25 November 2019

Rising Unemployment in India

The latest data on unemployment in India points to a significant surge. In fact, at 7.5%, the latest unemployment rate is the highest in 38 months, reveals the CMIE data. For calculation of this rate, the base is October–December 2015.

So, what is unemployment rate? 
Unemployment rate is the ratio of the unemployed to the working age population that is willing to work. If therefore considers only a part of the working age population – the part that is willing to work. 

In other words, the ratio of the employed to the working age population is called the employment rate.

India has a total labour force of about 52 crore. A low labour participation rate means fewer people are willing to work. 

In January 2016, the labour participation rate was 47%; it is down to 43% in October 2019, which effectively means that fewer people in the labour force are looking for and participating in work. 

There is a problem here: even though the labour participation rate is down to 43% (i.e., fewer people are participating in work), even these fewer people are not finding jobs (unlike in 2016). 

To put in perspective, of the 43% of the working age population willing to work, 7.5% are unable to find any work.

In light of the global slowdown and the deceleration in the Indian economy, the employment situation is unlikely to improve in the near future.  


Venkata Sundaragiri said...

Bharat, this is a great set of information. A little light shed on the reasons and causes and outlook would be awesome

Jayachandra said...

Willingness to work declining is a bit tricky to understand. How is it assessed. Can governments throw freebies and make labour content for their basic needs and thereby tamper the unemployment rate?

Krishna Kuppachi said...

Great share, BJ.

Wondering what constitutes the working age population and how do the statisticians decide on quantifying willingness to work.