India's unemployment rate declined to 6.67 per cent in September from 8.35 per cent a month ago in August, according to the Centre for Monitoring Indian Economy (CMIE). This is the lowest unemployment rate in last 18 months.
Moreover, the employment rate also scaled up to its highest level since lockdown to almost 38 per cent from 37.5 per cent in August. "It has more than recovered from its small fall last month. These are big and welcome gains," the CMIE CEO Mahesh Vyas said in an article.
The CMIE, however, observed that there is an odd case of the labour participation rate (LPR) declining in September, which is a sign of worry for the economy.
"This fell from 41 per cent in August to 40.7 per cent in September. This is odd because if the employment rate goes up and the unemployment rate goes down, it creates room for an expansion of the labour force and therefore also the labour participation rate," wrote Vyas.
The LPR reveals how many of the working age population are willing to be employed.
The labour participation rate in September at 40.7 per cent was 199 basis points lower than the average labour participation rate of 42.7 per cent in 2019-20.
The labour participation rate has been falling systematically since 2016-17 when it was 46.1 per cent, he said. In 2017-18, the year that showed the full impact of the November 2016 demonetisation and the July 2018 introduction of GST, the LPR fell by 256 basis points. Then it slid by 77 basis points in 2018-19 and then again by 14 basis points in 2019-20, said Vyas.
If this proportion keeps falling as it evidently is, it does not bode well for India's growth story. It renders all stories of a revival in the economy as a myth, said Vyas.
In its report last month, CMIE had said that over 6.6 million white collar professional jobs were lost from May till August 2020. Those who were rendered jobless as the COVID-19 pandemic ravaged the Indian economy comprised engineers, physicians, teachers, accountants, among others.
Over 121 million salaried jobs were lost in April due to coronavirus lockdown. The recovery in most of the jobs was seen by August, but the condition of some professions deteriorated over time, the CMIE said.