Published: 15th July 2021
Report shows unemployment in urban TN doubled in a year. Was the informal sector left unprotected?
Noted economist and former governor of the Reserve Bank of India, C Rangarajan, tells Express that the informal sector in the State was more affected due to the pandemic
A report from the chairman of the Prime Minister Economic Advisory Committee has shown that Tamil Nadu, a state with a high incidence of youth unemployment, saw urban unemployment double from 2020 to 2021. According to the report, titled ‘Post Covid Employment Scenario in India’, by Bibek Debroy, the urban unemployment rate in TN, though similar to the national average of 7.27 per cent in February 2021, is more than double that of the previous year.
The rate at the level of ‘graduate and above’ was at 16.78 per cent in February 2021, and it continues to remain higher than other education-level brackets. This was coupled with a nearly three per cent fall in labour participation rate compared to the previous year.
The labour force participation rate is a measure of the proportion of a country’s working-age population that engages actively in the labour market, either by working or looking for work; it provides an indication of the size of the supply of labour available to engage in the production of goods and services, relative to the population of working age.
Noted economist and former governor of the Reserve Bank of India, C Rangarajan, tells Express that the informal sector in the State was more affected due to the pandemic.
Informal sector is left unprotected: Rangarajan
Rangarajan says informal employees in hospitality sector were also affected as there was no mobility, and that social security is linked to the formal sector where various protection is provided to them. The informal sector is left unprotected. Rangarajan rues that though there is an act to register migrant workers, the State has not been doing so.
To a query on the struggle by MSMEs in the State due to the pandemic, Rangarajan, who chaired the 24-member committee last year to propose measures to bring the COVID-battered economy of Tamil Nadu back to growth, says like the Centre the State should also come out with a Credit Guarantee Scheme for Subordinate Debt, under which personal loans are given to promoters of stressed MSMEs.
About 80 per cent of the micro and tiny units, run by entrepreneurs, have closed down and skilled workers are finding it difficult to get alternate jobs, says KV Kanakambaram, president of the Industrial Estate Manufacturers Association. “When owners themselves are looking for jobs after selling their machinery, how will they provide jobs to youngsters?” asks Kanakambaram. Meanwhile, the report states that Tamil Nadu’s rural unemployment rate peaked at 53.19 per cent in April 2020, more than double the national average at 22.19 per cent during the first wave of pandemic.
A subsequent drastic increase in the Mahatma Gandhi National Rural Employment Guarantee scheme contributed to the rural unemployment rate decreasing significantly to 4.53 per cent in July 2020, the report states. Interestingly, as per an analysis available till March 2021, the rural unemployment rate in Tamil Nadu was at 2.7 per cent in February 2021, marginally higher than 1.17 per cent in February 2020, coupled with a significant decrease in rural labour participation rate by around eight per cent.
Rural female labour participation rate at 10 per cent is less than a sixth of male labour participation rate in February 2021, and seven per cent lower than the previous year. A similar peak of 45.55 per cent urban unemployment rate was seen in April 2020, significantly higher than national average at the time. However, one of the challenges in analysing employment scenarios is the lack of consistent job data especially during the pandemic. The report states that initially ‘Annual Survey of Employment and Unemployment’ was carried out by the Labour Bureau.
Subsequently, in April 2017, the National Sample Survey Office (NSSO) was entrusted with the task to conduct Periodic Labour Force Surveys (PLFS) to have a reliable high frequency data for urban areas, released quarterly and annual numbers for both rural and urban areas. The last PLFS results were published for January to March 2020 for the urban areas. As such, data by the Centre for Monitoring Indian Economy (CMIE) at the State-level was taken into account, the report states. Rangarajan, however, refused to comment on the data put forth in the report.