Joblessness is still far higher than what it was before the nationwide lockdown began on March 25.(HT File Photo)
Joblessness is still far higher than what it was before the nationwide lockdown began on March 25.(HT File Photo)

Urban job loss rate drops to 17.08% as of June 7

In rural India, where unemployment is still nearly 18%, demand for the rural job guarantee scheme will go up, according to economists.
Mint, New Delhi | By Prashant K. Nanda
PUBLISHED ON JUN 09, 2020 12:27 AM IST

The urban job loss rate dropped 8 percentage points in the first week of June from the preceding seven days, in a sharper-than-expected turnaround as the government lifted nearly all lockdown-related curbs, allowing factories and offices to reopen.

Urban unemployment fell to the lowest level since the lockdown was announced at 17.08% in the week to June 7 from 25.14% in the week ended May 31, according to data released by the Centre for the Monitoring of Indian Economy (CMIE). The rate is expected to decline as more economic activities such as hospitality sector open up.

The reduction in the number of jobless people in urban areas indicates the economy is slowly recovering from the government-imposed shutdowns to stem the spread of the coronavirus. But economists warn job gains are likely to be stubbornly slow and unevenly spread as many small businesses are either winding up or plan to cut jobs amid weak demand.

“The only reason why the numbers may have come down is because of the nature of the lockdown now. Moving from a massive nationwide closure to the opening of the economy must have created some opportunities—let’s say for a shop owner to go to his store, a street vendor going out with his vegetables or essential items to sale,” said Praveen Jha, professor of economics at the Centre for Economic Studies and Planning at Jawaharlal Nehru University. “I don’t think the economy or the employment space is making a ‘V-shaped’ recovery. At max, it will be a (more gradual) ‘U shaped’ recovery and (the economy) will take at least two years to be in a stable situation. And this only if we manage to control the Covid-19 pandemic within six months.”

To be sure, joblessness is still far higher than what it was before the nationwide lockdown began on March 25.

According to CMIE data, the urban unemployment rate is the lowest in 11 weeks. The previous low of 8.66% was recorded in the week to March 22, three days before the stringent lockdown. Between then and the week ended May 31, the urban unemployment rate has hovered between 30.93% and 21.45%.

The urban job loss rate comes close on the heels of a similar situation observed in rural India last week when unemployment dropped over seven percentage points, but remained largely unchanged this week.

Still, the urban job loss rate is now less than both the national (17.51%) and rural unemployment (17.71%) rates.

In rural India, where unemployment is still nearly 18%, demand for the rural job guarantee scheme will go up, economists said.

In addition, there will be disguised unemployment, or very low-paying employment, once the sowing season of new crops ends in a few weeks.

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