According to the quarterly bulletin of the Periodic Labour Force Survey (PLFS) published by the National Statistical Office (NSO) on November 24, India’s overall urban unemployment rate fell to its lowest level ever in the quarter that ended September 2022. The data in the bulletin also hints that some of the improvement is attributable to a rise in low-quality employment, a pattern that has been ongoing since the Covid-19 outbreak. Quarterly PLFS reports only provide a partial picture of the employment situation in the economy because they do not cover rural labor markets.

India’s urban unemployment rate decreased by 40 basis points (one-hundredth of a percentage point) from the previous low of 7.6% in April-June 2022 to 7.2% in the three months ending in September 2022. If one only takes the September quarter’s unemployment figures into account, the improvement was considerably greater. The previous September quarter’s lowest unemployment rate was 8.4% from July to September 2019. It’s crucial to compare rates from the same quarter because some jobs are seasonal, which also affects unemployment rates.

However, a decrease in the unemployment rate by itself is not a reliable measure of the status of the labor market. When employment is stagnant but fewer individuals are looking for it, the rate may also rise. The improvement in the most recent data cannot be attributed to the labor force participation rate (LFPR), which was 37.6% in the quarter of July-September 2022, the highest since the earliest period for which statistics from PLFS urban bulletins are available, April-June 2018.

Unemployment caused by a lack of jobs can certainly be indicated by a high percentage of the population looking for work and succeeding in finding one. People might apply for jobs in big numbers since those who are employed do not make enough money. This may be the case in July–September 2022, according to certain data in the urban bulletin. For instance, the percentage of regular pay or salaried workers was 48.7% in the quarter, which is the lowest level for the quarter and the same as the share in the same quarter last year. The percentage of independent contractors was 39.7%, the highest for the quarter, and the percentage of temporary employees was 11.6%, just above the 11.4% figure recorded from July to September 2020.

However, not all of the data points to unemployment because of anguish. For instance, the proportion of agricultural workers decreased from 5.9% to 5.7% in the same quarter last year.

The proportion of workers in the secondary sector, which includes industries like manufacturing, increased from 33.3% to 33.4% in the same period last year. Services workers’ percentage stayed at 60.9% from the previous year. It is impossible to say with certainty why the unemployment rate has decreased to its historically lowest level because both regular and agricultural jobs have decreased. When the unit-level data of the PLFS are published, information on wages will be made available, allowing for a clearer response to that question.

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