The unemployment rate in India has climbed to 7.2 percent in February 2019, according to the Centre for Monitoring Indian Economy (CMIE). Even though the total number of job seekers has dipped the rate remains high because of a reduction in labor force participation.
In February 2019, about 400 million people were employed in India, a six million drop compared to last year. The high unemployment rate of last month beats the previous highest rate from September 2016. Last year, the unemployment rate was at 5.9 percent in February.
In January, a CMIE report showed that about 11 million people lost jobs in 2018 as a consequence of demonetization of Rs. 500 and Rs. 1000 notes in 2016. Another reason for a loss in jobs could be the GST implemented in 2017 which affected small businesses and medium-sized enterprises.
The monthly workforce participation rates are lower than they were in 2018 when measured month-on-month. Lower labor participation indicates that a smaller proportion of India’s working population is inclined towards working. Along with a rising unemployment rate and lower labor participation, India’s talent market is poised for lower employment, according to Mahesh Vyas, Head of CMIE.
There is no dearth of working age population in India which increases by 23 million a year, according to CMIE. If at least 42 to 43 percent of these new labor market entrants join the workforce to actively seek employment, CMIE estimates that the Indian economy would have to provide for about 0.8 million jobs every month taking into account attrition due to retirement.
Weak farm prices and low jobs growth are often politicized as a topic for contention between the ruling party and the opposition, especially during an election year.