- Ravi Verma, hired by an electrical parts manufacturing firm early last year as India’s economy surged, was fired in November when the company lost several export orders. He has since remained unemployed, unable to pay back a ₹1 lakh loan he took to buy a two-wheeler.
- Verma is among thousands of Indian workers who lost jobs as the global slowdown hit exports, while the re-entry of nearly 20 million workers into the job market after the pandemic has aggravated the problem.
- The rising unemployment in India belies other indicators, suggesting the economy is undergoing a healthy rebound from the COVID-19 pandemic. Instead, the surge in people looking for work, many of them rural migrants, raises concerns about consumption and longer term growth prospects.
- The urban unemployment rate swelled to 10.1% in December, although the total number of jobs in India touched a pre-pandemic level of 410 million, data compiled by Mumbai-based think-tank Centre for Monitoring Indian Economy (CMIE) showed.
- Urban unemployment spiked during the pandemic, but before that it hovered between 6% and 7%, according to CMIE data.
- “Nearly 37 million workers were looking for work in December,” said Mahesh Vyas, MD of CMIE, citing a rebound in labour force participation rate driven by the return of women workers and rural youth as the pandemic fears eased.
- Globally, India remains a “bright spot” amid growing fears of a recession in the U.S. and Europe, and the economy is projected to grow below 6% in the next financial year starting in April, down from an estimated 7% growth in the current fiscal year.
- But, hiring in export-dependent manufacturing sectors like engineering, textile and software has slowed as companies face a decline in overseas demand – reflected in falling exports of manufactured goods, down 12.2% year-on-year in December.
Retail, IT hiring down
- Hiring in IT, software, education and retail fell up to 28% in December from a year ago, data compiled by Naukri.com, India’s biggest recruitment consultancy, showed, though it remained resilient in insurance, banking and auto sectors.
- Economists said the worsening employment scenario could affect consumer demand, drag private investments and hurt growth prospects
SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB