While 50,000 jobs were lost in October, November witnessed a much higher shedding of jobs at 35 lakhs.
The employment condition in India fell from the growth trajectory since the beginning of the fiscal’s third quarter. After the employment fell 20.3 per cent on-year in Q1 amid the nationwide lockdown, it recovered to a contraction of 3.5 per cent in Q2 as the economy started to recover. However, this improvement lost momentum in Q3, even as the economy showed more signs of recovery. While 50,000 jobs were lost in October, November witnessed a much higher shedding of jobs at 35 lakhs, according to CMIE’s Consumer Pyramids Household Survey. At 39.36 crore in November 2020, employment is still about 1 crore short of what it was in the March 2020 quarter.
In the first three weeks of December, more workers joined the workforce in the search of jobs. Though it led to a marginal improvement in aggregate employment compared to November, it also pushed up the unemployment rate in the first three weeks. While the employment rate rose marginally from 37.4 per cent in November to a three-week average of 37.5 per cent, the unemployment rate shot up from 6.5 per cent to 9.5 per cent in the same duration.
Consequently, it is expected that the employment numbers by the end of the third quarter would be nearly 39.5 crore, if the numbers do not deviate significantly in the remaining days of the month. This implies that employment in Q3 FY21 would be 2.5 per cent lower than the 40.5 crore employed in Q3 FY20.
Since employment and economic growth is believed to be closely associated with each other, it is estimated that the economy would shrink marginally less than it did in the September 2020 quarter. The Indian economy shrank by 7.5 per cent in Q2, after registering a record fall of 23.9 per cent in the first quarter. In both quarters, real GDP fell more sharply than employment.