After two quarters of fall, urban unemployment rate stagnated at 6.6% in Q2

After falling for two consecutive quarters, India’s urban unemployment rate stagnated at 6.6 per cent in Q2 (July-September), thus reflecting a slight deterioration in labour markets.

This stagnation comes amid a swelling labour force, meaning that the urban economy was not able to generate a commensurate number of jobs during the quarter.

However, the unemployment rate in current weekly status (CWS) terms for those above 15 years of age in the September quarter is still the lowest recorded in nearly five years, since the National Statistical Office (NSO) began releasing India’s quarterly urban jobless rate in December 2018.

The unemployment rate in urban areas has been steadily declining since the high of 12.6 per cent recorded in the Covid-affected April-June quarter of FY22, the Periodic Labour Force Survey (PLFS) data, released by the NSO, on Wednesday showed.

The unemployment rate among men increased slightly to 6 per cent during the quarter from 5.9 per cent in the previous quarter, whereas the jobless rate among women declined to 8.6 per cent from 9.1 per cent. These figures have also been declining since the April-June quarter of FY22, when they were estimated at 12.2 per cent and 14.3 per cent, respectively.

However, the unemployment rate for the youth (15-29 age group) declined to 17.3 per cent in Q2 from 17.6 per cent in the June quarter.

People belonging to this age group are usually first-timers in the labour markets and this metric reflects its robustness.

The latest quarterly survey also showed the labour force participation rate (LFPR), which represents the percentage of people either working or seeking work in the urban population, saw a marginal increase to 49.3 per cent in the September quarter from 48.8 per cent in the previous quarter. Both men and women showed greater enthusiasm for work during the quarter as their LFPR increased to 73.8 per cent and 24 per cent from 73.5 per cent and 23.2 per cent, respectively.

But this increased enthusiasm for work did not translate into better jobs for either men or women. The share of salaried jobs among them fell to 47 per cent and 52.8 per cent from 47.8 per cent and 54 per cent, respectively, in the previous quarter. Increasingly, they found work as self-employed, which includes working as unpaid helpers in household enterprises or owning an enterprise, which labour economists cite as a poor form of employment.

Earlier last week, the payroll data by the Employees’ Provident Fund Organisation (EPFO) also showed that fresh formal job creation cooled for the second consecutive month to decline to a six-month low in September, signalling a downturn in the formal labour markets during the second quarter.

The number of new monthly subscribers under the EPF declined by 6.45 per cent to 891,583 in September from 953,092 in August, shows the latest payroll data released by the EPFO on Monday.

Given the importance of having labour force data available at frequent intervals, the NSO launched India’s first computer-based survey to measure labour force participation dynamics at three-month intervals for urban areas in April 2017.

Before the PLFS, the National Sample Survey Organisation (now known as NSO), under the Ministry of Statistics and Programme Implementation, used to bring data related to employment and unemployment based on household socioeconomic surveys once in five years.