Unemployment rate in India surged to 8.32% in August, reversing any progress made in July. While the national unemployment rate in the month of August was at 8.32%, up from 6.95% in July, urban unemployment accelerated to nearly 10%, jumping 1.5 percentage points sequentially, according to monthly jobs data from the Centre for Monitoring Indian Economy (CMIE).
About 10 lakh jobs were lost in August, according to the private reasearch firm. The job losses were relatively low when compared with April when over 70 lakh jobs were lost amid the scond wave of Covid-19
According to CMIE, urban unemployment rate was 8.3% in July, 10.07% in June, 14.73% in May and 9.78% in April. Before the second wave of the covid-19 hit the country, urban unemployment was at 7.27%. Rural unemployment rate also rose 1.3 per cent to 7.64% from 6.34% in July, driven by low sowing activities agriculture sector in August.
While the employment rate declined, labour force participation rose marginally last month indicating that a larger pool of people are willing to get into the jobs market.
Note that the country has been witnessing a tough jobs environment for the last few years, with matters getting worse due to the pandemic. While economic activities are slowly coming back to normalcy, the job market has been struggling. Across India, eight states including Haryana and Rajasthan, continue to report a double-digit unemployment rate.
The unemployment rate hike in August comes after July saw some 15 million people joining the labour force, driven primarily by absorption of people in low productive agriculture works and the constriction sector. Job additions in July largely comprised poor-quality informal jobs and unless the economy recovers, these people now absorbed in agriculture work will find it tough to find alternatives, CMIE said last month.
By July-end this year, some 76.49 million people were employed in salaried jobs, lower than the 79.7 million people in June. Of the total salaried jobs lost, about 2.6 million are from urban India where the number of salaried people fell from 48.71 million in June to 46.15 million in July. However, the overall job loss rate in the country dropped to a four-month low of 6.95% compared to 9.17% in the month of June.
Meanwhile, India’s economy grew at a record pace of 20.1% in the April-June quarter of the current fiscal as the economy recovered from the second wave of the Covid pandemic while last year’s low base also helped. In the corresponding quarter of previous fiscal, India had posted the sharpest contraction on record of 24.4% due to a nationwide lockdown imposed to prevent the spread of Covid-19.
Since the April-June quarter of last year, the economy started recovering at a robust pace on the back of pent-up demand, but the second wave of the pandemic stalled the recovery process. The unlocking and government spending has helped revive the recovery.
