Unemployment Rate Improves; Now Slightly Better Than Pre-COVID Levels

India's unemployment rate has been improving post the COVID-19 induced nationwide lockdown.

According to the Centre for Monitoring Indian Economy's (CMIE) data, the national unemployment rate has eased to 8.9 percent for the week ended 3 July, which is a significant improvement from 23.5 percent in May. However, it is slightly higher than 8.6 percent seen for the week ended 28 June.

"The data so far therefore seems to suggest that the worst is over and we are likely to settle at an unemployment rate which would be only slightly higher than the rates witnessed before the lockdown," CMIE said.

"It may be equally likely that the period of rapid recovery seen in June is also over," it added.

From 1 June, central and state governments permitted offices, factories and other commercial establishments to resume work with necessary sanitary measures, except in containment zones.

The Mumbai-based think tank's survey showed that the labour participation rate (LPR) fell by 0.62 percentage points in the last week of June and then by 0.92 percentage points in the first week of July, after rising for three consecutive weeks.

However, the employment rate stood at 36.9 percent for the week ended 5 July, an improvement over the 35.9 percent employment rate recorded in the month of June 2020. This goes to show that the unemployment rate rose despite job additions in the first week of July, indicating that the rapid improvement registered in June may be slowing down.

The CMIE Unemployment Survey has become the proxy for evaluating the state of the labour market in the country since its inception. The labour force consists of employed persons and persons who are unemployed but actively looking for jobs. The survey includes a sample size of 43,600 households per month disturbed well across urban and rural areas.