Urban unemployment lowest in 5 years in 2022-23: Official data

India’s urban unemployment rate was 6.8% in the quarter ending March 2023, the lowest in at least five years, the period for which the National Statistical Office (NSO) has been publishing quarterly bulletins for urban areas using the Periodic Labour Force Survey (PLFS), data released on May 29 shows.

The March quarter was not the only good quarter for urban jobs in 2022-23. The urban unemployment rate was the lowest in 2022-23 (since 2018-19) for all quarters. This positive trend in jobs was not because fewer people were seeking jobs. The share of people working or looking for jobs – called the Labour Force Participation Rate (LFPR) – was the highest in 2022-23 (since 2018-19) for all quarters. This means that a record proportion of India’s urban population sought and found jobs in 2022-23. In the March quarter, LFPR was 38.1%, the highest in the urban bulletin series.

To be sure, at least some of this could be because the share of unpaid family workers was at its highest level in five years throughout the year. In the March quarter, this number was 6.1%.

“Unemployment rate is driven largely by educated young people. If that is low, that is a good sign, unless WPR (Worker Population Ratio) has fallen,” Amit Basole, who teaches economics at Azim Premji University, said. The problem could be the WPR increasing because of unpaid work, which usually happens because of women taking up such work, he added.

Quarterly bulletins only give headline numbers for urban areas in the entire PLFS series, which begins from the June quarter of 2018-19. Urban employment was 7.2% in the December quarter and 8.2% in the same quarter last year. It is important to check employment trends in the same quarter across years because some jobs – such as in agriculture – are seasonal in nature.

The annual numbers for 2021-22, released on February 24 this year, show similar trends. While the unemployment rate (4.1%) had decreased to its lowest level since 2017-18, the first year for which annual PLFS data is available, the share of unpaid family workers continued to increase. It was 17.5% in 2021-22, 4.2 percentage points higher than in 2018-19, the last year when the pandemic had no impact on the job market. The annual PLFS follows a July-June calendar.

While the unemployment rate fell even in 2021-22 compared to the year before, which saw the worst impact of the pandemic, the share of unpaid family workers did not see an increase. Recent urban bulletins suggest that this situation has worsened in urban areas in the fiscal year 2022-23. The exact role of this adverse development in bringing down unemployment rates will only be known once unit-level data is published in the annual PLFS report expected later this year.