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Jobs in India projected to fall 2.5% to 395 mn in Q3: CMIE

Chitranjan Kumar     December 22, 2020

India's employment is expected to fall by 2.5 per cent year-on-year (YoY) in October-December quarter of the current fiscal (FY21) as compared to the same period last year, according to a latest report by private think-tank Centre for Monitoring Indian Economy (CMIE). The third quarter of fiscal FY21 would end with employment of 395 million, which would be 2.5 per cent lower than 405 million employed in the December 2019 quarter, as per the CMIE data.  

India's employment fell by 20.3 per cent YoY to 320.6 million in the first quarter and by 3.5 per cent YoY to 394.9 in the second quarter of the current fiscal.

Employment statistics from CMIE's Consumer Pyramids Household Survey indicated a likely marginal improvement in aggregate employment in the first three weeks of December compared to November. The labour force participation rate also improved during this period. The average labour participation rate (LPR) in the first three weeks of December stood at 41.4 per cent, marginally higher than November's 40 per cent, the data showed.

Despite increase in labour participation rate, the average unemployment rate rose from 6.5 per cent in November to 9.5 per cent in the first three weeks of the current month. As a result, the employment rate rose marginally from 37.4 per cent in November to a three-week average of 37.5 per cent in December. 

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"With this, unless there is a big surprise in the last ten days of December, it is likely that employment could close at 394 million in December 2020. And, the third quarter of fiscal 2019-20 would end with employment of 395 million," said Mahesh Vyas, CEO, CMIE.

The CMIE data showed that total employment in India stood at 406 million at the end of March quarter, which fell sharply to 320.6 million in the June quarter of fiscal 2020-21. However, most of this fall was recovered in the September quarter as employment rebounded to 394.9 million. The figures were still short of the level in the March 2020 quarter and of the year-ago quarter.

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"Employment in each month of the second quarter was higher than it was in its preceding month. The recovery was progressing. But it was progressing increasingly at a slower pace in each of these months. This is partly understandable because the initial gains can be large as self-employed persons got back to their trade when the economy opened up and desperation drove daily wage labourers to accept any form of employment even at lower wage rates. Soon these options were exhausted and the pace of recovery slowed down during the second quarter," said Vyas.

The first two months of the third quarter have witnessed decline in employment.  While half a million jobs were lost in October compared to the September estimate, employment fell significantly by 3.5 million in November. Cumulatively, employment has fallen by four million during these two months. At 393.6 million in November 2020, employment is still about 10 million short of what it was in the March 2020 quarter, the report noted.

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