by Mahesh Vyas
India’s unemployment rate shot up to 7.4 per cent in December 2018. This is the highest unemployment rate we’ve seen in 15 months. The rate has increased sharply from the 6.6 per cent clocked in November. The climb to 7.4 per cent also indicates that the small fall in the unemployment rate seen in November was possibly an aberration in a trend that indicates a steady increase in the unemployment rate.
The 30-day moving average of the unemployment rate had climbed up much ahead by January 6, to 7.8 per cent.
The count of unemployed has been increasing steadily. Over the year ended December 2018, it increased by a substantial 11 million. Correspondingly, the count of the employed is declining. In December 2018, an estimated 397 million were employed. This is nearly 11 million less than the employment estimate for December 2017.
This is a very large fall in employment. Note that the sample of December 2018 is broadly the same as the sample of December 2017. Therefore, the difference in employment is not because of a difference in the sample.
Nevertheless, a word of caution is in order here. First, the employment / unemployment statistics for September through December 2018 are preliminary. Final estimates would be released by the end of January 2019. Second, much of the discussion that follows is based on monthly estimates which are based on a sample of about 140,000 respondents. These will contain a margin of error that can be reduced in a discussion that is based on the full sample of a Wave, which is of the order of 550,000. We would do this in February 2019.
Employment estimates have been volatile in the recent four months (September to December) when month-over-month employment estimates have increased or declined by 5-7 million. The trend nevertheless is of a steep decline.
The decline in employment began 13 months ago, in November 2017. Employment declined in each of the nine months between November 2017 and September 2018. Employment is estimated to have fallen by 10.3 million during this period. And, in the volatile last four months, it fell by another 2.2 million.
The distribution of this sharp fall in jobs in 2018 by various attributes of the working population can provide us some insights into the nature of this loss of jobs. All the data discussed below is available in the Employment and Wages chapter of the Statistics section of CMIE’s Economic Outlook service.
During 2018, there were job losses in both, rural and urban India. But, the loss in rural India was a lot bigger than in urban India. An estimated 9.1 million jobs were lost in rural India while the loss in urban India was 1.8 million jobs. Rural India accounts for two-thirds of India’s population, but it accounted for 84 per cent of the job losses.
A fall in employment is usually concentrated among women. We saw this in the aftermath of demonetisation. The entire brunt of that fall was borne by women. In 2018, women bore the major brunt of the fall in jobs, but were not alone this time.
Of the 11 million jobs lost, women lost 8.8 million jobs and men lost 2.2 million. Urban men did not lose jobs. On the contrary, they gained half a million jobs during 2018. But, rural men did lose 2.3 million jobs. Women lost jobs in both urban regions (2.3 million) and rural regions (6.5 million).
The impact of job losses in 2018 cut across a large number of age groups. Only the relatively senior middle-aged to senior age groups escaped the fury of shrinking jobs in 2018. Jobs of the age groups between 40 and 59 years did not shrink. All other age-groups saw a shrinking of jobs.
And, the hit was taken entirely by the uneducated. All other categories of maximum education level saw an increase in employment. But, this was not sufficient to offset the loss of jobs among the uneducated. It is possible that several uneducated graduated to some education during 2018 and did gain jobs and the count of the uneducated itself declined. But, it is also possible that the uneducated have lost jobs. The uneducated accounted for 10 per cent of all employed persons in December 2017. Their share has fallen rapidly.
Job losses are also concentrated among wage labourers, agricultural labourers and small traders.
So, the break-down of employment statistics by the various attributes of respondents discussed above tells us that a person who lost the job in 2018 mostly fits a profile like – is a woman, particularly a woman in rural India, is uneducated and is engaged as a wage labourer or a farm labourer or is a small-scale trader and is aged either less than 40 years or more than 60 years.
This is the profile of the relatively vulnerable. There is one more possible attribute of job losers in 2018 – the salaried employees. Salaried employees lost 3.7 million jobs in 2018.
That makes a rather sombre reading for the year we just got past.