Over 1.5 million people from both the formal and informal sectors lost their jobs in August, reversing some of the gains made in July, as the unemployment rate rose in rural and urban India.
According to the Centre for Monitoring Indian Economy (CMIE), the number of the employed fell from 399.38 million in July to 397.78 million in August, with nearly 1.3 million job losses in rural India alone.
According to CMIE, the national unemployment rate rose from 6.95% in July to 8.32% last month.
Urban unemployment rose 1.5 percentage points to 9.78% in August. It was at 8.3% in July, 10.07% in June, 14.73% in May and 9.78% in April. In March, just before the second wave of Covid infections hit India, the urban unemployment rate was at 7.27%.
Rural unemployment rose 1.3 percentage points to 7.64% in August against 6.34% in July, primarily driven by low sowing during the kharif season. While the employment rate fell, the labour force participation rate climbed marginally in August, indicating that a larger pool of people were willing to get into the job market. The monthly CMIE data showed 36 million people were actively looking for work, compared to around 30 million in July.
The total labour force size also rose to 433.86 million—almost four million more than July—reflecting a worsening trend. In fact, the labour force size in August was almost the same as in March 2020, just before the pandemic-induced nationwide lockdown, which led to muted economic activity, closure of firms and a shrinking employment market in April.
India has been witnessing a tough jobs environment for the last few years. Though economic activity is gradually returning to normal, the job market is struggling. Across India, at least eight states are still reporting double-digit unemployment rates.
The rise in unemployment in August comes after July witnessed nearly 15 million people joining the labour force primarily in low-productive agriculture work when the monsoon-led sowing season was at its peak. Job additions in July mostly comprised poor-quality informal jobs, and unless the economy recovers these people absorbed in agriculture work will find it tough to find alternatives, CMIE said last month.
“The labour market struggle will continue for a few more months at least. Unless the formal sectors show great promise, recovery of good quality jobs will take time. Economy is slowly recovering, at least the FY21 first quarter GDP data shows, but it’s on a low base. With the festive season, you will see some uptick in coming months, but a decent jobs recovery will depend on the economy, market demand and if we can manage to stop third wave of the pandemic,” K.R. Shyam Sundar, a labour economist, said.
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