India’s Unemployment Rate Up In April

Richard Ginika Izuora

India’s job seekers is rising as the country’s unemployment rate reportedly hit a four-month high in April.

It rose to 8.11 per cent from 7.8 per cent in March primarily because of a rise in India’s labor force participation rate (LFPR), according to Mahesh Vyas head of the Centre for Monitoring India Economy (CMIE).

At the same time, jobs creation to meet the demand for swelling workforce has been inadequate. This also worsened the joblessness rate in the country.

LFPR is the estimate of the country’s active workforce above 15 years of age. For instance, when only 60 of the 100 people of working age want jobs, LFPR is said to be 60%. If six out of these 60 do not get jobs, unemployment rate would be 10%. If all 100 seek work and 20 do not get jobs, joblessness would be 20%, despite more people getting jobs than when LFPR was 60 per cent.

In April, LFPR hit a three-year high of 41.98 per cent taking the overall number of people looking for jobs to 467.6 million. This was significantly higher than the usual range of 430-440 million since CMIE began tracking it in 2016.
The rise in LFPR may have been caused by massive layouts in the technology sector and startup economy amid a challenging macroeconomic environment.
CMIE’s unemployment report for April highlighted the following:

• Overall employment rate rose to 38.57%, the highest since March 2020
• 25.5 million more joined the labour force in April
• 22.1 million jobs were also created that month
• Therefore, around 87% of those who joined the workforce in April got jobs
• Urban unemployment rose to 9.81%, from 8.51% a month ago
• Rural unemployment fell marginally from 7.47% in March to 7.34%
• The notable rise in LFPR and employment rate in India in the month of April reflects an increase in willingness among people to seek employment,” Vyas wrote in the Business Standard.
• Around 95 per cent of those who joined the rural workforce found jobs, data showed.

This could be because the demand for work under the government’s rural employment scheme moderated in January due to a recovery in informal-sector employment, according to the Reserve Bank of India’s(pdf) April bulletin.

However, only 54.8% of the urban jobseekers found new jobs. Job creation, therefore, remains an acute challenge for the world’s most populous nation.

Structural problems linked to skill formation and curriculum reform hinder job growth in India. A study by talent assessment firm Wheebox concluded that half of India’s graduates are unemployable due to poor education and training.

“We do face a challenge in hiring as specific skill sets required for the industry are not currently easily available in the market,” said Yeshwinder Patial, director for human resources at MG Motor India, told Bloomberg. He was referring to tech skills such as cloud computing, artificial intelligence, industrial design and more.

Unfortunately, India’s educational institutions are far behind on this front.