Pre-festive cheer for the job market
Rise in employment just before festive season will raise aggregate demand & also favourably impact expenditure in programmes such as MGNREGS.
The pandemic has highlighted how critical agriculture and rural sectors are to the Indian economy. In September, the unemployment scenario improved dramatically, thanks to sudden improvement in employment generation in the villages. The rate of unemployment went down from 7.64% in August to 6.06% in September — a drop by 1.58 percentage points – that has pushed down the pan-India average from 8.32% to 6.86%. The contribution of urban India to the drop is far smaller with the unemployment rate going down from 9.78% to 8.62% in the same time window.
According to CMIE, the employment figure reached 40.62 crore in September which was the highest since March 2020, when pandemic paralysed the economy. According to CMIE, the growth of jobs in the previous month was driven by a rise in salaried jobs that is the most cherished category from the point of view of the workers. In fact, employment for daily wage earners and small traders even surpassed the pre-pandemic level of 13.05 crore in FY20. Labour participation rate that measures the share of a country’s population engaging actively in the labour market, rose from 40.52% in August to 40.66% in September.
The 30-day moving average of rate of unemployment has been declining in the first few days of the current month. A few sectors have stood out. These are construction, horticulture and poultry farming. Employment in agriculture declined a bit that was attributed to two reasons – return of a large part of the migrant labourers to the cities where they used to work and the absence of harvesting work.
A rise in employment in the villages augurs well for marketers before the festive season as well as the public exchequer. The marketers of goods and services would be happy since it would push up aggregate demand just before the festive season. The government will be happy since it would need to spend less on the employment guarantee programmes such as MGNREGS. With buoyant tax revenue, it would have more money to spend on infrastructure that would, in turn, create more jobs. The festive season would also create more jobs, especially at the retail sales level.