Joblessness in urban areas surges to 12%

NEW DELHI: Urban unemployment in India is nearing 12%, the highest in more than 10 months, as the resurgence of the coronavirus and accompanying restrictions wipe out millions of jobs.

Urban unemployment touched 11.72% in the week to May 9 from 9.55% in the week ended April 25, Centre for Monitoring Indian Economy (CMIE) data showed. This is almost two percentage points more than the April monthly figure of 9.78%.

Similarly, the national unemployment rate rose to 8.67% in the week ended May 9 from 7.4% a fortnight ago. Rural unemployment during the same period also rose from 6.37% to 7.29%. Like urban, the national and rural unemployment rates for the latest period are higher than the April monthly jobless rate.

Economists believe continued lockdowns in cities will further put pressure on the job market as they restrict economic activity. They also argue that the increase in unemployment can be attributed not just to lockdowns, but needs to be seen along with the overall economic scenario.

“The curbs and lockdowns this year are not like last year, but they’re quite well-spread. The labour and employment market has a direct correlation on how our overall economy functions. Several brokerage and financial organizations have downgraded the GDP forecast, and the economic revival will depend on how fast we as a country manage to tame the coronavirus pandemic,” said Sunil Kumar Sinha, principal economist at Indian Ratings and Research Pvt. Ltd, part of the Fitch Group.

Labour economist KR Shyam Sundar said 2020 was worse because of the national lockdown and closure of all economic activities, but a 12% unemployment rate without a national lockdown is worrisome. During the same period last year, the national unemployment rate was almost 24% in the week ended May 10, 2020, and the urban unemployment last year during the same period was 27.83%, CMIE data shows.

Sundar said while economic sentiment has a role in the jobs market, “an aggregated micro lockdown by states is equal to a quasi-national lockdown, and it’s the casual, the temporary, contractual and gig workers in a formal set-up who are falling victim to job cuts”.

“Besides, the urban informal sector and urban service support system have almost collapsed. Urban trading set-ups like markets are almost nonfunctional, and that’s why you see a heightened urban unemployment rate. But relatively less rural unemployment does not mean that the situation is better in rural pockets. Rural India is witnessing an intensification of underemployment, low productivity and income loss,” Sundar said.