India’s unemployment rate back to pre-lockdown level in February

The Centre for Monitoring Indian Economy (CMIE) has said the country’s unemployment rate has fallen to 6.9% in February from 7.3% last July.
By: | March 9, 2021
Topics: India | Job Cuts | News | Recruitment

However, it also noted that the labour participation rate dropped marginally to 40.5% in February from 40.6% in January. Year-on-year, the rate fell 2.1 percentage points. 

The labour participation and employment rates continued to be low due to the exodus of workers from the labour market who face a lack of jobs, CMIE said.  

“The unemployment rate has recovered to its pre-lockdown levels. However, the recovery in the labour force participation rate and the employment rate remains significantly lower than their levels before the lockdown,” it said. 

The drop in the labour force participation rate means that “the proportion of working-age people who are employed or are unemployed and are actively seeking employment has declined”. 

Over the recent years, India’s employment rate has been falling continually. It decreased from 42.7% in 2016-17 to 41.6%, 40.1% and 39.4% in the following three years till 2019-20. In February this year, it fell even further to 37.7%.

“The slide in the employment rate continues. The rate has recovered from the steep fall earlier in fiscal 2020-21. But it has merely reverted to its trend of a steady fall that was established before the lockdown,” CMIE said. 

The centre also said the return of the unemployment rate to pre-lockdown levels should not be a cause for celebration as it is an indication more of a shrinking labour force than a drop in the number of people unemployed. 

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CMIE explained, “During July-February last fiscal, the unemployment rate of 7.6% was a ratio of the 33.2 million unemployed out of a labour force of 438.5 million. During July-February this fiscal, a similar unemployment rate of 7.3% is a ratio of 31.2 million unemployed out of a much smaller labour force of 426.3 million.

“The small fall in the unemployed we see does not imply that more people got employment. It means that the unemployed just stopped looking for jobs. It reflects an exodus of labour from the labour markets in the face of lack of jobs.”