New Delhi, June 12 (TIWN) As employment rate continues to worsen amid the second wave of Covid-19, the Centre for Monitoring Indian Economy (CMIE) has said that the Indian labour market is in its worst condition since April-May last year, when the whole country was under lockdown.

The unemployment rate that reached 11.9 per cent in May 2021, continued to rise into early June. The 30-day moving average unemployment rate as of June 6, 2021 was 13 per cent. The labour participation rate that had fallen to 40 per cent has fallen further to 39.7 per cent. And the most important labour market indicator, the employment rate which had fallen to 35.3 per cent in May, dropped to 34.6 per cent by June 6, 2021. The Indian labour market is in its worst condition since the nation-wide lockdown months of April and May 2020.  The last four weeks have seen a particularly sharp deterioration in labour market conditions. The downturn began in the week ended May 16. During this week, the labour participation rate was at 40.5 per cent which was higher by a whisker than the average 40.4 per cent rate around which this ratio has been hovering for several months since the 2020 lockdown. But, the unemployment rate shot up suddenly to 14.5 per cent after remaining stable for several weeks at around 8 per cent. This implies that during this week of May 16, a number of people lost employment suddenly and they continued to look for jobs, albeit unsuccessfully.  In the next week that ended on May 23, the situation got worse with the unemployment rate shooting up to 14.7 per cent. This happened even as the labour participation rate declined to 39.4 per cent. The exceptionally high unemployment rate of the previous week apparently seriously discouraged labour from looking for work. They retreated and brought the labour participation rate down. The result of low labour participation and high unemployment was the lowest employment rate in nearly a year. It fell to 33.6 per cent. This was the lowest since the week of June 7, 2020.  There was a recovery of sorts in the week of May 30. The unemployment rate fell sharply to 12.2 per cent from its recent peak of 14.7 per cent in the previous week. But, labour continued to reel under the effect of the previous week’s high unemployment rate. Their disappointment with the high unemployment rate is seen in the continued fall in the labour participation rate. This fell to just below 39 per cent from 39.4 per cent in the previous week. 

The feeling of being discouraged is understandable because the unemployment rate inched up again in the week ended June 6 when it ended at 13.6 per cent. Labour participation rates have been decidedly under 40 per cent.

The average over the three weeks ended June 6 was 39.2 per cent. This consistent fall in the labour participation rate is a matter of concern.  Low and falling labour participation rate and high unemployment rate imply a fall in the employment rate and a fall in absolute employment. The employment rate fell from 36.8 per cent in April 2021 to 35.3 per cent in May 2021. This translated into a loss of 15.3 million jobs. As mentioned earlier, this fell to 34.6 per cent measured by the 30-day moving average on June 6. During the week ended June 6, it was much worse at 33.9 per cent. This implies a further loss of jobs.