BENGALURU: Robust festive sales and increasing domestic demand have not resulted in creating more jobs as the country’s unemployment rate has shot up to 7.86% this month from 6.43% in September, the latest data from the Centre for Monitoring Indian Economy (CMIE) showed.
The spike was driven by rural unemployment at 8.01%. Urban joblessness also remained high at 7.53% (See table).
The latest uptick in rural distress is in sharp contrast to the muted 5.84% rural unemployment rate in September, which was much lower than the previous month’s 7.68%. According to Mahesh Bhatt, chief business officer at TeamLease Services, erratic rainfalls and tightening financial conditions have led to muted economic activities, which in turn affected rural employment prospects.
Other experts blame macroeconomic factors. “The looming fears of a recession in the US market have created a panic among many IT companies. As a safeguard against decreasing demand for new projects and a volatile future they have frozen new hirings,” said Aditya Narayan Mishra, MD and CEO of CIEL HR Services. He added that the joining dates of freshers are also getting pushed, pushing up unemployment rates. CEOs of IT firms have given cautious outlooks during Q2 results, while clients are taking time to seal bigger deals.
While the venture capital fund flow was at its peak, many start-ups were on a hiring spree but with the changing business dynamics, funds have dried up. “Start-ups are realigning their talent strategy and this has impacted the overall employment sentiment. Global recession fears have resulted in companies tightening their purse. This has affected short-term hiring sentiments,” Bhatt added.