Coronavirus crisis has led to a spike in India's unemployment rate to 24.3 per cent in the week ended May 24 compared to 24 per cent in the preceding week, as per the latest data released by the think-tank Centre for Monitoring Indian Economy (CMIE). It was also higher than the average unemployment rate of 24.2 per cent reported in the past 8 weeks - the weeks of nationwide lockdown to contain the spread of coronavirus.
According to the Mumbai-based think tank, the labour participation rate during the fourth week of May was 38.7 per cent, marginally lower than the 38.8 per cent recorded in the preceding week. This drop in the labour participation rate comes after three weeks of continuous increase, the report said.
"While the unemployment rate has been reasonably stable around 24 per cent during the lockdown, the labour participation rate trend seems to tell a story of some interesting changes in the labour markets," Mahesh Vyas, Managing Director and CEO, CMIE, wrote in an article on Tuesday.
The country's unemployment rate has risen from under 7 per cent before the start of the pandemic in mid-March to 23.5 per cent in April, while it continued to remain high at around 24 per cent in May.
Meanwhile, the labour participation rate, which had fallen by 6.3 per cent from 41.9 per cent in March to 35.6 per cent in April, seems to be improving marginally in May. It has been rising steadily week-after-week during this month and reached 38.8 per cent as of the week ended May 17, indicating a recovery of nearly half the lost ground in April.
"The small fall in the latest week does not take away this evidently rising trend. So, it seems that a fairly large chunk of labour that had technically left the labour markets in April is returning back," the report noted.
CMIE's Consumer Pyramids Household Survey data showed that the labour force had shrunk by 68 million to 369 million in April this year from 437 million in 2019-20. "These 68 million had stopped actively looking for jobs. Interestingly, they had not stopped being interested in jobs. This is evident from the fact that the greater labour force increased by 9 million from 449 million in 2019-20 to 458 million in April," CMIE said.
The greater labour force is an indicator of the number of people who are willing to work. This includes three types of people - those who are employed; those who are unemployed, are willing to work and are actively looking for a job; and those who are unemployed, are willing to work but are not actively looking for a job. The labour force includes only the first two types.
The weekly estimates of May suggest that there is a migration of labour from the 'willing but not looking for jobs' category to the 'willing and looking for jobs category'. The discouraged workers seem to be coming back to look for jobs, which is good news, CMIE said. The weekly data also indicates that this influx into the labour markets is succeeding in finding jobs.
During the month of April, India's unemployment rate shot up 23.5 per cent amid coronavirus lockdown. State wise unemployment rate differed widely. Highest unemployment rate of 75.8 per cent was recorded in Puducherry 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. The lowest unemployment rate of 2.2 per cent was recorded in Himachal Pradesh followed by Sikkim (2.3 per cent), Punjab (2.9 per cent), Chhattisgarh (3.4 per cent), Telangana (6.2 per cent) and Uttrakhand (6.5 per cent).