8 mn people regained jobs in June as states relaxed curbs

By the end of June, the number of people employed in salaried and non-salaried jobs in India went up to 383.28 million up from 375.48 million recorded in May, according to fresh data from the Centre for Monitoring Indian Economy (CMIE).

There are several inherent pain points in the labour market even after the second wave of the pandemic. However, the silver lining is that the national unemployment rate fell to 9.17% by end of June from 11.9% in May, and urban joblessness dropped to 10.07%, down by 4.66 percentage points compared with May.

However, the national unemployment rate and urban unemployment rate in June this year is still the highest since June 2020 with the exception of only May 2021.

Experts and economists contended that the job market is still stretched and the recovery in June is because of the reopening of informal businesses in urban India and picking up of activities in mining, real estate, and segments of the manufacturing sector.

The pain in the job market seems to have lasted long with both the size of the labour market and the labour force participation rate (LFPR), a key indicator of the labour market’s health, remaining much lower than pre-covid-19 levels.

Besides, LFPR and the employment rate (ER) are still low. The low LFPR or LPR (labour participation rate) and ER show that the system weakness in the market and the lack of decent jobs are keeping people away from the labour market.

“The average LPR in 2019-20 was 42.7%. It fell to 35.6% in April 2020 and recovered to touch 41% in August 2020. However, it never crossed 41% after the first covid-19 wave. 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%… with this India has not recovered its pre-covid LPR levels,” the CMIE said on its website.

The June LPR was 39.57%, the lowest in 13 months, according to fresh data. The last time labour participation rate was lower than this was in May 2020 when it had dropped to 38.57% amid a national lockdown imposed to contain the spread of coronavirus.

“The impact on the employment rate (ER) follows…The ER continues to remain lower than in pre-covid times. In 2019-20, ER was 39.5%. This fell to 27% in April 2020 and was at 30% in May 2020. The recovery helped it touch 38% in September 2020. However, the gap with pre-covid levels remained in excess of 1.5 percentage points,” CMIE said. The second wave has widened this gap substantially, it said.

“Low LFPR and relatively low ER are not good indications and shows that people are staying away from work even when situation has improved somewhat on the coronavirus front because of lack of decent opportunities,” said Arup Mitra, a professor of economics at Institute of Economic Growth in New Delhi.

While the national and urban unemployment rates have fallen in June, several states and Union territories are still showing a very high joblessness rate. According to CMIE data, unemployment rate in June was at 27.9% in Haryana, 26.2% in Rajasthan and 22.1% in West Bengal.