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OJAANK IAS ACADEMY

Classification of unemployment on the basis of income group

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In an article I said that unemployment does not necessarily mean that the youth should be seen at tea stalls. It is also possible that they may be studying or handling household chores. Now we will try to identify the unemployed according to the category of their income. Are they poor or middle class or come from relatively rich class? CMIE’s Pyramid Household Survey (CPHS) makes such an exercise possible as it links each person assessed for employment status to a family. It also presents the income data of households.

For our convenience, we will divide the families into five income groups. The division of classes is not done in percentage as

The academic field is the standard, rather it is determined on the basis of the annual income of the families. At the bottom of the pyramid are those families who earn less than Rs 1 lakh a year. The next group earns an income between one lakh and two lakh rupees annually. Keep in mind that in the first year of the epidemic i.e. 2019-20, the median income of common households was Rs 187,410 and in 2020-21 it was Rs 170,500. So we call this group the lower middle class.

can. The third group of families earns between Rs 2 lakh to Rs 5 lakh annually. This category can be called middle income group. The fourth group earning between Rs 5 lakh and Rs 10 lakh annually can be termed as upper middle class. Families with an annual income of more than Rs 10 lakh can be counted in the rich category.

In 2019-20, the share of the poorest households in the total households was 9.8 per cent and only 3.2 per cent were unemployed. In the year 2020-21 and in the first half of 2021 22, their share in the total households was 16.6 per cent but the total unemployed were only 3.5 per cent. The poorest households are not those in which widespread unemployment was rampant. One explanation for this is that the poor cannot remain unemployed so they remain largely employed. But this is not true. Certainly, the unemployment rate in this group was the lowest at 4.1 per cent in September-December 2019, before the pandemic, while it stood at 4.8 per cent during September-December 2021. But in the case of labor participation also it remained at a lower level with 38.1 per cent and 31.3 per cent respectively during this period. While the employment rate stood at 36.5 percent and 29.8 percent respectively. This is the lowest performance across all income groups.

Clearly, the poorest households are twice as likely to suffer from the worst conditions of employment. Their position is also the weakest in terms of wages. The average wage income of a poor family is also the weakest. The average wage income of a poor family is around Rs 53,000 per annum, which is less than half of the average income of all households. Poor families face the twin difficulties of low employment and low wages.

More than a third of the unemployed live in low-middle-income households. Their share in the total households is about 45 percent. This group outperforms the poorest households in both labor force participation and employment rates, but is lower than all other categories.

The data indicates that a large part of this income group has moved to the lower income group from 2021-22. During this period, the share of this category in total unemployment increased from 33 per cent in September-December 2019 to 39.5 per cent by May-August 2021. Between September-December 2021, it again rose to 35.7 per cent. A large part of the unemployed population lives in the middle class family i.e. whose annual income is between Rs 2 lakh to Rs 3 lakh. These families constitute almost half of the total households and their contribution to unemployment is almost the same. This income group is the highest among the non-affluent classes in labor force participation and has a level of 40.8%. Households in this income group have the highest number of unemployed and the unemployment rate is also more than 9 percent.

The average salary of a family in the middle income group is a little less than Rs 2 lakh per annum. Keep in mind that salary income is part of the total income of the households. The biggest challenge of the country is to provide such jobs, so that 1.6 crore unemployed people of middle class families can get salary of more than two lakh rupees per month. It is also necessary to take into account the fact that the CPHS data also tells us that consumer trends are improving and the middle class is improving the most. Rich families have to bear the brunt of unemployment the least. their share in the total households is half a percent and Their share in unemployment is almost the same. Their average participation in the labor force is 46.3 per cent, the highest among all income groups. Their unemployment rate rose the fastest among all income groups but has since declined. It was over 15 per cent during the first wave of the pandemic. But in 2021 this rate averaged 5.2 percent. The employment rate has been above 40 per cent on most occasions. But it increased to 45 per cent during September-December 2021. This is much higher than other groups where the rate ranges from 30 to 40 per cent. However, India’s best performance of 45 per cent is also far worse than the global average of 54 per cent.


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