The unemployment rate in India is likely to cross 10 per cent in May due to stricter restrictions across states amid the ongoing second Covid-19 wave. Employment in urban areas has taken a harder knock this month.

With the second wave of the Covid-19 pandemic far from over in India, states are likely to go slow on the process of unlocking key economic activity. The unemployment rate has surged sharply as a result. The unemployment rate in May is likely to rise further due to increased restrictions on mobility and economic activity.

Mumbai-based think tank Centre for Monitoring Indian Economy (CMIE) recently said that the 30-day moving average employment rate fell by 100 basis points on the week ended May 23. It denotes a loss of 10 million or one crore jobs.

Mahesh Vyas, CMIE CEO, said the unemployment rate has gone up to double-digits when India was hit by a stringent nationwide lockdown during April and May 2020. He, however, feels that even the local restrictions across states are taking a toll on the economy during the second wave.

Vyas went on to suggest that the employment rate may ease or worsen in the last week of May, but the overall impact will be seen in the job market for a longer period. He warned that there is going to be a substantial loss of employment this month.

IndiaToday  had earlier reported that in the week ended May 23, the unemployment rate across the country had reached over 14 per cent, higher than the rate reported for the entire month of April.


Mahesh Vyas said the unemployment rate in May could rise above 10 per cent, given the weekly rates in the current month.

“Gleaning the weekly rates during the current month, it seems that May 2021 could end with an unemployment rate of over 10 per cent,” Vyas said. It may be noted that if the unemployment rate ends in double-digits in May, it will be a first since April-June 2020 period.

He went on to say that the 30-day moving average for the unemployment rate on May 21 stood at 10.3 per cent, and it has gone up to 10.6 per cent by May 23. One of his concerns is the fact that the unemployment rate has been much higher than the rural unemployment rate this month.

“Urban unemployment entered the double-digit zone on May 6 when its 30-day moving average rate was 10.2 per cent. It has risen steadily since then. By May 20 it touched 12 per cent and as of May 23 it was 12.7 per cent,” Vyas said.

Another big reason behind the rising unemployment rate across the board in May is due to stagnant labour participation rate (LPR), CMIE said. The LPR in April stood at 39.98 per cent and by May 23, it increased marginally to 40.1 per cent.

The rising unemployment rate in May has a direct correlation to the lack of LPR growth, according to CMIE.

That, however, does not mean that the unemployment rate is rising just due to lower LPR growth. Vyas said that the loss of employment rare during May is also an indication that more people are losing jobs.


India today

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