Unemployment in India rose to a two-year high of 6.9 per cent in the month of October. The unemployment rate has been rising steeply since July 2017. There was a slight improvement in September, but this was short lived.
According to a report by Centre for Monitoring Indian Economy (CMIE), unemployment is not the best measure for the labour market conditions in India. A better set of measures is the labour participation rate and the employment rate.
Put in simple words, the employment rate is a measure of the proportion of the total adult population that remains economically productive by being employed in some formal or informal activity for compensation. In October 2018, only 42.4 per cent of the population of India was willing to work.
CMIE has reported that the labour participation or willingness to work fell sharply after demonetisation, and has since not recovered. After Demonetisation, job opportunities reduced, companies ceased hiring, hence unemployed people stopped looking for jobs, the survey said.
But at least the number of people actively looking for a job is changing now. In October 2018, there were 29.5 million people actively looking for a job as compared to 21.6 million in October 2017.
The number of people employed in October 2018 was 397 million, 2.4 per cent lower than the 407 million employed in 2017.