The unemployment rate in the first week is at the lowest level since lockdown was announced in the last week of March 2020.
As economic activity catches pace in June, the employment situation in the country significantly improved in the first week after the months-long lockdown was lifted. The unemployment rate fell to 17.51 per cent in the week ending 7 June, according to weekly data released by CMIE. The unemployment rate in the first week is at the lowest level since the lockdown was announced in the last week of March 2020. The unemployment rate stood at 8.41 per cent just before the lockdown began and peaked to 27.1 per cent in the week ending May 3. A steep fall in the unemployment rate indicated green shoots of economic recovery after Prime Minister Narendra Modi’s government put an end to day travel restrictions and allowed most of the industries and businesses to operate.
Not only this, the unemployment rate fell despite a surge in labour participation, meaning that the country was able to provide jobs to an increasing number of jobseekers. India added 2.1 crore new jobs in the month of May, while labour participation rate also rose as the lockdown was partially lifted and many industrial activities and offices were allowed to open last month. This may bode well for the economy in the current month, as it shows migrant labourers are coming back to the job market and the industrial activity has started at a decent pace.
Standstill businesses and industries pushed the country’s unemployment rate to over 20 per cent for straight ten weeks during the nationwide lockdown. Also, with lakhs of migrant workers and labourers stranded amid lockdown, India saw an unprecedented reverse migration. This developed fear among industries about the migrant workers not returning.
However, the centre and various states, especially Yogi Adityanath-led Uttar Pradesh government, announced various schemes, compensation and social security for the labourers and migrant workers which may have helped in boosting sentiment in the job market. Meanwhile, the latest survey by ManpowerGroup underlined that the employment situation is likely to remain grim in the next quarter too, as only 5 per cent companies of India Inc are planning to hire new staff in Q2 FY21.