Unemployment is one of the major problems that India is facing right now. Due to overpopulation and lack of awareness, this problem is the cause of many other issues. According to the October reports available on the official website of the Centre for Monitoring Indian Economy (CMIE), the unemployment rate has reached 6.9 percent. Sadly, this is the highest unemployment rate recorded in two years.
This is not the only bad news from the labour markets. When it comes to analysing the labor market conditions in India, the unemployment rate is not the best measure and a better way is measuring the labour participation rate and the employment rate. The study also found that the labour participation rate which is a measure of the proportion of adults willing to work fell to 42.4% – the lowest since January 2016.
Demonetization is seen as the main reason behind these numbers. “Labour participation rate fell sharply after demonetization”, from around 47-48%, “and it has still not recovered,” the CMIE report read.
The estimated number of persons employed during October 2018 was 397 million which is 2.4 percent lower than the 407 million persons employed in October 2017.
This sharp fall in the employment rate in October is perhaps the most worrisome measure of the labour markets. While employment has been falling, the number of people unemployed who are looking for a job has been increasing. As of October 2018, there were 29.5 million unemployed persons actively looking for jobs. This is much more than the 21.6 million who were looking for jobs in October 2017.
Commenting on CMIE’s report, Aditya Narayan Mishra, CEO, CIEL HR Services, said,
“October-to-December is traditionally the job creation period across sectors in the Indian economy, and the mismatch between demand and supply of labour is hence worrying.”