Unemployment rate falls to 9.17% in June

India’s unemployment rate fell to 9.17% in June after a spike to 11.9% in May from 7.97% in April due to the second Covid wave.

According to the Centre for Monitoring Indian Economy (CMIE), in June 2021, urban unemployment rate fell, but still remained high at 10.07% compared with 14.73% in May. Rural unemployment rate in June stood at 8.75% from 10.63% in May.

April and May accounted for 22.7 million job losses, according to CMIE.

May 2021 was only the fourth month since at least January 2016 when overall unemployment rate breached the double-digit mark. Amidst country-wide lockdown, unemployment rate went past the mark during April, May and June last year.

The overall unemployment rate reached its peak of 23.52% in April last year, but started falling from the next month onwards. In May last year, country’s unemployment rate was 21.73%. In June last year, it was 10.18%.

Sources said that gradual withdrawal of partial lockdown amidst declining number of people getting affected are pushing workforce back into work, resulting in reduction in unemployment rate amidst a slight recovery in the labour force participation rate (LFPR). From 40.5% in the week ended May 16, LFPR stood at 39.6% in the week ended June 27. The average LFPR in 2019-20 was 42.7%.

LFPR is an age-specific proportion between persons either working or actively seeking work and the total population in working age group, usually 15 years and above. Unemployment rate is a ratio between persons who are not currently in job but are actively searching for one and the total labour force.

CMIE’s MD & CEO Mahesh Vyas wrote recently, “The employment rate was mostly over 37% between July 2020 and March 2021 with an average that was close to 38%. It fell to 36.8% in April and then sharply to 35.3% in May 2021. The first four weeks of June 2021 indicate a recovery that is still just short of 36%. This is a worryingly low ER.”