April unemployment rate up amid COVID-19 curbs

As India battles the second wave of coronavirus cases and states impose restrictions to curb the spread of infections, the unemployment rate inched up in April and is likely to close the month at a higher rate than March, as per think-tank Centre for Monitoring Indian Economy (CMIE).

"Fast frequency labour statistics indicate that labour market conditions have been deteriorating in April 2021. This is evident from the daily 30-day moving average estimates and the weekly estimates of three major labour market ratios during the month. The three ratios are the labour participation rate (LPR), the employment rate and the unemployment rate," CMIE Managing Director Mahesh Vyas said in an article.

In the last week of March (ended 28), the unemployment rate was 6.7 per cent, which shot up to 8.2 per cent in the following week, ended April 4. It inched up to 8.6 per cent in the week ended April 11 and is likely to close the month at 8 per cent after closing March at 6.5 per cent, Vyas said.

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Similarly, LPR, a measure of people seeking work, looks unlikely to fall in April. The 30-day moving average LPR indicates that the ratio was rising till April 15 when it peaked at 40.8 per cent. It started falling then but is unlikely to fall to a level lower than that of March 2021. "This is because the fall in LPR in March was quite steep. It seems likely that the ratio would stabilise at the fallen level and not recover in April," CMIE said.

From 40.5-40.6 per cent range during December-February, LPR fell to 40.2 per cent in March. "The 30-day moving average as of April 25 was 40.3 per cent. But this includes the last week of March and also the week ended April 4 which had an LPR of 41.2 per cent. The subsequent three weeks those ended April 11, 18 and 25 show an average LPR of about 40.1 per cent," the think-tank said, adding that unless there is an unusual bounce in the last week, the April LPR is likely to stabilise at its March level of 40.2 per cent.

Regarding the employment rate, the article stated that April could be the third consecutive month of deterioration in terms of the most important fast-frequency labour statistic. The employment rate reached its highest post-lockdown level of 37.97 per cent in September 2020. However, it fell for three consecutive months before climbing back to 37.94 per cent in January 2020.

"Then, it declined in February and March. Now, it looks like it will fall in April as well, to a sub-37 per cent level. The inability of the labour markets to absorb labour at a steady 40.2 per cent translates into a lower employment rate," CMIE said.

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As of March 2021, there were 43.8 million people in India who were unemployed and were willing to work. This number will have gone up in April as the LPR is seen as stable and the unemployment rate is rising.

Of these nearly 44 million people, nearly 28 million were actively looking for work and were unable to find any, while the remaining 16 million were available for work, but were not actively looking for work, it said. Of the 44 million people, 38 million are between 15 and 29 years of age, while around 22 million are in their early twenties.

"April 2021 has seen sharply rising Covid-cases, severe shortages in the health services, rising deaths and also rising unemployment. It is facile to say that it is not as bad as April 2020. India was adrift this April," the article concluded.

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