India sees dip in Jan unemployment rate as 6.6 million people moved out of the labour market: CMIE

Though January witnessed a shift towards better quality jobs, the quantum of employment continues to remain a challenge in February, it said.

CMIE data shows that the unemployment rate fell by 1.3 percentage points in January 2022 to 6.6% from 7.9% in December and the number of unemployed people fell by a hefty 6.6 million.

“This sounds very good. But, there is a twist. The fall in the unemployment rate did not arise out of 6.6 million people getting jobs. They, rather disappointingly, just stopped looking for jobs. As a result, they were no longer counted as unemployed and were out of the labour force,” CMIE said in its weekly labour market analysis.

Further, the total employment in the country last month shrunk by 3.3 million as the employment rate dropped in January to 37.6% from 37.2% in December while the labour force participation rate fell from 40.9% in December 2021 to 39.9% in January 2022.

“These two ratios show the real stress in the labour markets in January,” CMIE added.

As per the CMIE data, during the weeks ended February 6 and 13, the employment rate was 36.4% and 36.6%, respectively, which is comparatively poor with the already low employment rate of 37.6% in January 2022.

According to CMIE, the shift in the composition of employment in January in favour of better quality jobs is, however, encouraging. While employment among salaried employees increased by a substantial 5.7 million in January reaching nearly 83 million after having remained at 77 million in November and December 2021. Salaried jobs stood at 86 million in 2019-20.

While agriculture shed 2.5 million jobs and services sector shed 6.6 million jobs, industry, on the contrary, absorbed 5.8 million people in January with manufacturing adding 1.8 million jobs last month. 1.4 million jobs were added to manufacturing in December.

Mines and utilities added over 1.2 million jobs in January while the construction industry added 2.8 million jobs taking the total number of employed in the industry to 67.5 million in January 2022. This is high compared to the 61 million it absorbed before the pandemic in 2019-20, CMIE said.

According to CMIE, there is a sustained increase in employment in manufacturing in January as well with the total employed in manufacturing at 32 million, which is the highest since March 2020 though quite low compared to the 41 million employed in 2019-20.

“Reaching the 41 million mark seems extremely difficult because this would require massive investments into creation of new capacities and conditions are not conducive for that around now,” CMIE added.