According to data published by the Centre for Monitoring Indian Economy (CMIE), over 15 million people have lost their jobs in the month of May. The worst hit were the urban area people where joblessness rate rose to 18% in the week ending May 30.
The Indian economy has witnessed an economic blow due to this pandemic. The number of youth getting attracted to entrepreneurship and start-ups have increased in the past years but due to this pandemic many start-ups and other businesses have collapsed. Especially the manufacturing and service sector has taken a huge blow.
Mahesh Vyas, MD and CEO of CMIE, mentioned on its website, “Employment fell from 390.8 million in April 2021 to 375.5 million in May 2021. This translates into a loss of 15.3 million jobs or a 3.9% fall in employment in the month”.
Vyas further mentioned, “May 2021 is also the fourth consecutive month of a fall in employment. The cumulative fall in employment since January 2021 is 25.3 million. Employment in January 2021 was 400.7 million. This has dropped to 375.5 million. They account for 22.7 million of the 25.3 million job losses in the past four months. This is the period of the severe second wave of Covid-19. During these two months, India witnessed lockdowns of varying degrees for different durations in different regions. It was a period of substantial disruption in economic activities which was bound to reflect in employment.”
He added, “If we adjust for inflation, we find that 97 percent of the households in the country have witnessed a decline in incomes during the pandemic,” he pointed out. The labour participation rate, or the percentage of the working age population which is in the market, has come down to 40 per cent as of now from the pre-pandemic levels of 42.5 percent”.
He explained on the website, ”CMIE has completed a nation-wide survey of 1.75 lakh households in April which throws up worrying trends on income generation during the last one year — which has witnessed two waves of the pandemic. Only 3 percent of those polled said they have witnessed an increase in incomes, while 55 per cent said their incomes have declined, he said. An additional 42 per cent of the people said their incomes remained the same as that in the year-ago period.”
“The double-digit unemployment rate seen in recent times indicates that even these restrictions are taking a toll on the economy,” said Vyas.
The main reason behind this unemployment rise is the difference between the number of jobs created versus the number of jobs required. The gap has been further widened due to adverse effects of COVID-19 pandemic on the Indian Economy which further has led to harsh pay cuts and layoffs.
The rural unemployment rate was 9.6% in the last week of May, lower than the 13.5% in its third week. The central government MGNREGA Scheme gave massive support to employment in rural India. Due to this scheme 341 million people were employed during April, which was the highest since July 2020.