Unemployment rate could touch double-digit mark in May: CMIE

India’s unemployment rate could be over 10% with an estimated 10 million job losses in May, much higher than April, despite milder degree of restrictions due to local lockdowns, the Centre for Monitoring Indian Economy said. The unemployment rate stood at 7.97% in April while the fall in employment in April was 7.35 million.

“We still have a week to go before the month closes. May 2021 will end with a double-digit unemployment rate, falling employment rate and substantial loss of employment,” CMIE said in its weekly analysis.

According to CMIE, 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,” it said.


“The double-digit unemployment rate seen in recent times indicates that even these restrictions are taking a toll on the economy,” it added.

As per CMIE, the high degree of unemployment rate in May could be on the back of higher number of job losses in the month as the labour participation rate has remained unchanged.

“The steady and substantial rise in the unemployment rate in May 2021 is likely to be the result of loss of employment during the month, i.e. some people who had employment already are losing it. We say this because there is no increase in the labour participation rate that could have also caused an increase in the unemployment rate,” it said.

CMIE data shows the unemployment rate was higher at 14.7% for the week ended May 23 compared to 14.5% in the week ended May 16, 2021 and 8.7% in the week ended May 9.

CMIE further said the 100 basis point fall in employment rate from 36.8% in April to 35.8% on May 23 would translate into a fall in employment of the order of 10 million. “This would be much more than the 7.35 million fall in employment recorded in April 2021,” it said, adding employment has been falling since January 2021.

As per CMIE, the unemployment rate has been rising in both rural and urban regions. While the urban unemployment rate stood at 12.7% on May 23 the rural unemployment rate was 9.7% compared to 7.1% on May 1.

“Given that the average unemployment rate in rural India has been around 6% in recent years and the monthly unemployment rate touched 8%rarely in rural India before the lockdown, this 9.7% rate is rather high. It warrants a greater deployment of the MGNREGS,” it suggested.