Unemployment scenario: Future tense

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The despair on the job front has slowly been replaced by hope. The year 2021 has well begun. A significant fall in unemployment rate has been recorded in January, while employment rate rose though not so impressive. The gains can be consolidated, but would require a great push to the labour-intensive business and industries, particularly the Micro, Small, and Medium Enterprises (MSMEs). Additionally, the course of fast deteriorating quality of job especially after the pandemic needs to be reversed, which can be done only by putting on hold the four labour codes that the Modi government has passed in the parliament and subsequently notified. The fall in unemployment rate from 9.1 percent in December 2020 to 6.5 percent in January 2021, as stated in the latest CMIE report, is of course significant. It creates a great hope among the jobseekers in a background of almost cent per cent joblessness during the lockdown of the economy, and only a little improvement thereafter. However, the government will have to work relentlessly, because even with 2.6 percent fall in unemployment, India is still at the unemployment level of two years back in 2018, which was 45 years high. Any complacency on the part of the government therefore would be dangerous.

We need jobs for all hands, but the rise in employment rate was only one percent from 36.9 percent in December 2020 to 37.9 percent, though it is a big positive change. It indicates that recovery is far from satisfactory, since there is much difference between the fall in unemployment rate and rise in employment rate. It also indicates the difficulties ahead. In absolute terms, the number of people employed increased from 388.8 million in December 2020 to 400.7 million in January 2021, which means nearly 12 million additional jobs were bagged by the jobseekers. When we compare it with the employment trend in the country, which month-over-month rarely crossed the 5 million mark even before the lockdown, we find it impressive. However, we cannot ignore the past experience, especially after the beginning of unlocking the economy in June 2020. First, employment rose with the recovery process, then it slowed down and stalled even before the recovery was complete. Employment rate was then declined in each of the three months between October and December 2020. The recovery in January 2021 is therefore a welcome relief, but it needs to be sustained with sustained efforts.

Sudden increase in employment in January 2021 has reduced the number of unemployed to 27.9 percent as against the average 33 million who were looking for employment in 2019-20. The pandemic caused the unemployment rate to fall to 6.5 percent. It shows the volatility of the unemployment scenario that continues from the last six months ranging from a low 6.5 percent to 9.1 percent, the average being about 7.4 percent, much higher than 2018’s 6.5 percent. We must note that the last two months have seen an unusual jump in this volatility. Moreover, a very large number of people around 40 million are waiting for employment. We must act fast, to give jobs to all hands that want work.

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