India's unemployment rate shot up to 27.1 per cent in the week ended May 3 from 21.1 per cent in the preceding week, according to data released by the think-tank Centre for Monitoring Indian Economy (CMIE) on Monday. The rising unemployment comes as India continues to remain under lockdown due to coronavirus pandemic. This was the highest unemployment rate so far and the unemployment rate has risen because of a surge in the labour participation rate from 35.4 per cent in the week of April 21 to 36.2 per cent in the week ended May 3, Mahesh Vyas, Managing Director and CEO, Centre for Monitoring Indian Economy (CMIE), wrote in an article on Monday.
"The spike in the unemployment rate indicates that this surge in job seekers was highly disappointed. They could not find jobs. Their addition to the labour force merely raised the unemployment rate," Vyas said.
The unemployment rate in the month of April was 23.5 per cent, much higher than 8.7 per cent reported in the previous month.
"Data for the first week of May indicates that the rate could climb further. This worsening should be expected as the lockdown continues to get prolonged. Initially, a lockdown only hurts the most vulnerable labour that is informally employed in unorganised sectors. Gradually, it starts hitting the more secure jobs," Vyas said.
The start-ups have already announced lay-offs and industry associations have warned of job losses. Even NASSCOM, India's IT association with over 2,800 member companies, has warned of job losses. These are not mere warnings anymore because job losses are seen across all types of employment, he added.
CMIE's Consumer Pyramids Household Survey estimated that employment fell by a massive 11.4 crore in April 2020. In March 2020, employment had already dropped to 39.6 crore, lowest in the last four years.
Average employment during 2019-20 was 40.4 crore. Compared to this, the fall in March was just 2 per cent. But, they still added up to 0.8 crore job losses. Compared to the same average of 2019-20, the fall in April was 30 per cent, which translates into a loss of 12.2 crore jobs. "This is a mind boggling loss of jobs," Vyas noted.
In April, urban unemployment rate stood at 24.95 per cent, while in rural India it was 22.89 per cent. State wise, Puducherry recorded highest unemployment rate of 75.8 per cent, followed by 49.8 per cent in Tamil Nadu, 47.1 per cent in Jharkhand, 46.6 per cent in Bihar, and 43.2 per cent in Haryana.