Urban Unemployment Rate Continues Its Downward Trajectory

The urban unemployment rate in India continued to decline and fell to a new low of 6.8 per cent in January-March this year. The rate is the lowest ever since the government began its Periodic Labour Force Survey (PLFS) in 2018-19.

Revealing encouraging signs of economic revival, the decline marks the seventh consecutive quarter of decline and indicates a positive trend in recovery of the urban labour market from the impact of the COVID-19 pandemic.

The rate of unemployment in Indian cities was however stagnating at 7.2 per cent in the last quarter of 2022, as per the data released by the National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation.

However, it fell in the next quarter even as the Labour Force Participation Rate (LFPR) increased to 48.5 per cent from 48.2 per cent the previous quarter (July-September), reflecting an improvement in the labour market.

The jobless rate in urban areas had been on a continuous decline since the peak of 20.8 per cent in the April-June quarter of 2021. It touched the lowest in more than four years in current weekly status (CWS) terms for all ages, as per the survey.

The LFPR of both men and women rose in October-December last year. While the participation rate of men rose by 20 basis points to 73.5 per cent, that of women increased by 40 basis points to 22.7 per cent, according to the survey. One basis point is one-hundredth of a percentage point.

However, the drop in the unemployment rate was larger for men, as it fell 50 basis points from October-December last year to 6 per cent in January-March this year. Meanwhile, the rate for women decreased to 9.2 per cent from 9.6 per cent, showed the ministry's latest PLFS report.

The survey, published on a quarterly basis for urban data, measures the unemployment rate in terms of CWS. As per this definition, a person is considered employed if they worked for at least one hour on any day during the seven days preceding the day they are surveyed.

Women showed greater enthusiasm for work as their LFPR witnessed greater increase than that of men in the March quarter. The female participation rate registered an increase of 0.4 percentage points and stood at 22.7 per cent, from 22.3 per cent in Q3 while the LFPR for males stood at 73.5 per cent against 73.3 per cent in the previous quarter.

A large number of women found work in the self-employed category (38.5 per cent in Q4FY23 against 37.9 per cent in Q3FY23), which includes unpaid helpers in household enterprises. Meanwhile, the share of men in regular salaried jobs increased to 47.3 per cent, from 46.9 per cent during the period under review.

The worker-to-population ratio (WPR), which is the percentage of employed persons in the population, also witnessed an increase of 0.5 percentage points sequentially to 45.2 per cent in Q4. The female WPR stood at 20.6 per cent while the male WPR was 69.1 per cent.