Weekly jobless rate surges to 8.86 % after recovery in September

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The country’s unemployment rate worsened in the week ended October 10, latest data from private think tank Centre for Monitoring Indian Economy (CMIE) showed.

The all-India weekly unemployment rate inched up to 8.86 percent in the week to October 10, weeks after the joblessness rate dropped to a six- month low of 6.86 percent in September. In rural India, the weekly unemployment rate was 9.48 percent for the week, rising sharply from 6.06 percent at the end of September, also a six-month low.

For urban areas, it was 7.50 percent, lower than the 8.62 percent recorded in September, according to CMIE data.

For the week ended October 3, the all-India weekly unemployment rate stood at 7.56 percent, and for rural and urban areas the rate stood 6.99 and 8.73 percent, respectively.

CMIE managing director and chief executive officer Mahesh Vyas said, “The increase in unemployment seen in the week ended October 10 was concentrated in rural India. But this is not a matter of much concern because the labour participation and the employment rate increased in rural India. The employment rate increased from 37 percent in the prior week to 38 percent."

In urban India, while the unemployment rate has dropped a bit, the employment rate has also dropped a bit. This is slightly worrisome. But rural India provides comfort, he added. 

The unemployment rate is a bit volatile. This reflects the nature of an unsettled labour market. It (the volatility) possibly reflects the churn in the economy as it struggles to come out of the recent downturn, Vyas observed.

The rise in the rate of unemployment comes weeks after a sharp and sudden increase in employment in September. Jobs increased by 8.5 million in September with 6.5 million alone in rural India.

Yuvika Singhal, economist at QuantEco Research, said that the rise in all-India unemployment seen for the week to October 10 “was completely a function of rural unemployment ticking up. It could be related to seasonality or perhaps simply an unwinding post the strong increase in jobs growth in September.”

The volatility notwithstanding, it would be reasonable to expect the unemployment rate to decrease on a trend basis, given the impressive improvement in mobility we are seeing in cities, though workplace-related mobility marginally declined in the last one week, Singhal added. 

Continued opening up of the economy and progress on vaccinations amid Covid cases dwindling to less than 20,000 continue to boost consumer confidence. On the rural side, the onset of Kharif harvest should also allow a more purposeful engagement of the labour force in the near term, she noted. 

CARE Ratings senior economist Kavita Chacko said the improvement in employment in September, especially in rural areas, can be linked to the sowing of agricultural crops which was delayed due to erratic rainfall in the normal sowing period of June-August and can be seen as being a seasonal uptick.

“Although economic indicators have been improving, demand in the economy has to see a durable improvement for a noteworthy broad-based rise in employment,” Chacko noted.