Sunday, November 24, 2019

Unemployment, LFPR and Double Whammy

India's unemployment rate (Urban: 9.3% Jan-March 2019) has been increasing in recent years. And I am sure that you must have come across this article and we will not try to debate on the same. But there is one interesting thing to notice about. 
So the methodology used for the report quoted here is called the "current weekly status" method which gives an average picture of unemployment in a period of 7 days preceding the survey period. A person is considered unemployed in a week if he did not work even for 1 hour during that week. Now the unemployment rate is determined by dividing the number of unemployed people with the people actively seeking a job. LFPR (Labor Force Participation Rate) may be taken as the proxy for the denominator which is the section of the working population in the age group of 16-64 in the economy currently employed or seeking employment.
But the irony is that the LFPR (64% in 2004-05; 49.8% in 2017-18) in itself is decreasing in India which is a grave matter of concern than the unemployment rate itself. Because that would mean that even when a lesser proportion of people are seeking a job, a higher proportion of them are not getting one. 
This is what has been termed as Double Whammy by Mahesh Vyas, CEO of CMIE.


1.  Business Standard TUESDAY, 19 NOVEMBER 2019, Mumbai City Edition 


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