India's unemployment rate surged to 7.77% in October as compared to a four-year low of 6.43% in September, primarily due to a significant rise in the rural unemployment rate, essentially in non-agricultural rural India.
Though the unemployment rate in urban areas declined to 7.21% from 7.70% in September, rural areas saw the jobless rate rising to 8.04% in the month, data gathered by private think tank Centre for Monitoring Indian Economy (CMIE) shows. As on November 2, 2022, India's unemployment rate stood at 7.66% -- 7.31% in urban and 7.82% in rural areas.
The data shows the unemployment rate rise in October is accompanied by a small fall in the labour participation rate (LPR), which fell from 39.3% in September to 39% in October. "A falling LPR combined with an elevated unemployment rate implies that the employment rate has been falling. The employment rate is the proportion of the working-age population that is employed. The employment rate is down to 36% in October 2022. A year-ago the employment rate was around 37.3%. The fall is therefore quite significant," says CMIE CEO Mahesh Vyas.
The jobless estimate for October is closer to the average unemployment rate after the Covid pandemic hit India in April-May 2020. The average rate since June 2020 is 7.7% and the median rate is 7.5%. He said its failure to endure implies the unemployment rate is sticky in its range of 6.5-8%, with a mean of around 7.5%. "A fall in the unemployment rate during a month should therefore be interpreted with some caution."
Notably, the CMIE data shows employment fell by 7.8 million in October 2022. The count of unemployed rose by 5.6 million. And about 2.2 million quit the labour market. The labour force shrunk from 432 million in September to 429.8 million. Employment fell from 404.2 million in September to 396.4 million in October 2022.
Among the industries, employment in agriculture has been falling over the last year. The CMIE data shows it peaked at 164 million in November 2021. Since then, it fell rapidly to a low of 134 million in September. Its recovery in October 2022 at 139.6 million is the lowest agriculture employment seen in any October of the last four years.
"Therefore, while there was no fall in employment in agriculture in October 2022, the level of employment in the sector was quite low," says the CMIE.
The services sectors lost 7.9 million jobs in October 2022 -- 4.6 million losses in rural and 3.3 million in urban India. The industrial sector lost 5.3 million jobs in October. Construction, which is the largest employer, lost little more than a million jobs in October, most in rural India. In October, says the think tank, employment in the form of daily wage labourers shrunk by nearly 15 million.