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Unemployment declines in September

by BQ News Bureau
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During September 2020, employment increased and unemployment declined compared to the status in August 2020. Employment increased by 5.1 million from 392.5 million to 397.6 million. Unemployment declined by 7.3 million from 35.7 million to 28.4 million, according to a CMIE research report.

The bigger fall in unemployed compared to the rise in the employed indicates that the labour force shrank by 2.2 million from 428.3 million in August to 426 million in September. A large shrinking of the labour force is a sign of discouraged workers.

At 426 million in September 2020, the labour force was nearly 11-12 million short of its level a year ago and also against the average size of the labour force in 2019-20.

An increase in employment and a simultaneous fall in the labour force is a strange phenomenon. The urban and rural regions have very different stories to tell.

In rural India, employment increased handsomely by 7.4 million and unemployment declined by a little over 5 million. As a result, while the all-India labour force declined, the rural labour force increased by 2.3 million. In fact, the employment level in rural India in September was similar to the average employment in rural India in 2019-20 and almost similar to the employment level a year ago, in September 2019.

At the same time, urban India saw a shrinking of its labour force and employment. Employment declined by 2.3 million and unemployment also declined by 2.3 million. As a result, the labour force was reduced by 4.6 million in towns and cities in September. These are big falls. The monthly fall in the labour force is 3.3 per cent. Save for the meltdown month of April 2020, the urban labour force has never shrunk so much in a month.

The big increase of 7.4 million jobs in rural India does not inspire confidence in terms of their quality. While on a net basis, a total of 7.4 million additional rural jobs were added in September, 8.1 million job additions were among those with less than high school education in rural India. These are not the best jobs.

Of the 7.4 million rural jobs added, 4.2 million were among women. There was a surge in employment in the form of daily wage earners. Their numbers increased by 13.7 million in rural regions in September compared to August. Increase in rural jobs was mostly among women.

A redeeming factor is an increase in jobs for graduates in urban India. These grew by 2.1 million. Another welcome change seen in the September labour data from Consumer Pyramids Household Survey is the increase in salaried jobs. These increased by 4.4 million.

The 5.1 million increase in employment in September indicates a continuation of the recovery of jobs since their precipitous fall in April. Total employment in September 2020 was 397.6 million. This was 5.8 million short of the average 403.5 million employment in 2019-20.

All the deficit is in salaried jobs. These are 16.5 million short of their level in 2019-20. These losses are partly offset by a gain of 7.3 million in farming and 3.1 million in daily wage earners.

Labour data for September are comforting in the sense that they belie fears of the recovery in employment seen since May, stalling or even reversing as the weekly data did suggest initially. However, the quality of recovery in jobs leaves much to be desired.

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