The Indian labour markets continue to be under stress due to the falling employment rates in rural India and stagnant in the urban pockets, the Centre for Monitoring Indian Economy said, suggesting an urgent need to create more jobs.
“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,” CMIE said in its weekly analysis.
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 2020 when it was just 182 basis points after which it rose to 254 basis points in September and there are apprehensions it may widen further in October.
CMIE stated that jobs in rural India surprisingly plunged in the month of October, which is known for the peak month for the harvesting of Kharif crop. While sowing is spread over four months, most of the crop is harvested in October. It is also possible that employment under the MGNREGS has declined significantly in October, said the CMIE.
“Till October 19 this year, the scheme had provided 58.5 million person-days of employment compared to 138 million person-days of employment provided during the entire month of October 2019. These numbers do get revised very substantially and therefore, it may be hazardous to draw inferences at this stage. Yet, the fall evident so far is quite large. The average person-days of employment per day in October 2019 was 4.47 million. In the first 19 days of October 2020 it was 3.08 million, a fall of 31 per cent,” the report said.
The employment rate in rural India was 39.8 per cent in September, which was at the highest level since the lockdown began and was close to the pre-Covid level. However, rural India could not sustain an employment rate of 40 per cent or more. The weekly employment rate had touched 39.9 per cent in the week ended September 6 but it is on a downward trajectory since then. In the week ended October 4, the rate was down to 39 per cent and then it slipped further to 38.8 per cent in the week ended October 11, and recovered to 39.5 per cent in the week ended October 18.
Also, the economic recovery is showing signs of stagnation after a decent recovery in the previous months. After the major shock in April 2020, the recovery was smart in May and better in June. It continued well into July as well however it stalled in August and September. Now, it appears that the stagnation could extend or worsen in October, CMIE said.
