The Centre for Monitoring Indian Economy said on Tuesday that India’s unemployment rate hit 27.1% for the week ended May 3. This is higher than the 23.8% unemployment rate recorded during the last week of March, when the nationwide lockdown was imposed to combat the coronavirus pandemic.
The organisation said that the unemployment rate in the month of April was 23.5%, much higher than the 8.7% recorded for overall March. While the lockdown began on March 25, it was in force during the whole of April, until May 3. On May 1, the Centre extended the lockdown till May 17.
The organisation said that the unemployment rate for the week ended May 3, the highest-ever so far, seems to be the result of an increase in the labour participation rate from 35.4% during the week that ended on April 21 to 36.2% for the week ended May 3. However, this surge, possibly brought about by the reopening of some industries on April 20, did not translate into more jobs for workers.
“The surge in labour participation during a lockdown reflects hope and desperation,” the organisation said. “The simultaneous increase in the unemployment rate reflects disappointment.”
CMIE said the unemployment rate in the first week of May could be even higher than the 23.5% recorded for the whole of April. It said the worsening could be expected given that the lockdown continues to get prolonged.
“Initially, a lockdown only hurts the most vulnerable labour that is informally employed in unorganised sectors,” CMIE said. “Gradually, it starts hitting the more secure jobs. Start-ups have announced lay-offs and industry associations have warned of job losses.” The organisation said job cuts are being seen across industries.
Some airlines as well as Indian multinational conglomerate Reliance Industries have recently announced pay cuts for existing employees too.
CMIE said that the Consumer Pyramids Household Survey indicated that employment fell by 11.4 crore in April. In March, the total employment had fallen to 39.6 crore, a record low in four years. By the end of April, this number dropped further to 28.2 crore.
“It is not surprising that small traders and wage labourers account for most of these losses,” CMIE said. “They have been the most severely hit during the lockdown.” The organisation said employment among wage labourers dropped from 11.6 crore in March to just 3.7 crore in April.
CMIE added that 1.8 crore business persons lost their jobs in April. Over one in five salaried employees lost their jobs. Their number declined from an average of 8.6 crore per month in 2019-’20 to 6.8 crore in April.
“Arguably, and hopefully, the street hawker may return to her beat after the lockdown,” the organisation said. “Her challenge is to survive the lockdown. However, the challenge for the salaried employees could be to get the job that was lost during the lockdown. Salaried jobs are not easy to get.”
However, agriculture has weathered the lockdown storm, the CMIE said. The number of farmers grew by 60 lakh, or 5%, in the month of April. But the organisation added: “When jobs evaporate in other sectors, people revert back to their farms which seem to have an infinite capacity to absorb labour; but unfortunately, that employment is mostly disguised unemployment.”