According to data released on May 29, the urban unemployment rate in India was 6.8% in the quarter ending March 2023. This is the lowest rate in at least five years, as reported by the National Statistical Office (NSO) through their quarterly bulletins for urban areas using the Periodic Labour Force Survey (PLFS). The annual numbers for 2021-22 also showed a decrease in the unemployment rate to 4.1%, the lowest level since 2017-18.
Lowest Urban Unemployment in 5 years in 2022-23
Not only the March quarter, but all quarters in 2022-23 experienced the lowest urban unemployment rates since 2018-19. This positive trend in job creation is not due to a decrease in the number of job seekers. In fact, the Labour Force Participation Rate (LFPR), which measures the proportion of people working or actively seeking employment, was the highest in 2022-23 for all quarters since 2018-19. This indicates that a significant proportion of India’s urban population actively sought and secured jobs during this period. In the March quarter, the LFPR reached 38.1%, the highest in the urban bulletin series.
However, it’s worth noting that the increase in employment could be attributed, at least partially, to the rise in unpaid family workers, which reached its highest level in five years throughout the year. In the March quarter, this figure stood at 6.1%.
Amit Basole, an economics professor at Azim Premji University, suggests that a low unemployment rate, particularly among educated young people, is a positive sign. However, he cautions that an increasing Worker Population Ratio (WPR) due to unpaid work, often undertaken by women, could pose a problem.
The quarterly bulletins only provide headline numbers for urban areas within the entire PLFS series, which began in the June quarter of 2018-19. Comparing employment trends in the same quarter across years is important due to the seasonal nature of certain jobs, such as those in agriculture.
Decreased Unemployment Rate, Rise in Unpaid Family Workers
The annual data for 2021-22 shows similar trends, with a decreasing unemployment rate (4.1%) compared to the previous year. However, the share of unpaid family workers continued to rise, reaching 17.5% in 2021-22, which is 4.2 percentage points higher than in 2018-19, a year unaffected by the pandemic. The annual PLFS report follows a July-June calendar.
While the unemployment rate continued to decline in 2021-22, despite the pandemic’s severe impact in the preceding year, the proportion of unpaid family workers did not see a corresponding increase. Recent urban bulletins suggest that this situation worsened in urban areas during the fiscal year 2022-23. The full extent of the influence of this negative development on the decline in unemployment rates will only be known once the unit-level data is published in the upcoming annual PLFS report, expected later this year.
