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India’s December ’21 Unemployment Rate Hits 4-Month High


India’s unemployment rate hit a four-month high in December 2021 according to data from the Centre for Monitoring Indian Economy (CMIE).


GS-III: Indian Economy (Human Resources, Employment, Growth and Development of Indian Economy)

Dimensions of the Article:

  1. What are the risks to employment based on data in December 2021?
  2. Causes of Unemployment in India
  3. Way Forward

What are the risks to employment based on data in December 2021?

  • Urban unemployment rate on a weekly level had spiked to a double-digit rate to around 10.09 per cent in mid-December.
  • Urban employment is a proxy for better paying jobs and a decline in these numbers reflects impact on better-paying organised sector’s jobs.
  • With Covid-19 cases on the rise amid the threat posed by the Omicron variant and many states imposing fresh curbs, economic activity and consumption levels have been affected. This could adversely affect economic recovery further going ahead.
  • The December 2021 numbers are also significant as they show a declining trend even before the new Covid-19 wave of January 2022 led to fresh restrictions being imposed on business.

Causes of Unemployment in India

  • Jobs in the capitalist world have become highly specialised but India’s education system does not provide the right training and specialisation needed for these jobs.
  • In India nearly half of the workforce is dependent on Agriculture – even though agriculture is underdeveloped in India and only provides seasonal employment.
  • Mobility of labour in India is low due to factors like language, religion, and climate.
  • The industrial development had adverse effects on cottage and small industries – as the cottage industries fall, many artisans become unemployed.
  • Constant increase in population has been a big problem and one of the main causes of unemployment.
  • Certain work is prohibited for specific castes in some areas and this also contributes to unemployment.

Way Forward

  • Improving the labour market information system where emerging demand for skills are spotted quickly and the necessary training and certifications for the same are created is one the steps.
  • Development of the rural areas will help mitigate the migration of the rural people to the urban areas thus decreasing the pressure on the urban area jobs.
  • There is a need for a National Employment Policy (NEP) that would encompass a set of multidimensional interventions covering a whole range of social and economic issues affecting many policy spheres and not just the areas of labour and employment.
  • Jobs and skills planning should be decentralized and it has to be done at state and district levels, where there is granular information on education, skills and job options.
  • Decentralisation of Industrial activities is necessary so that people of every region get employment.

-Source: The Hindu

February 2024