According to the Centre for Monitoring Indian Economy’s (CMIE) latest weekly report, India’s unemployment rate fell to 7.4% for the week ended July 12, from 8.9% in the previous week and a high of 23.5% in May, The CMIE, however, termed as ‘debilitating’ the fall in labour participation rate that stood at 40.4% for the week ended July 12 from its recent peak of 42% in the week ended June 21. In the whole of 2019-20, the average labour participation rate was 42.7%.
The number of employed people in the country in June stood at 37.3 crore, as per the CMIE data, while those looking for jobs are 46.1 crore. The country’s employment rate in June was recorded at 35.9 per cent. The unemployment rate in urban areas for the month stood at 12.02 per cent, while it was recorded at 10.52 per cent in rural areas. Haryana has the highest unemployment rate of 33.6 per cent, followed by Tripura at 21.3 per cent and Jharkhand at 21 per cent.
Lockdown after the Covid-1 outbreak in India has caused severe unemployment. The lockdown came into force on March 25, initially for three weeks then extended to May 17. Some curbs were eased on April 20, but many commercial activities and all public transport remain suspended. Notably, India’s unemployment rate was recorded at the highest since January when it came to be at 25.52 per cent in April. According to CMIE, around 12.2 crore workers lost their jobs in April, most of them small traders and daily wage earners. They lost their jobs in April as economic activity all but ceased after the new coronavirus pandemic forced a nationwide lockdown. The month of May also saw the unemployment rate of 23.48 per cent as most of the economic activity remained subdued. The employment rate in March was recorded at 8.75 per cent, while it remained 7.22 per cent and 7.76 per cent in January and February.
The problem is that post lockdown loss of jobs has affected mostly the poor and vulnerable labour force and households. Crisil Research had said in an April 30 note: “This deep slowdown and across the board pain leaves large swathes of India’s informal workforce vulnerable, particularly in the construction, manufacturing and services sectors,”. “The most affected are daily-wage earners and those with no job security.” In the same vein Sunil Kumar Sinha, principal economist at India Ratings and Research said, “The informal economy runs on a daily basis, so the real brunt [of the lockdown] has to be faced by the people such as rickshaw pullers and construction workers. They are the worst hit.” About 90% of India’s 500-million strong workforce toils in unregulated businesses and jobs, part of a vast informal economy.
There have been intermittent signs of improvement in the unemployment scenario during the lockdown as well, but they were only transitory and cannot be taken as a trend. CMIE data showed in its weekly report that the unemployment rate in India fell to its pre-lockdown level of 8.5% in the week ended June 21 from the peak rate of 23.5% in April and May after the nationwide lockdown was imposed resulting in job losses for millions of workers. Even this transitory sign of improvement showed uneven recovery of employment in the urban and rural areas. The urban unemployment continued to be higher than pre-Covid levels while the rural unemployment came down significantly, showing the efficacy of programmes like Mgnrega and beginning of Kharif sowing across the country.
Apart from increase in unemployment in the informal sector, there are reports of pay cuts in the organized private sector or even retrenchment, but the right estimate of these are yet to come. Recently the Delhi Metro announced a pay cut and a unit of Atlas Cycle closed down. Particularly disturbing is the Atlas like closures. The government says it does enough but Atlas closed down for its inability to garner a small amount. Atlas Cycles is a name that became a synonym for bicycles in India, but government could not reach it. It has shut its last manufacturing unit in Sahibabad, just outside the national capital, citing lack of funds to run the factory. The company shut the factory on June 3, which ironically was also happened to be the World Bicycle Day. It laid off its 431 remaining employees, though Rana insists they continue to be on the roll of the company and will be paid “lay-off wages” upon marking attendance daily. There are many such episodes at smaller levels, but they are less known. India could be great only if it gives productive employment to all its work force. But rather than doing this, the official data on unemployment has stopped coming from the official sources.
Its CEO, N.P. Singh Rana, however, insists that the shutdown is only temporary, and the company will resume operations once it is able to raise around Rs 50 crore by selling surplus land.
While he did not elaborate on the payment to employees, “lay-off wages” typically equal to 50 per cent of basic salary and dearness allowance.
The plant, the biggest in the country, started in 1989. It was the last operational plant of the Atlas cycle with a monthly production of over two lakh bicycles.