Urban unemployment rate at 6.7% in quarter ending March 2024 : NSSO data
To be sure, a rise in the unemployment rate does not necessarily mean that the number of jobs in the economy has fallen
India’s urban unemployment rate in the quarter ended March 2024 was 6.7%, according to data released by the National Sample Survey Office (NSSO) on Wednesday.
While this number is ten basis points – one basis point is one hundredth of a percentage point — lower than the number a year ago, a long-term comparison shows that the fall in unemployment rate seems to be losing momentum. On a sequential basis – quarter on quarter – the unemployment rate increased between quarters ended December 2023 and March 2024 for the first time after the quarter ended June 2021. To be sure, sequential changes in unemployment rate are not very useful because some jobs, such as those in agriculture, are seasonal in nature.
The 6.7% urban unemployment rate in the quarter ended March 2023 has fallen by 1.5% compared to the number last year. This is the lowest proportionate fall in the unemployment rate in the 11 preceding quarters (every quarter starting April-June 2021. This data was released as part of the quarterly bulletin published only for urban areas as part of the Periodic Labour Force Survey (PLFS), which gives summary statistics starting April-June 2018.
The data shows that there are differences in the trends in urban unemployment by gender and age group in the quarter ended March 2024. The unemployment rate for men remained flat at 6.1% compared to the March quarter last year, but was higher than the 5.8% figure for the quarter ended December 2023. On the other hand, the unemployment rate decreased both sequentially and year-on-year for women. Similarly, the number decreased year-on-year among both men and women in the 15-29 years age group; but increased sequentially for both genders in the 15-29 years age group.
To be sure, a rise in the unemployment rate does not necessarily mean that the number of jobs in the economy has fallen. This is because the unemployment rate is defined as the fraction of people participating in the labour force (those working or looking for a job) who do not have a job.
As far as total number of jobs are concerned, they are determined by the share of workers in the population (represented by Worker Population Ratio or WPR). The WPR either increased or remained flat both sequentially and year-on-year in the March quarter across gender and age groups. This means that any growth in the unemployment rate in the quarter was the result of job seekers increasing faster than jobs. This can be seen from the labour force participation rate (LFPR) or the share of people working or looking for a job. The LFPR increased from 38.1% in the March quarter last year to 39.5% in the March quarter this year. This rate was 39.2% in the December quarter.
Unemployment in itself has not been a problem in the post-pandemic labour market in India, with even the annual unemployment rate falling. However, this has been partly possible because of a growth in unpaid family workers, who are counted as a class of self-employed workers by the PLFS. The share of such workers in the March quarter was 6.4% in urban areas, the highest for a March quarter since 2019, the earliest March quarter for which the urban bulletins have data.
Last year, the proportion of such workers in the March quarter was 6.1%. On the other hand, the proportion of regular wage or salaried workers (the best paid on average among different kinds of workers in the PLFS) decreased to 48.7%, compared to 48.9% last year. The share of such workers was 50% and 50.5% in the March quarters of 2019 and 2020, the only pre-pandemic March quarters for which the bulletins have data. Similarly, the proportion of agricultural workers in urban areas remained flat compared to last year at 5.8%. The share of such workers was 5.3% and 5.1% in the March quarters of 2019 and 2020.
Quarterly PLFS bulletins do not have data on wages for workers or rural labour markets.