Unemployment rate falls in July as sowing, hiring by industry progresses | Economy & Policy News

The UR stood higher at 8.5 per cent in urban areas in July, compared to 7.5 per cent in rural areas, reversing the situation from the previous month. In June, the urban UR was 8.8 per cent, while the rural UR was 9.3 per cent.

As such, the decline in the UR was higher in rural areas at 1.8 percentage points, compared to 0.3 percentage points in urban areas over this period.

These numbers may indicate some mitigation in rural distress, but they may not provide much relief to the government, which is striving to encourage the private sector to hire more, as joblessness remains elevated in urban areas where most formal jobs are located.

Sowing typically starts around June, but a delayed monsoon led to increased hiring in the farm sector in July, explains Bank of Baroda chief economist Madan Sabnavis.

This is also the month when new recruits join organisations, he further elucidates.

Private sector hiring usually happens after campus placements, he adds.

Meanwhile, the Naukri JobSpeak Index, which tracks new job listings and job-related searches from recruiters, also increased to 2,877 in July from 2,582 in the previous month.

The UR measures the number of people who are unemployed out of those in the labour force actively looking for a job.

The male unemployment rate decreased from 7.8 per cent in June to 7.1 per cent in July. For females, it dropped from 18.6 per cent to 13.2 per cent. Despite this larger decline among females, their unemployment rate remains higher than the national average.

One reason for this could be the restrictions imposed by various states on female participation in some factory activities. The Economic Survey 2023-24 noted that a total of 139 prohibitions across 10 states in India restrict women from participating in “factory processes such as electroplating, petroleum generation, and the manufacturing of products such as pesticides, glass, rechargeable batteries, etc.”

Uttar Pradesh had the highest number of restrictions, with 18 activities restricted, followed by Andhra Pradesh (17), Tamil Nadu (16), Maharashtra (15), and West Bengal (14).

Meanwhile, the labour participation rate (LPR), which shows the proportion of working-age people (above 15 years) willing to work, declined from 41.3 per cent in June to 41 per cent in July, according to CMIE.

This indicates a rise in the number of people not actively seeking work.

The LPR for males declined to 67.7 per cent in July from 68 per cent in the previous month, while for females it remained the same at 11.2 per cent.

Meanwhile, data from the Employees’ Provident Fund Organisation (EPFO) indicated job growth in the formal sector in May.

There were net additions of two million jobs compared to 1.6 million in the previous month. The figure was 0.9 million in May 2023.

Nearly 45 per cent of the net additions in May were among those aged 25 years or younger.

Finance Minister Nirmala Sitharaman announced various schemes in the Budget for 2024-25 to enhance employment opportunities. One such scheme is for first-time employees based on enrolment in the EPFO. The effect of the scheme will be known in the coming months, as the Budget is yet to be passed by Parliament.

With the overall economy expected to perform well this year, the demand for labour is likely to increase, Sabnavis hopes.

However, it may be moderated by the higher use of technology, such as artificial intelligence, in certain sectors, notes Sabnavis. “On the whole, however, the situation will improve,” he says.

First Published: Aug 04 2024 | 2:33 PM IST