India’s unemployment rate rises further, employment rate lowest since June

As per CMIE, the 36.2% employment rate in the week of November 22 is the lowest employment rate since the recovery stagnated in late June 2020. It also marked the fourth consecutive fall in the rate since the week of October 25. The employment rat...

Agencies
In the first three weeks of November the employment rate has been sliding slowly and steadily. It stood at 37.5% in the first week, 37.4% in the second week and now 36.2% in the third week.
India’s unemployment rate stood at 7.8% for the week ended November 22 and the labour participation rate at 39.3% resulting in a sharp fall in employment rate at 36.24%. While this is a sign of weakening labour markets over the last four week, it also reflects the inability of the labour markets to absorb adequate proportions of the working age population during the festive season of 2020, the Centre for Monitoring Indian Economy said.

As per CMIE, the 36.2% employment rate in the week of November 22 is the lowest employment rate since the recovery stagnated in late June 2020. It also marked the fourth consecutive fall in the rate since the week of October 25. The employment rate stood at 37.38% in the week ended November 15.

“The deterioration of labour metrics in November is a signal again of the early exhaustion of the recovery process that began in late May this year,” it said. “The recovery is not complete. The employment rate never reached its pre-lockdown levels. And before reaching there, it has started to decline again”.


According to CMIE, the employment rate is the best measure of the health of the Indian economy as it measures the proportion of the working age population that are employed. The employment rate was 39.4% in 2019-20. It dropped to 27.2% in April and stood at 30.2% in May after which it rose to 37.8% in October.

In the first three weeks of November the employment rate has been sliding slowly and steadily. It stood at 37.5% in the first week, 37.4% in the second week and now 36.2% in the third week.

The CMIE weekly data analysis shows the unemployment rate of 7.8% for the week under consideration is much higher than the 5.5% unemployment rate pencilled in the preceding week or compared to any of the preceding four weeks when the unemployment rate hovered between 5.5% and 7.2%.
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“The sharp rise of the unemployment rate is against the trend seen since the recovery began. The trend has been one of falling unemployment rates with an occasional spike which happened during the first fortnight of October 10,” it said.

Talking about the labour participation rate, which touched a peak of 41.3% in the week ended October 25, before starting to slide, the CMIE said that an increasingly smaller proportion of the working age population is seeking employment.

“In absolute terms, the LPR translates into the labour force. If the LPR continues to fall sharply, the labour force shrinks,” it said, raising apprehensions that had stagnated in October could be falling in November which is worrisome. The average LPR in 2019-20 was 42.7%.

“It had never fallen below 42% till the lockdown. Now, it seems to be heading towards a sub-40% level,”it added. The LPR was 39.5% in the week ended November 15 and 39.3% in the week ended November 22.
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“The recovery seen in the increased economic activity till September or October is running out of steam. Labour statistics indicate a substantial slowing down of the economy in November,” CMIE said.

While CMIE hopes that a brisk beginning of the rabi sowing season will mean the agriculture sector will continue to perform well in the current fiscal year, it is apprehensive it will lead to a reverse migration of labour back to the farmlands.
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