Unemployment rate down, falls to 9.19% in June from 11.9% in May: CMIE

The unemployment rate fell in June to 9.19% compared to 11.9% in May as economic activity picked up pace across India and is likely to be back to its earlier levels of 6-7%, the Centre for Monitoring Indian Economy said. However, the labour participation rate and the employment rate in the country continues to be much lower than the pre-Covid levels.

As per the CMIE data, while the urban unemployment fell sharply in June at 10.07% compared to 14.73% in May, the rural unemployment rate was lower at 8.75% in June as against 10.63% in May.

“India’s problem is less with the unemployment rate and much more with the labour participation rate (LPR) and the employment rate (ER). The lasting impact of Covid is a much smaller worker participation rate in India,” CMIE said in its weekly analysis.

According to CMIE, the average LPR in 2019-20 was 42.7% but fell to a low of 35.6% in April 2020 before recovering to 41% per cent August 2020. “So the LPR has lost and never recovered about 1.7 percentage points from its pre-Covid 19 levels. In April-May 2021 it averaged at 40% and we expect it to end at the same level in June 2021,” it said.

Even the employment rate is much lower than its pre-Covid levels. As per the CMIE data, it stood at 39.5% in 2019-20but fell to 27% in April 2020. Though it recovered to 38% in September 2020 but the gap with pre-Covid levels remained in excess of 1.5 percentage points.

According to CMIE, the second wave has increased this gap substantially. The average ER in April-May 2021 was 36% and it is likely to remain at that level in June 2021 as well. “This would imply that at the end of the second wave, the ER would be 3.5 percentage points lower than it was in the pre-Covid days,” it said, adding that though the gap may reduce in the coming months but ER will continue to be much lower than in the pre-Covid times.

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