Unemployment rate shoots up to 8% in April

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SME Times News Bureau | 13 May, 2021
As the severe second wave of Covid-19 and the resultant lockdowns bring economic activities to a halt, India's job scenario worsened in April 2021.

As per data published by the Centre for Monitoring Indian Economy (CMIE), India's unemployment rate rose 8 per cent in April, against 6.5 per cent in March.

"April 2021 turned out to be worse than expectations. We had expected labour participation rate to stabilise at its March 2021 level. The LPR had dropped sharply in March already after a modest fall in February. But, the LPR fell for a third consecutive month in April," CMIE's CEO Mahesh Vyas said.

It fell to 39.98 per cent -- the lowest LPR since May 2020, the month of a stringent nation-wide lockdown. The LPR in April 2021 is therefore the worst since the national lockdown, the CMIE said.

It attributed this fall is the result of the local lockdowns in several states. In Maharashtra, a state that imposed partial lockdowns, saw its LPR fall sharply from 44.2 per cent in March to 40.6 per cent in April.

The labour force shrank by 1.1 million in April 2021 to 424.6 million compared to 425.8 million in March. In spite of this smaller labour force looking for employment, a greater proportion failed to find employment.

The employment rate fell from 37.6 per cent in March to 36.8 per cent in April.

Vyas noted that the lockdowns could have denied people from seeking employment and caused a fall in labour participation, but, the economy also could not provide adequate jobs to those who sought jobs.

"So, the strain in the labour markets was not entirely because of the partial lockdowns. It was largely because the economy simply could not provide employment to large numbers who sought work," he added.

While the labour force shrank by 1.1 million in April, the count of the employed fell by a much larger 7.35 million, as per CMIE data.

It noted that salaried job losses were disproportionately located in rural India. While urban salaried jobs accounted for 58 per cent of total salaried jobs in 2019-20, they accounted for only 32 per cent of the job losses till April 2021.

Rural salaried jobs that accounted for 42 per cent of the total, on the other hand, accounted for 68 per cent of losses.