India’s unemployment rate has quickened to historic highs despite a fleeting sign of recovery, costing well over 114 million jobs, mostly of small traders and daily wagers, data from the Centre for Monitoring Indian Economy (CMIE) shows.
The country’s unemployment rate touched 27.1 per cent in the week ended May 3 - the highest ever - indicating a bloodbath in the wake of the coronavirus pandemic and the lockdown.
Not surprisingly, India’s factory output, a key measure of economic activity, shrunk by 16.7 per cent, data from the Central Statistics Office showed on May 12, signalling that a widespread shutdown had bit the economy hard.
The lockdown imposed on March 24 has shuttered shops, factories and services, such as tourism, eateries and public transport, devastating jobs. Millions of displaced migrant labourers continue to flee major cities for their home states, as they fight a survival battle.
Mounting unemployment will pile more pressure to ease pandemic restrictions, with Prime Minister Narendra Modi saying on May 12 that new lockdown rules would be announced on May 18.
“It (unemployment rate) seems to have risen because of a surge in the labour participation rate from 35.4% in the week of April 21 to 36.2% in the week ended May 3,” said the CMIE’s Mahesh Vyas.
In any job survey, people with jobs are categorised as employed. People without jobs but looking for work are considered unemployed. However, the labour force participation rate is simply equal to people who are employed plus people who are not employed.
In a rough-and-ready sense, the unemployment rate is then simply the number of unemployed divided by the total labour force times 100.
According to Vyas, the spike in the unemployment rate indicates that “this surge in job seekers was highly disappointed. They could not find jobs. Their addition to the labour force merely raised the unemployment rate”.
Manufacturing output shrank 20.6 per cent, electricity production dropped 6.8 per cent and mining remained flat, according to the official data released on May 12. The figures are likely to be revised as the lockdown has impacted data flow, the statistics ministry said.
