Unemployment rate hit 6.1% in Jul ’17 to Jun ’18: Official data
The government released a controversial jobs report that seemed to suggest unemployment in India was at a four-decade high, but, even as it retained the numbers in the report, which had been leaked, it said the underlying survey was based on an entirely new methodology, making any comparison with previous surveys unfair.
The country’s unemployment rate was 6.1%, data from the country’s first periodic labour force survey (PLFS) for July 2017-June 2018 showed. Given the government’s admission on methodology, this is a number that has to be seen in isolation — at least until the next survey based on a comparable methodology is released.
The last “unemployment-employment survey” was carried out in July 2011-June 2012, according to which the all-India unemployment rate was 2.7%. But that was based on an expenditure survey.
Chief statistician of India Pravin Srivastava said PLFS is based on a completely new methodology and statistical design, making it unfair, and also unscientific, to compare it with previous joblessness surveys.
“In fact this is a completely new product. New technologies were used. Earlier, the unemployment-employment surveys were based on private final consumption expenditure. This one uses educational levels,” Srivastava said.
The PLFS annual report on joblessness was held back by the government.
Protesting the delay in making the report public, two independent members of the National Statistical Commission, including its acting chairman, resigned in January.
The Business Standard newspaper carried an article based on a leaked draft of the report, which stated that the country’s unemployment rate was at a 45-year high. Niti Aayog vice-chairman Rajiv Kumar had then said the report was not final or official.
The leak proved embarrassing for the government, with the opposition, especially the Congress targeting it.
Still, even if the 6.1% joblessness number is seen in isolation, there are several worrying aspects in the report.
The report, for instance, reveals a crisis of quality jobs among educated young people. The unemployment rate among young people between 15 and 29 years of age, in 2017-18 stood at 27.2% for women in urban areas, 18.7% for men in urban areas, 13.6% for women in rural areas, and 17.4% for men in rural areas. Even in absolute terms, these are high numbers. It means that one in every four women in cities wanting to work can’t find a job.
Srivastava suggested that the use of educational attainment as the key metric may have contributed to a higher unemployment rate emerging. “Educational levels have gone up and incomes have risen. Therefore, aspirations have also gone up. Educated youth can afford to stay at home longer if they don’t get jobs that match their aspiration,” he said.
In any jobs survey, people with jobs are categorised as employed. People without jobs but looking for work are considered unemployed. However, the labour force participation rate is simply equal to people who are employed plus people who are not employed.
In a rough-and-ready sense, the unemployment rate is then simply the number of unemployed divided by the labour force times 100.
According to PLFS, the country’s labour force participation rate stood at 36.9% in 2017-18. It was 39.5% in 2011-12.
For educated men in rural areas (secondary school education and above) and women in rural areas aged 15 years and above, the unemployment rates stood at 10.5% and 17.3% respectively.
“There is surely some genuine increase in unemployment,” economist Amitabh Kundu said. Kundu chaired one of the commissions that devised joblessness surveys.
Kundu, however, said one of the reasons for a high unemployment rate was the design of PLFS itself. Unemployment surveys typically involve asking of a question related to employment status to an individual being surveyed.
“The methodology itself could have led to a slightly higher rate because although the question asked in the survey is still the same, the fact that it was asked repeatedly in three monthly visits as opposed to just once a year in earlier surveys, the respondent might have reported the unemployment status for a shorter period of time,” Kundu said.
In the 2011-12 survey, when the unemployment rate was 2.7%, respondents were surveyed only once. Kundu’s point is that the higher frequency of visits to gauge unemployment, may have, in itself, shown a higher rate of unemployment.