India's unemployment rate rose to 4.7% in 2012-13 from 3.8% in 2011-12 due to a sharp slowdown in the industry and infrastructure sectors that prompted firms to lay off workers to protect their margins, a trend that is surely going to be a headache for the UPA ahead of the polls.
The labour ministry's third annual employment and unemployment survey on 1,33,354 households across the nation showed rural unemployment rising to 4.4% during the last fiscal from 3.4% in 2011-12 while it rose to 5.7% from 5% in urban areas.
Though the unemployment rate is still lower than 9.4% of 2009-10 when drought in many parts of India scalped rural jobs.
Though the jobless rate in India has risen sharply in one year, it is much lower than that of some of advanced nations and EMEs. Unemployment rate was over 7% in eight of the G20 nations — it was as high as 25% in Spain and South Africa and above 11% in European Union.
The unemployment rate was less than 5% in only four countries — China, India, Japan and South Korea. G20 nations accounted for 93 million jobless, which was almost half of the 200 million unemployed globally.
In India, unemployment increased with the slowdown in the economic growth from 8.6% in 2009-10 and 9.3% in 2010-11 to 5% in 2012-13 mainly on account of sharp fall in the industrial growth from 8.2% in 2010-11 to 1.1% last year.
The last few years also saw labour unrest in big corporates such as Maruti, Hero Motocorp, Bajaj Auto over wages and job cuts especially for contract labourers. Infrastructure firms like Lanco had to lay off staff as many of the projects got stalled due to delays in land acquisition and environment clearances.
The survey showed that the labour force participation rate (LFPR) declined to 50.9% in 2012-13 under usual principal status (UPS) approach from 52.9% in 2011-12 as many youths preferred to go for higher studies rather than join the workforce.
For age group 15-29 years, the unemployment rate is estimated at 13.3%. The unemployment also soared job creation has slowed sharply even as more workers entered the market.
The unemployment rate is significantly higher among females (7.2%) as compared to males (4%). In urban areas, the female unemployment rate is estimated to be 12.8%. Among states, the unemployment rate was above 10% in Arunachal Pradesh, Goa, Kerala, Sikkim, Tripura, Lakshadweep and Puducherry.
The jobless rate was lower than 3% in Andhra Pradesh, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh and Mizoram.
A majority 48.2% of India's 491 million workforce are self-employed especially engaged in farming and retail trade, about 17.4% are wage earners and the remaining 34.4% are under contract workers or casual labourers.
In times of slowdown or a bad monsoon, the unemployment is higher for the casual labourers.