Unemployment rate in May unchanged at 23.5%: Data
The country’s unemployment rate remained unchanged at 23.5% in May 2020, despite easing of a nationwide lockdown, according to data from the Centre for Monitoring Indian Economy (CMIE). The number people looking for work has however increased significantly, the CMIE’s survey showed.
According to data from CMIE’s website, the rate of unemployment in urban India stood at 25.6%, higher than rural India’s 22.6%.
Not surprisingly, the country’s factory output, a key measure of economic activity, shrunk by 16.7%, data from the Central Statistics Office had shown on May 12, signalling that a widespread shutdown hit the economy hard.
But according to CMIE’s data, the lockdown’s relaxation seems to have impacted the labour participation rate, which indicates the percentage of all people of working age who are employed or are actively seeking work. “Evidently, people are coming back to the labour markets as the lockdown eases,” CMIE’s Mahesh Vyas said.
The labour force participation rate has bounced back up from its lowest level of 35.4% in the week ended April 26. In the next week ended May 3, it stood at 36.2%. It then shot up to 37.6% in the week ended May 10. In the latest week of May 17, it increased to 38.8%, indicating demand for work.
In any jobs survey, people with jobs are categorised as employed. People without jobs but looking for work are considered unemployed. However, the labour force participation rate is simply equal to people who are employed plus people who are not employed. In a rough-and-ready sense, the unemployment rate is then simply the number of unemployed divided by the total labour force times 100.
According to Vyas, on a weekly basis, the week ended May 24 recorded an unemployment rate of 24.3%. This is a shade higher than the 24.0% unemployment rate recorded in the preceding week.
“It appears that the unemployment rate is around the same level as it was in April. It is higher by a whisker. The small relaxations in the lockdown since April 20 have not had any positive impact on the unemployment rate, yet,” Vyas said.
According to data sourced from the CMIE’s unemployment tracker, unemployment was highest in Jharkhand at 59.2%, followed by Bihar at 46.2% and Delhi at 44.9%. The rate of joblessness was lowest in Uttarakhand at 8.0%, followed by Assam and Odisha, both at 9.6%.
When growth stumbles, vulnerable jobs without safety nets take the first hit. Unemployment then spreads to more secure setors.
Job losses in the consumer durables manufacturing sector has been huge, analysts say, leading to de-growth. “Discretionary segments such as household appliances, readymade garments and quick service restaurants (QSRs) will bear the brunt of the pandemic blow and see the steepest revenue declines under both scenarios as stretched working capital cycles will put a squeeze on liquidity and hurt profitability. These segments will also take the longest to recover post-lockdown, with discretionary spending taking up to a year to revive,” said Rahul Prithiani, director Crisil Research.