Stellar GDP growth in Q1 results in better employment numbers

The stellar GDP growth in the first quarter of this financial year translated into better employment numbers for the economy, according to a government survey released on Monday.

The unemployment rate in urban areas for people aged 15 years and above fell to 6.6% in the April-June quarter compared with 6.8% in the previous quarter and 7.6% a year ago, according to the quarterly periodic labour force survey report released by the National Statistical Office, which tracks employment over a shorter time frame - a week's period from the date of the survey.

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Results of the annual survey showed urban and rural employment declining to 3.2% in 2022-23 (July-June) from 4.1% in the previous year, as per a different methodology which tracks employment status over a longer time frame.

The Indian economy grew 7.8% in the first quarter of the year on the back of services growth and strong domestic demand. The improving employment situation in the country also translated into an improvement in female labour force participation in urban areas to 23.2% from 22.7% in the previous quarter. Male labour force participation remained steady at 73.5%. Labour Force Participation Rate (LFPR) is defined as the percentage of population in the labour force, as per the report.

International organisations have been urging India to increase labour force participation for women to improve its growth potential. In an interview with ET last week, Auguste Tano Kouame, World Bank's country director for India, said increasing female labour force participation was necessary to achieve an 8% growth rate, which is needed to become a developed economy by 2047.

Seven of the 22 states in PLFS had female labour force participation rates lower than 20%. Bihar was the worst, with 11.9% FLFPR, followed by Jharkhand (12.1%) and UP (13.1%). HP was the only state with female labour force participation higher than 30%.

Rural areas perform better

The recovery in economic activity in 2022-23 (July-June) was also reflected in rural areas performing better than urban centres.

The unemployment rate declined to 2.4% in 2022-23 (July-June) compared with 3.2% in the previous year, according to the annual PLFS report released by the government.

Female labour force participation, as per the detailed methodology, improved much more for rural centres, rising to 41.5% in 2022-23 from 36.6% for women aged 15 and above in 2021-22, compared with the urban centres, which experienced a less than two percentage point rise in employment.

The performance of rural areas was also better in terms of remuneration in the first quarter of 2023-24, as their wages increased 3.3% sequentially compared with 1.7% rise in urban centres. However, in the case of the self-employed category, which constitutes a larger proportion of the workforce, the rise in urban wages was higher at 3.4% compared with 2.4% in rural wages.

Male-Female divide

Analysis of PLFS data indicates that even though female participation improved, unemployment was still higher than male counterparts.

While the unemployment rate for men aged 15 years and above in urban areas fell below 6%, female unemployment rate remained above 9% for the fifth consecutive quarter.