Real estate, agri bolster jobs market recovery from covid

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The labour market seems to have recovered from the devastating impact of the pandemic’s second wave with the unemployment rate falling and the labour force participation rate (LFPR) and employment rate improving by the end of July.

The revival was, however, primarily driven by the farm and real estate sectors. Mining and manufacturing sectors, in contrast, shed millions of jobs, while employment data in the services sector has stayed largely unchanged, showed monthly data accessed on Sunday from the Centre for Monitoring Indian Economy (CMIE).

On the positive side, the national unemployment rate fell to 6.95% in July from 9.17% in June. The July figures are the lowest in at least four months. The joblessness rate was 6.5% in March just before the second wave struck, disrupting economic recovery, and claiming hundreds and thousands of lives. The urban unemployment rate for July at 8.3% and the rural joblessness rate of 6.34% were also separately at their four-month lows.

The July monthly LFPR was 40.17%, better than June’s 39.57%, and also the best in four months with the same number being recorded in March 2021. A higher LFPR means more people are looking for employment and is indicative of the revival in the jobs market. Also, the employment rate in July climbed to 37.38%, also a four-month high.

In terms of overall numbers, 399.38 million people are employed in the country, both in salaried and non-salaried jobs at the end of July. This is almost 16 million more than in June.

However, most of these additions were from agriculture, which absorbed 163.25 million people or little over 11 million more than in June. This was followed by the real estate and construction sector, which absorbed 5.5 million more people than in June.

In contrast, the number of people working in the manufacturing sector dropped from about 29.65 million in June to 28.87 million in July. Similarly, those working in the mining sector declined from 1.59 million in June to 1.14 million in July.

Employment in the services sector remained almost unchanged at 14.19 million in July against 14.13 million in the previous month.

The jump in absorption in agriculture and real estate may have helped the recovery in the overall labour market parameters such as LFPR and employment rate, but showed that more people are engaged in less productive farm work in the absence of decent non-farm jobs, thus boosting disguised unemployment, contended experts.

The jobs market has a long way to go, according to several market parameters, they pointed out.

“Traditionally, July is the month when agriculture activities in rural India are at a high because of the monsoon reaching almost all parts of the country. This is the case in 2021 as well. However, a sizable portion of the labour market working in the agriculture sector when other key sectors are not doing well hints at disguised unemployment. More people doing the same work is neither good from the productivity point of view nor from the people’s income point of view,” said Arup Mitra, a professor of economics at Delhi University’s Institute of Economic Growth.

“The core sector job creation is lagging. The Employees’ Provident Fund Organisation payroll data shows how the core sectors are not absorbing people. It is because of the poor economic environment, the nagging pandemic, and the poor demand in the market because of income and job loss,” explained K.R. Shyam Sundar, a labour economist.

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