Job situation improves as unemployment rate falls: CMIE data

India's job situation seems to be improving in July so far after seeing a major fall in the employment rate in June 2022, according to the latest data released by private think tank CMIE (Centre for Monitoring Indian Economy). India's unemployment rate in June 2022 spiked to 7.80% from 7.12% in May 2022, shows the CMIE data.

While urban unemployment saw a huge decline -- from 8.21% in May to 7.30% in June – rural joblessness rose significantly to 8.03% in June 2022 from 6.62% in May 2022. The improving scenario in July can be attributed to monsoon pick-up, leading to better labour force participation in rural India.

The day-wise data from CMIE shows India's unemployment rate on June 30, 2022, was 7.79%. This included 7.33% in urban India, while 8% in the rural parts of the country. On July 14, 2022, the overall unemployment rate declined to 7.29%. Though the joblessness rate in urban India has increased in the past 15 days to 7.66%, the rural areas have shown much resilience and have recovered to 7.12%.

The country's overall unemployment rates in the past three days stand at 7.29% (July 14), 7.46% (July 13), and 7.33% (July 12), CMIE data shows. In the past 12 months, the unemployment rate has breached the June level four times -- April 2022 (7.83%), February 2022 (8.11%), December 2021 (7.91%) and August 2021 (8.32%).

The think tank says India registered the biggest fall in employment during a non-lockdown month in June 2022. Jobs fell from 404 million in May 2022 to 390 million in June 2022, putting about 13 million people out of the employed category. Rural India was hit the most, primarily due to the patchy southwest monsoon in the first fortnight of June, which led to reduced demand and participation of the labour force.

The labour participation rate fell in rural India from 41.3% in May to 39.9% in June. This fall of 1.4 percentage points is much larger than the 0.4 percentage point fall in the LPR in urban India where it fell from 37.1% to 36.7%.

During June, the total unemployed people increased by 3 million, while the rest -- about 10 million of the 13 million who lost jobs -- exited the labour markets, states CMIE managing director Mahesh Vyas. The employment rate fell to 35.8% in June 2022 - its lowest level in two years – led by rural areas.

The think tank data shows India's employment fell by 1.7% in the previous financial year (FY22) as compared to the pre-pandemic levels in FY20. The labour force also shrunk (1.5%) and the number of unemployed went up by 1.2% in FY22 when compared with the pre-pandemic levels.

The monsoon was sluggish till June 15, 2022, and the rural labour force participation rate fell during this period. Then, as the monsoon revived, the LPR improved as well. It is expected that as the monsoon has picked up in July, employment in rural India will also revive.