One of the most crucial indicators of economic recovery is employment data and the employment rate for the month of November as tracked by CMIE (Centre for monitoring Indian Economy) shows. The unemployment rate has also dropped from 7.75% in October to 7% in November as per this data. While the overall number shows improvement, urban employment has surged from 7.38% in October to 8.21% in November. It is the decrease in rural employment that has helped the overall number.  

Mahesh Vyas, MD and CEO of CMIE says 1.4 million jobs were added in November which is a good sign. “Employment rate has gone up slightly but it means a lot because it is based on the total population”, he says in an interview to ET Now. What is worrying though is the loss of urban jobs including a decline in salaried jobs and the quality of jobs that have been added.  

The CMIE data is at odds with data from Naukri.com that shows an increase in job listings of 26% in November compared to the same month last year. News reports also talk about how IIT graduates are being offered as much as Rs 2 crore per annum as starting salaries and startups are in a bidding war for top talent. The reason for this dichotomy according to Vyas is the gap between the skill level of the workforce that companies are looking for.

Courtesy: CMIE

“There are very few appropriately skilled people in India. IIT’s take very few ppl in a year and they will always be in demand. Meanwhile, demand for lesser-skilled people is very low”, says Vyas.   

He also points out that data from job listing sites does not necessarily reflect the broader situation of the urban Indian workforce. For example, plumbers, carpenters do not list on such job sites. 

The other worrying factor is the drop in labor participation rate in those above the age of 15 years. This has gone down from 43% pre-pandemic to 40% currently. “Most important numbers in an economy are consumer sentiment and employment and these are telling us on an aggregate that we are not doing well”, says Vyas.