India- 10 million people lost jobs in May 2021

 The second wave of COVID-19 pandemic forced the states to impose restrictions

According to the Centre for Monitoring Indian Economy (CMIE), 10 million people have lost jobs in the month of May. The job scenario in India is set to worsen a great deal as the nation once again is faced with double-digit unemployment rate.

May 2021 is going to see unemployment rate in India deteriorate even with limited restrictions in place on account of the second wave of COVID-19 infection, much lenient in comparison to the nationwide lockdown seen during the first wave.

CMIE CEO Mahesh Vyas has said that “the only time the unemployment rate lurched into double-digits was when India was shut down by a stringent nationwide lockdown during April and May 2020.

There is no similarly draconian lockdown now although there are several local restrictions that restrain mobility in varying but distinctly milder degrees. The double-digit unemployment rate seen in recent times indicates that even these restrictions are taking a toll on the economy."

India will close May with double-digit unemployment rate, falling employment rate and substantial loss of employment, he cautioned.


In the weeks ended May 16 and May 23, unemployment rate had reached 14.5 % and 14.7 %, way higher than 8.7 % seen in the week ended May 8. "Gleaning the weekly rates during the current month, it seems that May 2021 could end with an unemployment rate of over 10 %," Vyas said.

Worryingly, unemployment rate has been growing in both urban as well as rural regions, as opposed to the usual trend where urban unemployment rate is much higher that the rural unemployment rate.

"Urban unemployment entered the double-digit zone on May 6 when its 30-day moving average rate was 10.2 %. It has risen steadily since then. By May 20 it touched 12 % and as of May 23 it was 12.7 %," Vyas said.

In contrast, rise in rural unemployment rate is a more recent phenomenon that began in May. "During April, the unemployment rate rose from 6.2 % as of April 1 to 7.1 per cent by May 1. Then, it fell to 6.7 % by May 7 before it began its steep rise. By May 23 it reached 9.7 %," Vyas wrote in his report.

This steady rise in unemployment across the board is likely to result in loss of employment during May. 

"If the unemployment rate were to rise along with an increase in the LPR, then it could be inferred that an increase in the unemployment rate is because there is an increase in the number of people who are seeking employment but are failing to find work. But, this is not the case. The LPR has not risen perceptibly," it further added.

The loss of employment is also evident in the steady fall in the employment rate during May 2021, Vyas stated. The employment rate was 36.8 % in April 2021, whereas the 30-day moving average employment rate on May 23 was 35.8 %. This 100 basis point fall in the employment rate translates into a fall in employment of the order of 10 million, he said.

Employment has been falling since January 2021 and has seen a 10 million decline between January and April 2021. May 2021 could see a similar fall, Vyas warned.

India's unemployment rate sharply rose to 7.11 % in 2020 from 5.27 % in 2019; the United States and Brazil showed higher unemployment rates in comparison to India.

India's unemployment rate rose to its highest level since 1991 during 2020 as coronavirus pandemic caused economy to come to a screeching halt, according to a study. The nation saw one of the toughest lockdowns in the world starting March last year as the pandemic claimed numerous lives, with stringent restrictions on mobility and economic activities across the board.

India's unemployment rate sharply rose to 7.11 % in 2020 from 5.27 % in 2019, said a report by Centre for Economic Data and Analysis (CEDA) based on the ILOSTAT database of International Labour Organisation. Going back, India saw its unemployment rate rise between 2008, when it was 5.36 % to 5.65 % in 2010. It maintained a downward trend between 2013 and 2019, when it came down from 5.67 % to 5.27 %.

The study also surveyed eight other countries, including Bangladesh, Pakistan, Sri Lanka, China, Russia, Brazil, United States, United Kingdom and Germany. India displayed the highest unemployment rate as compared to its closest neighbours, with China at 5 per cent, Bangladesh at 5.3 per cent, Pakistan at 4.65%  and Sri Lanka at 4.84 per cent.

India also registered higher unemployment rate compared to United States, United Kingdom and Germany between 2015 and 2019, the report said. However, the US had higher unemployment rate as compared to India in 2020 (8.31 %). United Kingdom and Germany had unemployment rates of 4.34 % and 4.31 %, respectively.

The only other nation after the US to display a higher unemployment rate than India was Brazil. The South American nation saw a substantial rise in unemployment between 2014 (6.66 %) and 2020 (13.67 %).

CSE (Centre for Sustainable Employment) of Azim Premji University, on April 16, 2019, has come out with its “State of Working India (SWI) 2019”, an analysis of the unemployment problem, with a potential formula to generate mass employment in the country.

A couple of the key findings are that 60 % of the educated youth in the 20-24 age group is unemployed and that the country's unemployed are mostly the higher educated and the young.

Among urban men, the 20-24 age group accounts for 13.5 %of the working age population, but 60 % of the unemployed. In addition to rising open unemployment among the higher educated, the less educated, mostly informal workers have also seen job losses and reduced work opportunities since 2016.

The data-analysts have pointed out that the data on women in urban areas show that graduates are 10 % of the working age population, but 34 % of the unemployed.

Youth today are much better educated than their parents. According to the 2015 Employment-Unemployment Survey of the Labour Bureau, workers with no formal education at all are now 12 % of the labour force. The enrolment rate for secondary education reached 90 % in 2015. The enrolment rate for higher education in the 18-23 age group rose to 26 %t in 2016 from 11 % in 2006.                                                                                              Rukhsana Manzoor Deputy Editor            

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