Unemployment falls, but not because people got jobs; here’s the REAL reason

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Updated: Apr 29, 2020 1:32 PM

The national lockdown did not just throw 7.2 crore people out of the labour force but it also drove another 8.5 crore to some kind of desperation to look for jobs.

unemployment, employment, job market, joblessness, labour marketThe severe fall in the labour participation rate has also pulled down the unemployment rate to the lowest level during the national lockdown as people who do not intend to work are not considered unemployed.

With every passing week of the nationwide lockdown, more workers and labourers are losing trust in the job market and leaving it. The labour participation rate has dropped by 7.2 percentage points to a mere 35.4 per cent during the lockdown so far, showing a big portion of the working-age population have quit the labour markets, said the Centre for Monitoring Indian Economy (CMIE). It also underlined that over 7 crore people have quit the labour markets in a month. The severe fall in the labour participation rate has also pulled down the unemployment rate to the lowest level during the national lockdown as people who do not intend to work are not considered unemployed.

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The unemployment rate stood at 21.1 per cent during the week ended April 26, from the 26.2 per cent rate recorded in the preceding week. The national lockdown did not just throw 7.2 crore out of the labour force but it also drove another 8.5 crore to some kind of desperation to look for jobs in the middle of a national lockdown when none were available and this desperation suggests that people were highly vulnerable to a loss of livelihood caused by the lockdown, said Mahesh Vyas, MD & CEO, CMIE.

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The report suggested that the relaxation in the lockdown can immediately reduce some pain and damage done to the livelihoods. The partial relaxation of the lockdown from the week of April 20 did have an impact on employment, majorly in the agriculture and rural areas. Meanwhile, lakhs of migrant workers got stranded after the centre suddenly announced a nationwide lockdown. With almost all the businesses coming to a standstill and travel restrictions everywhere, the workers and labourers had almost nothing to rely on for their livelihood.

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