as India’s farms require more people during the sowing season of kharif crops. That, according to Vyas, is a cause for concern.
The increase in jobs comes from India’s rural agricultural sector instead of other non-agricultural sectors, Vyas said, adding that September saw a very high increase in the additional area of land under kharif crops which usually leads to a corresponding increase in employment in agriculture. “If the increase is largely seasonal and associated with the monsoon and kharif crop-related activities then this may not be a sustainable increase. This will become clear only as the data for the coming months become available,” the CMIE statement said.
Urban Employment
Of the total 70 lakh people employed last month, only 10 lakh were in urban India, according to CMIE data. Point-to-point comparisons with estimates of a year ago show the labour force in urban areas expanded from 13.7 crore to 14.1 crore but employment remained stable at 12.7 crore.
While there may not have been a significant improvement, the lack of additional fall in employment is also a good sign, Vyas said.
At the same time, urban India needs more high quality jobs to tackle its graduate challenge. According to data, the count of urban graduates who are unemployed is rising steadily whereas the count of urban graduates who are employed is declining gradually.
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