Lockdown woes: Joblessness rate near 1-year high; unemployment up in rural areas; virus threat hits demand for MGNERGS work

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May 18, 2021 5:30 AM

According to data released by Centre for Monitoring Indian Economy (CMIE), rural joblessness doubled to 14.34% in the week ended May 16 from 7.29% in the previous week. Urban unemployment rate went up to 14.71% in the latest week under review from 11.72% in the week earlier.

CMIE’s MD and CEO Mahesh Vyas told FE that the rapid rise in unemployment rate in villages indeed reflected the spread of Covid-19 in rural areas.

The lockdown has had an immediate, telling effect on the employment scenario in the country. India’s unemployment rate, that has remained elevated for a few weeks, soared to a near one-year-high of 14.45% in the week ended May 16. While an already-high urban joblessness has turned more acute, a near 100% week-on-week rise in rural unemployment pushed the overall joblessness rate to a level not witnessed since the week ended June 7 last year, when it stood at 17.51%.

According to data released by Centre for Monitoring Indian Economy (CMIE), rural joblessness doubled to 14.34% in the week ended May 16 from 7.29% in the previous week. Urban unemployment rate went up to 14.71% in the latest week under review from 11.72% in the week earlier.

CMIE’s MD and CEO Mahesh Vyas told FE that the rapid rise in unemployment rate in villages indeed reflected the spread of Covid-19 in rural areas.

While the increase in the overall unemployment rate shows the economy’s increasing inability to generate jobs, the data of the Mahatma Gandhi National Rural Employment Scheme (MGNREGS) indicate a sizeable section of people opting not to take up the jobs offered in the wake of the Covid-19 threat.

According to the MGNREGA website, till May 17 in the current fiscal, 4.88 crore persons demanded work under the scheme, of which 4.29 crore (88%) have been offered jobs, but ultimately only 3.14 crore persons (73%) among those who were offered jobs turned up for work.

“The gap between employment offered and employment provided implies that either workers are not turning up at the work sits despite being given work or they are not aware of the fact that muster rolls have been issued to them,” said Debmalya Nandy, member, NREGS Sangarsh Morcha.

XLRI professor and labour market expert KR Shyam Sundar said the Covid penetration into rural areas has caused an increased fear of the risk of infection. The supply-side constraint is primarily due to inadequate and unpredictable replenishment of funds from the central level to the local level, he said.

According to the CMIE data, India’s unemployment rate reached its zenith at 27.11% for the week ended May 3, 2020, in the midst of countrywide lockdown last year. However, it started coming down to stand at 4.66% for the week ended January 17, 2021, but has since been picking up gradually.

While the net number of jobs lost after the pandemic stood at about 5.5 million in March 2021, compared with the number in 2019-20, the number of salaried jobs lost was a staggering 10 million. According to Vyas, 60% of these 10 million jobs were lost in the rural sector.

In the absence of opportunities in companies and small establishments, there has been a shift of the labour force to the agriculture space, creating a fair bit of disguised unemployment. In some sense, this is the reverse of the trend seen when the economy was liberalised and people moved from farms into factories.

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