India- 10 million people lost jobs in May 2021
The second wave of COVID-19 pandemic forced the states to impose restrictions
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 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.
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.
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