India's unemployment rate has hit 3-year high, shows CMIE data

According to CMIE, the urban unemployment rate stood at 8.9%, slightly higher than the rural unemployment rate of 8.3%.

Youths line up outside a bus depot in Adilabad, Telangana, to apply for the jobs of temporary driver and conductor in October 2019.

India’s unemployment rate in October rose to 8.5%, the highest level since August 2016, according to data released by the Centre for Monitoring Indian Economy (CMIE) on Friday.

According to CMIE, the urban unemployment rate for October 2019 stood at 8.9%, slightly higher than the rural unemployment rate of 8.3%.

The chart below shows the unemployment trend since January 2016, when CMIE began estimating unemployment.

 

Among States, Tripura and Haryana saw unemployment levels of more than 20% (the highest), while the unemployment was the lowest in Tamil Nadu at 1.1%. Rajasthan saw its unemployment rate double between September and October 2019.

 

The CMIE’s figures are in line with the findings of the latest Periodic Labour Force Survey, which had estimated an unemployment rate of 6.1% between July 2017 and June 2018, the worst in 45 years.

The data also comes on the back of other indicators showing a downturn in the economy, including the core sector output in September posting its worst contraction in at least 14 years. Earlier, August’s industrial output shrank at its fastest rate in more than six years.

A working paper titled, 'India’s Employment Crisis' by researchers at the Centre for Sustainable Employment estimates that between 2011-12 and 2017-18, employment declined by an unprecedented nine million jobs (a 2% drop), with agricultural employment declining by 11.5%.

In the same period, employment in the service sector increased by 13.4%, while manufacturing employment dipped by 5.7%.

The graph below shows the change in employment in absolute numbers across sectors.

 

The data in the paper also shows that while employment has been declining, those who are "Not in Labour Force, Education and Training" has continued to increase -- from about 84 million in 2011-12, it has now crossed 100 million.

Falling manufacturing employment and decelerating construction employment growth are "bad news for the economy", the paper notes, adding, "To sustain the growth of income, improve standard of living, and to reduce poverty, employment opportunities in manufacturing and construction (although a transitory sector) is necessary."