Unemployment rate falls to 7.7% in May on dip in labour participation

Unemployment rate falls to 7.7% in May on dip in labour participation

Subject :Economy

Section: Employment and poverty

Context: The rate in India fell to 7.7 per cent in May due to a decline in the labour participationat441.9million, according to a data released by private economic thinktank CMIE.

Details:

• Unemployment rate in India among people aged 15 years and above fell to 7.7 per cent in May 2023, from 8.5 per cent in the previous month
• The unemployment rate inched down as a consequence of a fall in the labour participation, which implies a fall in the number of people who entered the labour market in search of work.
• Compared to April, labour participation rate (LPR) fell by 1.1 percentage point to 39.6 per cent in May, she said.
• This drop in LPR in May was expected because April witnessed a large number of people entering the labour force but only a small share was able to secure employment in the month. This was bound to discourage many from searching for work in the month of May. As a result, the labour force shrunk in size from 453.5 million to 441.9 million.
• Meanwhile, the decline in labour participation in May 2023 was considerably higher in rural India compared to urban India.
• In urban India, the labour force shrunk by close to 4.5 million.
• There were around 147 million people in the urban labour force in April, which inched down to 142.5 million in May.
• the urban labour market recorded a fall in the number of employed as well as unemployed people.
• The 4.5 million fewer people in the urban labour force in May was the result of a combination of a decline in jobs by around 2.4 million and a fall in the number of unemployed in urban India by 2.1 million.
• This resulted in a total of 129.5 million people in the urban workforce, and around 13 million unemployed persons, it added.

Concept :

Various indicators of employment and unemployment

•  Labour Force Participation Rate (LFPR)-the percentage of persons in labour force (working or seeking or available for work) in the population of all age
• Unemployment rate -refers to the percentage of unemployed persons in the labour force. Labour force includes persons who are either employed or unemployed but seeking work.
• Worker Population Ratio (WPR)-the percentage of employed persons in the population.

Activity Status

• Usual Status: The activity status determined on the basis of the reference period of the last 365 days preceding the date of survey, it is known as the usual activity status of the person.
• Current Weekly Status (CWS): The activity status determined on the basis of a reference period of the last 7 days preceding the date of survey is known as the current weekly status (CWS) of the person).