Urban unemployment rises to 8.2%, hits 11-month high

Unemployment is inching up. In the week ended October 8, it was 5.8 per cent compared to 5 per cent in the preceding week. In urban India, unemployment was 8.2 per cent. This is the highest unemployment rate in urban India in the past 11 months. Urban labour participation rate has recovered to its level during the last December-January period.

The rise in labour participation rate and the unemployment rate shows that labour is returning back to the labour markets but, it isn't finding jobs.

The fall in labour participation rate began soon after demonetisation. We are probably seeing a recovery after about a year.

The BSE-CMIE effort at measuring unemployment in India has been a witness to this tumultuous period. The effort has completed five Waves of surveys. The first and second Waves were done during the pre-demonetisation period. These were during January-April 2016 and May-August 2016. Demonetisation occurred mid-way through the third Wave of September-December 2016. Two more Waves have been completed after this.

At the end of each Wave a statistical volume -- "Unemployment in India, A Statistical Profile" is produced. All the five Statistical Profiles produced so far are now available in freely downloadable pdf formats on CMIE's website https://unemploymentinindia.cmie.com and on BSE's website, http://www.bseindia.com/bsecmieindices/unemployment.aspx.

These about-185-page statistical volumes provide data that can help us understand employment and unemployment in India through the demonetisation period and going ahead, through GST.

These statistical profiles provide estimates of the labour force, labour participation rate, employed and unemployed persons and the unemployment rate during a Wave.

A useful set of additional indicators estimated in these volumes is the greater labour force and the greater unemployment rate. This concept is explained below.

A person is considered unemployed if s/he is willing to work and is actively looking for a job but, is unable to get a job. Three conditions must be fulfilled -- the person must be unemployed, must be willing to work and, must be actively looking for a job. The last criterion implies applying for jobs, appearing for interviews, making enquiries for jobs, standing in queues for jobs, etc. If an unemployed person is willing to work but is not actively looking for a job then s/he is not counted as an unemployed person for calculating the unemployment rate. This is the international practice and this is what we follow.

The labour force is simply the sum of the unemployed as defined above and the employed. And, the unemployment rate is the ratio of the unemployed to the labour force.

Now, consider the unemployed who are willing to work but are not actively looking for a job. Why should an unemployed person who is willing to work not be looking for a job? Possibly, because such a person does not believe that a job is available. Maybe, there is a seasonality in seeking jobs. Or, there could be social constraints that refrain a person from seeking a job. While the reasons for such behavior could be interesting, it is perhaps, very important to know the size of such persons who are willing to work but do not actively look for jobs.

The statistical profiles provide estimates of these unemployed who are willing to work but are not actively looking for a job. The sum of unemployed who are willing to work and are actively looking for a job and, unemployed who are willing but not actively looking for a job is the greater unemployed. Interestingly, the unemployed who are willing to work but are not actively looking for a job was about 70 per cent of the size of the unemployed who are willing and looking for a job.

During 2016, the unemployment rate was 8.2 per cent but, the greater unemployment rate was 15 per cent.

"Unemployment in India, A Statistical Profile" presents estimates of India and 25 major states. Separately, estimates are presented for urban and rural regions of the individual states as well. Data on labour force, employment, unemployment, greater unemployment, etc. is also presented by educational qualification, age and gender.

BSE has been an enabling partner in the measurement of unemployment in India and in making these statistical profiles freely available for public use, for informed debate, research and policies.

While this is a good beginning to measure unemployment, we need to push the frontiers to measure the nature of employment in India, the dynamics of jobs creation in India and to identify the sectors or regions of jobs vulnerabilities.



Every Tuesday, Business Standard brings you CMIE’s Consumer Sentiments Index and Unemployment Rate, the only weekly estimates of such data. The sample size is bigger than that surveyed by the National Sample Survey Organisation. To read earlier reports on the weekly numbers, click on the dates:
November 21November 28December 4, December 11December 18December 25January 1January 8January 15 , January 22January 29February 4 , February 12February 19February 27March 5March 13March 19, March 26April 02, April 10April 17April 23May 1May 8May 15May 21May 28June 4June 11June 18June 25July 2July 10July 16July 23July 30August 7August 14August 21August 27September 3September 10September 17September 24, October 1

Consumer sentiment indices and unemployment rate are generated from CMIE's Consumer Pyramids survey machinery. The weekly estimates are based on a sample size of about 6,500 households and about 17,000 individuals who are more than 14 years of age. The sample changes every week but repeats after 16 weeks with a scheduled replenishment and enhancement every year. The overall sample size run over a wave of 16 weeks is 158,624 households. The sample design is of multi-stratrification to select primary sampling units and simple random selection of the ultimate sampling units, which are the households.

The Consumer Sentiment index is based on responses to five questions on the lines of the Surveys of Consumers conducted by University of Michigan in the US. The five questions seek a household's views on its well-being compared to a year earlier, its expectation of its well-being a year later, its view regarding the economic conditions in the coming one year, its view regarding the general trend of the economy over the next five years, and finally its view whether this is a good time to buy consumer durables.

The unemployment rate is computed on a current daily basis. A person is considered unemployed if she states that she is unemployed, is willing to work and is actively looking for a job. Labour force is the sum of all unemployed and employed persons above the age of 14 years. The unemployment rate is the ratio of the unemployed to the total labour force.

All estimations are made using Thomas Lumley's R package, survey. For full details on methodology, please visit CMIE India Unemployment data and CMIE India Consumer Sentiment.

The creation of these indices and their public dissemination is supported by BSE. University of Michigan is a partner in the creation of the consumer sentiment indices.

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