However, much of the labor force consisting of farm laborers and petty traders left the job market, leading to only a slight increase in the unemployment rate last month.
CMIE data shows that the unemployment rate fell from 7.1% in May to 7.8% in June, with rural unemployment increasing by 1.4 percentage points to 8% in rural India, while the Unemployment rate in urban India fell by 0.9 percentage point to 7.3%, which is the lowest unemployment rate in India in 16 months.
Even the labor force participation rate fell to its lowest level at 38.8%, from 40% in the previous two months.
Consequently, the employment rate in India fell to 35.8% in June 2022, its lowest level in two years. Implicitly, less than 36% of India’s working-age population was employed in June 2022, he said.
“The June debacle was primarily a rural phenomenon and much of the fall was in informal markets. This could largely be a labor migration issue and not a broader economic malaise,” the CMIE said.
According to the CMIE, June marks the start of the southwest monsoon in the Indian subcontinent and sowing of the kharif crop is accelerating during this month. The progress of the monsoon until 15 June was uneven with rains 32% below normal during the first fortnight.
This could have slowed the deployment of labor to the fields, leading to the loss of nearly 8 million jobs in the agricultural sector in June, he said.
“But as the monsoon has picked up, the labor force participation rate has also improved and it is expected that the monsoon pick-up in the coming weeks will lead to a recovery in the labor market. employment in rural India,” he added.
The CMIE further stated that the fall of 2.5 million salaried jobs in June 2022 revealed the growing vulnerability of this sector.
“The government has reduced the demand for armed personnel and the opportunities for private equity-funded jobs in the new world have also started to decline,” he said, warning that the economy must grow at a pace faster than it could in the near future to save and generate such jobs.