The rising number of Covid-19 cases and continuous lockdown have severely hit the job market, bringing the labour participation rate to a record low. While many businesses and markets remained closed in the last two weeks, a large number of people had to sacrifice their jobs. The unemployment rate during the last week was 23.4 per cent, labour participation rate fell to 36 per cent and the employment rate was a mere 27.7 per cent, said a report by the Centre for Monitoring Indian Economy (CMIE). In March, both the labour participation rate and the employment rate fell to their all-time low, the report added.
However, there has been a consistent fall in employment since the beginning of the year 2020, it swelled up in March due to a countrywide lockdown. “The fall since January 2020 is particularly steep – almost spectacular. It seems to have nosedived in March after having struggled to remain stable over the past two years. Then, there is a precipitous fall,” said Mahesh Vyas, MD & CEO, CMIE.
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The manufacturing sector which cannot operate on the ‘Work from Home’ module has faced a severe shock and has majorly affected the job market as it generates maximum employment, especially from the informal sector. In an unprecedented case of reverse migration, lakhs of migrant workers returned to their hometowns due to the unavailability of jobs and a lack of basic facilities for survival. “The income shock to migrant workers has resulted in a massive reverse migration, the effects of which will only unravel over time,” said a KPMG report.
Meanwhile, more than one-third of the regular wage or salaried employees in urban India may bear the brunt of uncertain income due to the stalling of urban activity. Rajasthan, Punjab, Andhra Pradesh, Chhattisgarh, and Gujarat are likely to face the maximum hit as nearly half of their workforce is from the informal sector, the KPMG report added.