Decoding significance of fall in unemployment rate

Job markets have recovered, the unemployment rate is down, and the share of agriculture in jobs is declining, economic statistics that should bring cheer to the government ahead of the national election in 2024-that's the gist of jobs data released on Friday.

- Abhishek Jha and Roshan Kishore

When the National Sample Survey Office (NSSO) released GDP numbers for 2021-22 last May, it became clear that the Indian economy had crossed pre-pandemic levels in terms of overall incomes after the 6.8% contraction in 2020-21. The question that was still unanswered back then was whether the pandemic had left permanent scars on the labour market. Headline numbers from the 2021-22 Periodic Labour Force Survey (PLFS) report released by the NSO on February 24 suggest that even the labour markets have recovered from the pandemic. Two key statistics support this conclusion. Unemployment rate has fallen further in the 2021-22 PLFS round and, more importantly, the increase in the employment share of agriculture seen in the 2020-21 round has been reversed.

To be sure, the latest PLFS results are not exactly surprising, as the quarterly PLFS bulletins- unlike the annual report they only cover urban labour markets have been suggesting an improvement in labour market indicators. While the statistics quoted above are unambiguous in signifying improvement, the fine print of the data does point out persisting fault lines that reflect an unequal recovery in labour markets.