New Delhi: India’s labour market remains under stress, primarily because of a fall in the employment rate in rural India and continued low employment rate in urban India, the Centre for Monitoring Indian Economy said.

“The falling employment rate in rural India and the continued low employment rate in urban India are the weaknesses in India’s labour market recovery process,” the independent think tank said in its weekly analysis. “Given that rural India has a much larger weight in all-India estimates, it is imperative that its employment rate stops falling any further,” it added.

According to CMIE, keeping the employment rate from slipping is challenging.

“To merely keep the employment rate unchanged, the economy has to generate additional jobs. It needs to run to stay where it is,” CMIE suggested.

CMIE data shows that the gap between the monthly employment rate in 2020-21 and the corresponding month of 2019-20 narrowed consistently till August, when it was just 182 basis points, after which it rose to 254 basis points in September. There are apprehensions it may widen further in October.

As per the data, the average rural employment rate stood at 39.1% in the first three weeks of October, lower than 39.8% in September, which was its highest level since the lockdown and closer to the 40.7% rate in 2019-20.

The average employment rate in urban India in the first three weeks of October was 34.8%, slightly better than 34.4% in September, but still over 200 basis points lower than the 2019-20 level.

Citing labour market statistics derived from CMIE’s Consumer Pyramids Household Survey, CMIE said the data is indicating a stagnation of India’s economic recovery from a shock in April during the lockdown.

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