Sudden Lockdowns In Areas Make Recovery In Employment Difficult: CMIE Data

The unexpected imposition and relaxation of the lockdown to fight COVID-19 in parts of India is making a recovery in employment rate difficult, the Centre for Monitoring Indian Economy said on July 14.

"Data of the first two weeks of July suggest that the recovery has stopped progressing beyond its level of the last two weeks of June," the Mumbai-based think tank said.

"It is possible that July may see very little gain in terms of jobs returning," it said, adding that there will be a limit to the immediate recovery that was seen in June as the lockdown has a long-term effect.

The week ended July 12 was the third consecutive week to record a decline in labour participation rate which stood at 40.4% after falling from 42% in the week ended June 21. "This is debilitating. From an economic growth point of view it is important that the labour participation rate does not fall," the data showed.

The drop in the labour participation rate was, however, made up by a sharp decline in the unemployment rate in the week ended July 12, to 7.4%. This helped in a small recovery in the employment rate which rose from 36.9% in the week ended July 5 to 37.4% per cent in the week ended July 12.

CMIE said that the main challenge is in urban India where the labour participation rate has dropped to 37%by the week ended July 12, taking over all the gains made in improving the labour participation rate in June in urban India.

However, the urban unemployment rate also fell significantly to 9.9%, thus helping improve the employment rate from 33.2% in the week ended July 5 to 33.3% in the week ended July 12. "That is too small a gain to repose much faith in," CMIE Data showed.

Rural India has performed better with rural labour participation rate rising marginally from 42% to 42.1% in the first two weeks of July. The unemployment rate fell from 7.8% to 6.3% in rural India showing improvement in the employment rate from 38.7% to 39.4%.

"At this level it is still shy of its pre-lockdown period. But, the overall recovery has been impressive," it said, adding that the aggressive spending on MGNREGS by the government and brisk sowing activities for the kharif crop has helped keep rural India better employed. "However, the reluctant recovery of labour markets in urban India is an indication of the limits of the current recovery," CMIE stated.

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