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Wednesday, January 19, 2022

Fewer have jobs in poll-bound Goa, UP, Punjab, Uttarakhand than five years ago

While all the four states were below the national average, the fact is India – as a whole – has seen its labour force participation rate (LFPR) and employment rate fall sharply over the past five years.

Written by Udit Misra | New Delhi |
Updated: January 11, 2022 7:21:15 pm
A bookseller on Kolkata's college street (Express Photo: Shashi Ghosh)

An analysis of unemployment data sourced from the Centre for Monitoring Indian Economy (CMIE) shows that in each of the four poll-bound states — Uttar Pradesh, Punjab, Goa, and Uttarakhand — the total number of employed people at the end of December 2021 was lower than five years ago. The CMIE did not have data for Manipur, the fifth state that faces elections in February.

In Uttar Pradesh (UP), for instance, while the total working age population has increased by over 14 per cent (2.12 crore) to 17.07 crore from 14.95 crore in the past five years, the total number of people with jobs has shrunk by over 16 lakhs. As a result, its “employment rate” (ER) — the total number of employed as a percentage of the working age population (15 years or above) — has fallen from 38.5 per cent in December 2016 to 32.8 per cent in December 2021.

Another way to understand this fall is that if UP had the same employment rate in December 2021 as it did in December 2016, then an additional 1 crore of its residents would have had a job today.

Similarly, five years ago, in Punjab, the second-biggest state in this group, more than 98.37 lakh of its 2.33 crore working age population was employed. Now, the total employed is down to 95.16 lakh (3.21 lakh less) despite the working age population growing by almost 11 per cent to 2.58 crore.

In percentage terms, Goa saw the sharpest fall in employment rate over the past five years as it fell from just under 50 per cent in December 2016 to below 32 per cent now. In other words, five years ago, every second person in Goa’s working age population had a job but now that proportion has fallen to one in three.

The number of employed in the hill state of Uttarakhand has dropped almost 14 per cent or 4.41 lakh to 27.82 lakh over the last five years; that being so, its working age population has increased by almost 14 per cent to 91 lakh. The state’s employment rate has fallen to 30.43 per cent in December 2021 compared with 40.1 per cent in December 2016.

Under normal circumstances, the Unemployment Rate (UER) is a perfectly fine metric to track joblessness, but in India’s case, and especially over the past decade, UER has been proving ineffective in accurately assessing the true level of job distress. That’s because UER is expressed as “unemployed as a percentage of the labour force” but over the past decade, India’s labour force participation rate (LFPR) itself has been declining.

The LFPR is essentially the labour force as a percentage of the working-age population. In most other comparable countries, the LFPR is between 60 per cent and 70 per cent. In India, it has been hovering around 40 per cent. What this means is that in other countries 60 per cent of people belonging to the working-age group (i.e., 15 years and above) demand a job while in India only 40 per cent look for a job.

That is why, people who track unemployment closely such as Mahesh Vyas, CEO of CMIE, advocate the use of ER to adequately capture the full picture.

While all the four states were below the national average, the fact is India – as a whole – has seen its LFPR and employment rate fall sharply over the past five years. Between December 2016 and December 2021, India’s LFPR has fallen from 46 per cent to 40 per cent, and the employment rate from 43 per cent to 37 per cent. As a result, while India’s total working-age population has jumped 12.5 per cent from 96 crores to 108 crores, the total number of employed has dropped about 2 per cent from 41.2 crores to 40.4 crores.

“The fall in employment is not surprising. The Indian economy has been losing its growth momentum since 2016. Between demonetisation, GST and the Covid pandemic, there has been one disruption after another,” says Himanshu, Associate Professor of Economics at Jawaharlal Nehru University.

Sequential data over the last five years shows that the drop in employment in all states is secular, and not restricted to the pandemic period. The fall has been steady and spread over five years in UP; Goa saw a rapid fall, with the January-March 2019 quarter witnessing the sharpest. In Punjab, the January-August 2020 period did witness a substantial fall.

Last week, Haryana Chief Minister M L Khattar had refuted the CMIE data showing high unemployment rate in the state. “We shall discuss the issue with the Advocate General and action shall be taken, if required,” he had said claiming that official reports – read surveys of National Statistical Office – showed unemployment rate in Haryana at not more than 6.1 per cent. While CMIE estimates of unemployment in Haryana are higher than NSO’s, the two data sets are not comparable since they employ different definitions and methodologies. Moreover, even by NSO estimates, Haryana’s unemployment has been in double digits since April 2020.

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