India’s unemployment rate hit a 3-year high of 8.4% in August 2019, reveals data released by think tank Centre for Monitoring Indian Economy (CMIE).

The agency noted that the unemployment rate has hit the highest level since September 2016.

During the month of August, employment was nearly 2% higher than it was in August 2018, aided by growth in rural India. The year-on-year employment growth in rural India stood at 2.9 % in August 2019, while urban India reported a 0.2% decline.





The labor participation rate, one of the factors behind the unemployment rate, has risen slowly and steadily to 43.35% in August 2019, from 42.46% in October 2018.



It has recovered from the combined shock of demonetization and GST that led to a rise in the unemployment rate in India, according to the report.

The increase in the labor participation rate is a healthy sign as it hopefully reflects confidence in labor that they may find jobs. However, this increase in the labor force participation rate is not matched with an increase in the employment rate.





The difference between the two has been rising. More people are seeking employment but not as many people are finding employment.





What Amartya Sen says about unemployment in India?

Amartya Kumar Sen who is an India economist and philosopher had once said that India’s current unemployment figures were low enough to put other developed countries to shame. He threw light on the difficulties which were involved in measuring employment and unemployment in a developing country.



Currently, India is facing a slowdown in economy and unemployment which has been the center of public debated in India.

Government data survey carried out in 2017-2018 revealed that unemployment in the country reached all the time of 6.1%.

Official employment surveys and the census show that in 2018, there were 471.5 million persons employed and 30.9 million unemployed in India.





Unemployed men aged 15to29 years who comprised 21.1 million or 68.3% of all the unemployed in the country.

How developing countries like Bangladesh is doing well in economic growth and development?

The Bangladesh government in June unveiled a record 5.23 trillion taka ($62billion) proposed national budget, targeting economic growth of 8.2% for the current 2019-20 fiscal year.

Bangladesh’s economy grew 8.13% this fiscal year, the highest in its history.



According to the ADB report buoyant exports, robust private consumption, higher remittances, accommodative monetary policy, ongoing reform to improve the business climate and higher infrastructure spending have helped Bangladesh attain high growth.



Moreover, the implementation of many more mega infrastructure projects will further also help the country to generate the rest expected growth.

What does Bangladesh owe its quiet transformation?

As with all large-scale historical phenomena, there can be no certain answer, only clues, still, Bangladesh’s economic transformation was driven in large part by social changes, starting with the empowerment of women.

Bangladesh has made significant strides towards educating girls and giving women a greater voice, both in the household and the public sphere.



These efforts have translated into an improvement in children’s health and education, such that Bangladeshis’ average life expectancy is now 72 years, compared to 68 for Indian and 66 for Pakistanis.

The Bangladesh government also deserves credit for supporting grass-roots initiatives in economics inclusion. Among Bangladeshi adults with bank accounts, 34.1% made digital; transactions in 2017, compared to an average rate of 27.8% for South Asia. Moreover, only 10.4% of Bangladeshi bank accounts are “dormant”, compared to 48% of Indian bank accounts.





Another partial explanation for Bangladesh’s progress is the success of its garment manufacturing industry. That is itself driven by a number of factors. One notable point is that the main garment firms in Bangladesh are large—especially compared to those in India, owing largely to different labor laws.

How India is facing a high unemployment rate?

There are rising numbers of job seekers, the labor supply in India is getting a boost from the rapid expansion of the working-age population in the country- the population of 15-59 years olds increased at the rate of 14 million a year in the 2000s.

The nature of labor supply is changing too, with an increased enrolment of young adults for education and their rising job aspiration.

Of all 15-29 year ole females in India, 31% had been attending schools or colleges in 2018, up from 16.3% in 2005 although, it needs to be mentioned here that there has been questioning on the quality of education received and skills acquired by these young people.

A significant number of people who are employed according to official statistics could actually have been disguised unemployment in agriculture consider a person who does no job but occasionally assists his family in cultivation. Young persons in rural areas will be increasing to exit disguised unemployment in agriculture.





India faces a tough challenge in creating decent jobs for its growing young population. To tackle this, action will be needed on multiple fronts including investments in human capital, the revival of the productive sectors, and programs to stimulate small entrepreneurship.

If the country is unable to make effective use of the strengths of its young women and men now, it can perhaps never to do so. Within the next two decades or so, India’s population will gradually start getting older, and it will be tragic for millions of poor Indians to grow old before getting even moderately rich.





A way forward

Creating more and better jobs requires economic transformation: moving workers from lower to higher productivity activities. It also means a spatial transformation with urbanization pulling villagers into secondary towns and cities.



This shift will need to be led by the private sector, the main engine of job growth. For this to happen on a large enough scale, we need to look at what has worked best to create jobs, focusing on sectors that have the highest potential.

Agriculture still accounts for almost 70% of total employment in low-income countries. A central challenge for agriculture and the food system is to generate high value-added jobs across the value chain, especially for women and youth.

Governments need to take public policy actions to create an enabling environment. They need to invest in education, from early childhood to adulthood, to build the human capital needed for a rapidly evolving global economy. They need to build quality infrastructure to connect domestically and globally. And they need to set up the right ecosystem for private investment, especially for smaller businesses and entrepreneurs.