Unemployment rate soars to 11.9% in May, 10 m jobs seen lost in the month

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June 02, 2021 1:30 AM

According to the Centre for Monitoring Indian Economy (CMIE) data, barring April, May and June last year, the monthly unemployment had never breached the double-digit mark at least since January, 2016.

Else, the country faces an employment problem that could get increasingly challenging with each year of delay.Else, the country faces an employment problem that could get increasingly challenging with each year of delay. (Representative image)

The second Covid wave has led to a sudden spike in India’s unemployment rate – it rose to 11.9% in May from 7.97% in the previous month. The rate had last reached double digits in June last year, when it was 10.18%.

According to the Centre for Monitoring Indian Economy (CMIE) data, barring April, May and June last year, the monthly unemployment had never breached the double-digit mark at least since January, 2016.

It reached its peak of 23.52% in April last year amidst country-wide lock-down, but started falling from the next month onwards. In May last year, country’s unemployment rate was 21.73%.

According to CMIE, urban unemployment rate zoomed to 14.73% in May this year, the highest since 23.14% recorded in May last year. At 10.63%, rural joblessness in May was also the highest since 21.11% recorded in May last year.

Sources said that the fear of getting infected and poor vaccination regime would have dissuaded a section of the workforce from opting for work, thereby causing a decline in labour force participation rate (LFPR).

Labour force participation rate is an age-specific proportion between persons either working or actively seeking work and the total population in working age group, usually 15 years and above. Unemployment rate is a ratio between persons who are not currently in job but are actively searching for one and the total labour force.

CMIE’s MD & CEO Mahesh Vyas wrote recently, “We see evidence of loss of employment in the steady fall in the employment rate during May 2021. The employment rate was 36.8% in April 2021. The 30-day moving average employment rate on May 23 was 35.8%. This 100 basis point fall in the employment rate translates into a fall in employment of the order of 10 million.

This would be much more than the 7.35 million fall in employment recorded in April 2021. Employment has been falling since January 2021. It had fallen by about 10 million between January and April 2021. May 2021 could see a similar fall.”

Unemployment in urban areas stood at a worrisome 17.88% for the week ended May 30; the rate has risen for the seventh straight week and 47 basis points over the previous week alone.

Overall unemployment rate, however, fell to 12.15% for the week ended May 30 as against 14.73% in the preceding week. This was largely due to near 400 basis points fall in the rural unemployment rate to 9.58% for the week ended May 30 from 13.51% in the week before.

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