The unemployment rate in rural areas saw a sudden jump in the last week, after significantly falling in all weeks of September 2020. The unemployment rate in rural India stood at 7.93 per cent — seven-week high — in the week ending 4 October, skyrocketing from 4.73 per cent in the previous week, according to the Centre for Monitoring Indian Economy (CMIE). On the other hand, urban unemployment fell to 8.17 per cent in the last week, compared to 8.25 per cent in the week ending-27 September. The rise in rural unemployment also raised the overall unemployment rate of the country to 8.01 per cent in the last week, from 5.84 per cent in the previous week.
It is evident from the past that the unemployment rate rises either due to a decline in the number of jobs, or when more people enter the labour market in search of jobs. During September 2020, employment increased and unemployment declined, compared to August 2020. Employment increased by 51 lakh from 39.25 crore to 39.76 crore while unemployment fell by 73 lakh from 3.57 crore to 2.84 crore.
However, while many found jobs, the major fall in unemployment was also because others exited the labour market without finding jobs. Consequently, the labour force shrank by 22 lakh in the month. A large shrinking of the labour force is a sign of discouraged workers, CMIE added. The labour force was nearly 1.2 crore short of its level a year ago and also against the average size of the labour force in the last fiscal year 2019-20.
While the all-India labour force declined, the rural labour force increased by 23 lakh in September. Meanwhile, many farm labourers who were engaged in farm-related activities, have witnessed a loss of earning opportunities after the harvest is completed.