Unemployment rate at 3 year high in August 2019, reveal CMIE data

Unemployment rate in India has hit a record 3 year high of 8.4% in August 2019, says data released by Centre for Monitoring Indian Economy (CMIE).

According to the data, weekly unemployment rate in Indian stand between 8 and 9% in August 2019, as compared to 7-8% observed in July. CMIE noted on Wednesday that the unemployment rate in the country has hit the highest level since September 2016.

As per CMIE, urban unemployment rate was at 9.6%, and rural stands at 7.8% during the month under review.

In August, employment was nearly 2% higher than it was in August 2018, supported by growth in rural India. Year-on-year employment growth in rural India stood at 2.9% in August 2019, while urban India reported a 0.2% decline, quoting the report Business Today said.

Labour participation rate (LPR) is one of the factors behind unemployment rate. LPR has risen slowly and steadily to 43.35% in August 2019, from 42.46% in October 2018.

According to a report in Business Today, increase in labour participation rate is a healthy sign as it hopefully reflects a confidence in labour that they may find jobs, report said.

"However, this increase in labour force participation rate is not matched with an increase in the employment rate. The difference between the two has been rising. More people are seeking employment but not as many people are finding employment," it said.

"Investment conditions have been weak. New investments into large and modern enterprises are important to absorb the rising working age population into the labour markets. However, data from the annual financial statements of companies and from announcements by entrepreneurs do not show any pick-up in investments. Growth in good quality jobs is therefore very poor," added in its report.

As per CMIE, if labour continues to face a rising unemployment rate, and poor employment opportunities, it may start getting discouraged from entering the labour markets.