Demonetisation Lowered Labour Participation: Economist Mahesh Vyas

Economist Mahesh Vyas talks to The Quint’s Sanjay Pugalia on the situation of unemployment in the country.

2 min read

Everybody is aware of the job crisis in India, and they also know that this has become a political issue. Hence, during the debate, people often take extreme positions. The new facts emerging in this debate are worrying.

A new fact is that people have started to lose hope about getting a job. They are not seeking jobs anymore.

The inflow of aspirants in the job market is known as Labour Participation Rate. This has reduced significantly after demonitisation. Women have been the most affected. They are not asking for jobs anymore.

In October, 2.37 crore people lined up for 1.2 lakh jobs in Railways.  

We thought of analysing the current situation of job crises with facts and figures by talking to economist Mahesh Vyas, MD and CEO of Centre for Monitoring Indian Economy (CMIE).

Vyas talks to The Quint’s Sanjay Pugalia on how to analyse the unemployment status of the country, labour participation rate, demonetisation and women employment.

On the status of unemployment in the country, Vyas told us that we should put aside unemployment for the moment and focus on the labour participation rate - how many people are hunting for jobs?

“Most of them get the jobs, some don’t. Labour participation rate is at 43 percent today, if someone is selling pakoras on the streets, we consider them employed. If someone is working in agriculture sector or in any sector which isn’t a formal job, we consider him a part of the labour market. We only exclude those who refuse to work at all or who are not in search of employment.”
Mahesh Vyas, Economist

He said this statistic should touch the 50 percent mark. In other countries, it hovers around 65 percent; in India, this number hovers around 45 percent.

“This is the most important number. After this is the unemployment rate, which is constantly at a rise. It is somewhere around 6.7 percent. 43 percent is hunting for jobs and among them, 7 percent are not getting jobs,” he said.

Vyas also focused on the low labour participation rate in the country, saying that the labour participation rate is more than 60 percent in many countries.

“Why is it so low in our country? Was there a tipping point, after which there has been an immense fall?”
Economist Mahesh Vyas

Vyas also said the labour participation rate decreased further after demonetisation.

He added that women have also stopped looking for jobs, excluding themselves from labour participation.

“When we processed the declining labour participation data, we found out that women have excluded themselves from Labour Participation. Most of the excluded population consists of women, men are participating at almost same numbers. It was strange to see only women getting excluded and we should admit that demonitisation has affected women more than men.”
Economist Mahesh Vyas

In India, around 82 percent men and 92 percent women survive on a salary of below Rs 10,000.

“The country is having a jobless growth and because of the lack of jobs, people are ousted from the workforce and are sitting at homes. This is a matter of concern and caution.”
Economist Mahesh Vyas

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