Unemployment Rate in India


    In News

    • Recently the Periodic Labour Force Survey (PLFS) was released by the National Statistical Office (NSO).

    More about the news

    • The unemployment rate:
      • The unemployment rate in urban areas for persons aged above 15 eased to 7.2% in July­-September 2022 from 9.8% a year ago and 7.6% in the previous quarter.
      • The unemployment rate was 6.6% for men and 9.4% for women. It was 9.3% and 11.6%, respectively, in July-­September 2021. 
    • The labour force participation rate (LFPR):
      • LFPR in urban areas for persons aged 15 and above, increased to 47.9% in July­-September 2022, from 46.9% in the corresponding period in 2021. 
        • It was 47.5% in April­-June 2022.
      • Women:
        • The Centre for Economic Data and Analysis (CEDA) said in a release that over the past two decades, the LFPR of women has been steadily declining, despite an increase in their educational attainment.
    • The worker-population ratio (WPR):
      • The worker-population ratio (WPR) also witnessed a marginal increase compared with last year’s. 


    • The Labour force participation rate (LFPR):
      • Definition:
        • The LFPR essentially is the percentage of the working-age (15 years or older) population that is asking for a job; it represents the “demand” for jobs in an economy. 
        • It includes those who are employed and those who are unemployed.
      • Significance of LFPR in India:
        • Comparing with the global LFPR:
          • Typically, it is expected that the LFPR will remain largely stable.
          • The world over, LFPR is around 60%. In India, it has been sliding over the last 10 years and has shrunk from 47% in 2016 to just 40% as of December 2021.
        • Low Contribution of women in LFPR:
          • The main reason for India’s LFPR being low is the abysmally low level of female LFPR.
          • In other words, less than one in 10 working-age women in India are even demanding work. 
          • Even if one sources data from the World Bank, India’s female labour force participation rate is around 25% when the global average is 47%.
    • The Employment Rate (ER):
      • Definition:
        • The ER refers to the total number of employed people as a percentage of the working-age population.
      • ER to capture the fall in EFPR:
        • When LFPR is falling as steadily and as sharply as it has done in India’s case, it is better to track the Employment Rate (ER).
        • By using the working-age population as the base and looking at the number of people with jobs (instead of those without them), the ER captures the fall in LFPR to better represent the stress in the labour market.
    • The worker-population ratio (WPR): 
      • Definition:
        • The WPR is defined as the percentage of employed persons in the population.

    Reasons of unemployment in India

    • Failure of farm sector & labour market:
      • One of the key reasons behind rising unemployment last month was the failure of the farm sector to absorb the influx of additional labour.
      • Besides the farm sector letting go of workers, the deterioration in labour market conditions across urban and rural regions also led to higher unemployment.
    • Job opportunity & qualification mismatch:
      • India presents a paradox of skill shortages while being labour surplus.
        • Trucks are idle because of the shortage of drivers. The steel industry needs more metallurgists. 
        • The healthcare sector is short of nurses and technicians. 
        • The construction sector needs civil engineers, hi-tech welders, bricklayers, and so on. 
    • Sector-specific mismatch:
      • India’s economic growth has been largely services led, with a small pool of skills at the upper end, given a glaring failure in mass education, while capital intensity has increased in manufacturing overall in spite of our labour abundance. 
    • Low participation of women:
      • One reason is essentially about the working conditions — such as law and order, efficient public transportation, violence against women, societal norms etc — being far from conducive for women to seek work.
      • A lot of women in India are exclusively involved within their own homes (caring for their family) of their own volition. 
      • Lastly, it is also a question of adequate job opportunities for women.

    Employment Generation Programmes of the Government

    • Atma Nirbhar Bharat Rojgar Yojana (ABRY): 
      • It was launched in 2020 as part of Atma Nirbhar Bharat package 3.0 to incentivize employers for creation of new employment along with social security benefits and restoration of loss of employment during Covid-19 pandemic.
    • Pradhan Mantri Rojgar Protsahan Yojana (PMRPY):
      • It was launched in 2016 to incentivise employers for creation of new employment. 
    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
      • MGNREGA is to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. 
    • Aajeevika – National Rural Livelihoods Mission (NRLM):
      • It was launched by the Ministry of Rural Development (MoRD) in 2011. 
      • Aided in part through investment support by the World Bank, the Mission aims at creating efficient and effective institutional platforms for the rural poor, enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services. 
    • Pt. DeenDayal Upadhyaya Grameen Kaushlya Yojana (DDU-GKY):
      • DDU-GKY is a part of the National Rural Livelihood Mission (NRLM), tasked with the dual objectives of adding diversity to the incomes of rural poor families and cater to the career aspirations of rural youth.
    • PM- SVANidhi Scheme:
      • Prime Minister Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) Scheme aims to provide collateral free working capital loan to Street Vendors, vending in urban areas, to resume their businesses which were adversely affected due to COVID-1 induced lock-down. 
    • Pradhan Mantri Kaushal Vikas Yojana (PMKVY):
      • Pradhan Mantri Kaushal Vikas Yojana (PMKVY) is the flagship scheme of the Ministry of Skill Development & Entrepreneurship (MSDE) implemented by National Skill Development Corporation.

    Way Ahead

    • Employment and unemployment in India have always been at the centre of discussion for the government and intellectuals alike. 
    • Employment in itself comes with some of its own issues, like lack of decent working conditions, exploitation of employees, absence of decent remuneration etc.
    • The quality of education should be the cornerstone for the government and people alike.
    • It is time we take the Skill development initiative undertaken by the government to be implemented effectively.

    Source: TH