Even while all development indices, including the gross domestic product (GDP), indicate a robust economic rebound, unemployment in the country continues to rise. According to the latest unemployment rate data issued by the Mumbai-based think tank Centre for Monitoring Indian Economy (CMIE), 1.5 million people lost their jobs in August, with 1.3 million lost in rural India. The unemployment rate takes into account both rural and urban India and formal and informal job losses.
The national unemployment rate surged unexpectedly to 8.32 per cent in August after decreasing to 6.95 per cent in July, according to CMIE. Many economists believe that one of the critical causes of rising job losses is an uneven recovery. According to CMIE figures, urban unemployment increased by 1.5 per cent to 9.78 per cent in August. In July, it was at 8.3 per cent. Meanwhile, rural unemployment rose by 1.3 per cent in August to 7.64 per cent, up from 6.34 per cent in July.
More people looking forward to work
Aside from the increasing unemployment rate, the labor force participation rate has also increased, according to CMIE data. As a result, more people are actively seeking employment. According to statistics, approximately 36 million people were actively looking for work in August, up from 30 million in July.
Unemployment increases when more people are looking for work, which is not a good omen for long-term economic growth. The second wave cut short India’s employment market recovery and the job market has been sluggish ever since.
While important economic indicators point to a quick rebound, the job market as a whole is still struggling. A lack of job possibilities might stifle long-term economic growth by lowering general purchasing power, which would lead to a drop in consumer demand. Although the economy grew in the first quarter of this year, average consumption demand remains sluggish. The low base effect was primarily responsible for the growth.
Gloomy Employment outlook
Unemployment is still significant in several Indian states. In August, double-digit unemployment rates were reported in at least eight states across India. This unemployment follows the addition of 16 million workers in July. When the Kharif planting season was at its apex, the bulk of the expansion was attributable to low-quality farm labor.
Many people lost work in August when the sowing season slowed, resulting in a significant increase in rural unemployment. Furthermore, according to CMIE, the majority of the jobs added in July were of low quality. The job market’s fate will be determined by the country’s ability to maintain the current growth pace, avert a potential third wave, and generate additional demand during the next festive season.