Adding to the recent trend of positive economic news, it was announced that India’s unemployment rate fell to 3.1 percent in 2023. The improved employment scenario comes close on the heels of higher-than-anticipated GDP growth, confirming the historical belief that jobs and growth go hand in hand.
Curiously, the National Statistics Office walked an extra mile releasing jobs data for the calendar year—a first in its history—as against the tradition of publishing data for the July-June year. If the high unemployment rate ahead of the 2019 general elections led to a contentious debate with the government tossing it in the bin, the latest dispatch coming just before 2024 elections will likely be showcased as a major accomplishment.
A decade ago, Narendra Modi ran for prime minister with the promise of creating 10 million jobs every year. While he is yet to make good of the promise, it’s certain that job creation will remain one of the key poll planks. One of the notable data points in the latest unemployment numbers is the reduced gap between the labour force and the workforce.
While 2023 saw a 59.8 percent labour force participation rate, or those who are actually working or willing to work, the total workforce, or those actually engaged in some form of work, stood at 58 percent. In other words, if the available work pool is 60, 58 are meaningfully employed. This is good news, as the gap was higher in previous years.
While the official data shows all is well on the jobs front, private estimates indicate otherwise. According to CMIE’s Consumer Pyramids Household Survey, the unemployment rate rose to 8 percent in February 2024 from 6.8 percent in January. What’s more unsettling is that unemployment eased in urban India, but rose sharply in rural areas to 7.8 percent, perhaps due to the dismal growth in the agriculture sector, which is delaying rural economic recovery.
Besides, the CMIE data also shows a rise in youth unemployment during October-December 2023, while in 30-34 age bracket it touched a 10-quarter high of 2.49 percent. Clearly, two aspects need attention. One, the female labour force currently stands at less than a quarter and needs to be strengthened. Two, more than 10 million Indians join the workforce every year, which means job creation should keep apace to sustain the low unemployment rate.