Employment falls for first time in October since recovery began; festivals, kharif harvest fail to lift jobs

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November 5, 2020 1:25 PM

Though the fall in employment was small, its occurrence when demand for employment was rising has surprised the market.

jobs, employment, unemployment, LPR, labour participation rate, festival, khariff harvestLabour participation rate stood at 40.66 per cent in October 2020, which was exactly what it was in September 2020.

Employment in the month of October 2020 fell for the first time since May when the recovery began after the nationwide lockdown was imposed to arrest the spread of the coronavirus pandemic. The month witnessed a fall of 5.5 lakh in the number of people employed, said a report by the Centre for Monitoring Indian Economy (CMIE). Employment rose by 3.16 crore in May, 6.32 crore in June, 1.53 crore in July, and so on till September 2020. Though the fall in employment was small, its occurrence when demand for employment was rising has surprised the market. The count of the unemployed who were willing to work increased by 1.2 crore in October.

The three key labour market ratios — labour force participation rate, unemployment rate and employment rate — had shown a slightly worsening trend until the third week ending in October. Even though October was a festival month and a Kharif-crop harvest month, along with elections in a few states, these factors could not help in improving the employment landscape.

The labour participation rate fell 7.08 percentage points in April, which had recovered 5.04 percentage points between May and July. But, it has made a negligible further recovery in the last three months. India, therefore, still suffers a loss of nearly two percentage points in labour participation rates compared to pre-lockdown levels, CMIE added.

Labour participation rate stood at 40.66 per cent in October 2020, which was exactly what it was in September 2020. On the other hand, the unemployment rate rose to 7 per cent in the month, increasing from 6.7 per cent in September 2020. Adding to the woes, the employment rate also deteriorated in October. It fell from 38 per cent in September to 37.8 per cent in October. This is an outcome of a combination of a stagnant labour participation rate and an increase in the unemployment rate, CMIE underlined. 

Meanwhile, the fourth week of October was a little better than the previous three weeks and the labour participation rate increased smartly. Also, the week ended November 1 saw a comparatively healthier employment rate. These improvements in the two most recent weeks moderated the impact of the initially declining trend on October’s labour data, however, they did not change the overall results of the month too much. The PMI report on services and manufacturing sectors, released by IHS Markit, also showed that the employment fell in the month of October despite a rise in economic activity.  

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