Mixed indications on unemployment!

The unemployment rate in urban India is decreasing along with the growing economy. In the financial year 2024, India’s urban unemployment rate fell sharply to 6.6 per cent, compared to 7.2 per cent in the previous fiscal year. According to the National Statistical Office (NSO)’s second advance estimate, India’s economy is estimated to have grown at a rate of 7.6% in FY24 up from 7 per cent in the preceding fiscal.

While, according to the Periodic Labour Force Survey (PLFS) data, urban unemployment rate fell from 6.8 per cent in Q4FY23 to 6.7 per cent in Q4FY24. However, it had sequentially increased from 6.5% in the December 2023 quarter.

Meanwhile, the worker population ratio has also increased from 35.6% to 36.9%.

Reasons for Rise In Unemployment:

Economists attribute the sequential increase in unemployment to rural workers seeking employment in urban areas during non-agricultural seasons. In India, the period between December and June is known as the non-agricultural season. Therefore, workers migrate to cities in search of jobs.

Reasons for Falling Female Unemployment

Typically, urban unemployment increases from the third quarter to the fourth quarter in any financial year. According to Finance Ministry, female unemployment rate decreased from 9.2% in Q4FY23 to 8.4% in Q4FY24. Female unemployment was 8.6% in Q3FY24. According to the Finmin, “Under the Jal Jeevan Mission, access to piped drinking water, cooking fuel under Ujjwala, sanitation, etc., has increased, giving women some time for domestic work. This has made them capable of working and search for employment opportunities.”

Reasons for Increased Worker Population Ratio

The Worker Population Ratio (WPR) indicates the percentage of workers in the population. It increased from 36.7% in Q3FY24 to 36.9% in Q4FY24. This is attributed to rural workers migrating to urban areas. WPR in Q4FY24 is the highest since the survey began in 2018.

What about Labour Force Participation Rate?

Labour Force Participation Rate (LFPR) –  is the portion of the population that supplies or offers labour for economic activities. It slightly increased to 39.5% in Q4FY24, compared to 39.2% in Q3FY24. Both employed and unemployed individuals are included in LFPR