Joblessness in urban areas surges to 12%

India’s urban unemployment shot up to nearly 12% as states imposed lockdowns and curbs in cities and urban centres, underlining how a strained economy is finding it tough to accommodate people who are seeking employment.

Within a fortnight, the urban unemployment has reached 11.76% in the week ended May 9 from 9.55% in the week ended April 25, according to the Centre for Monitoring Indian Economy (CMIE). This is almost two percentage points more than the April monthly unemployment rate of 9.78%.

Similarly, the national unemployment rate climbed up to 8.67% in the week ended May 9 from 7.4% a fortnight ago. The rural unemployment during the same period also changed from 6.37% to 7.29%. Like urban, the national and rural unemployment recorded in the week ended May 9 is also higher than the April monthly joblessness, indicating that the unemployment is climbing up as the second wave of the pandemic continues unabated in the country.

Joblessness has been a prickly issue in India and the pandemic has stretched the labour market. Economists believe that the continued lockdowns will further strain the jobs environment as most cities have been witnessing restricted economic activities. They also argue that the increase in unemployment cannot only be attributed to lockdowns, but needs to be seen along with the overall economic scenario.

“The curbs and lockdowns this year is not like last year, but it’s quite well spread. The labour and employment market has a direct bearing on how our overall economy functions. Several brokerages and financial organisations have downgraded their GDP forecast for India, and the economic revival will depend on how fast we as a country manage to tame the pandemic,” said Sunil Kumar Sinha, principal economist at Indian Ratings and Research Pvt. Ltd, a part of Fitch Group.

Moody’s Investors Service on Tuesday joined other rating agencies in slashing its FY22 growth forecast for India to 9.3% from 13.7% estimated earlier, citing negative impact of the second wave.

Previously, Nomura downgraded projections of economic growth to 12.6% from 13.5% earlier for 2021-22, JP Morgan has revised GDP growth projection at 11% from 13%, and UBS sees 10% GDP growth, down from an earlier projection of 11.5% for 2021-22.

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 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. The urban trading setups like markets are almost non-functional and that’s why you see a heightened urban unemployment rate. But a relatively less rural unemployment does not mean that situation is better in rural pockets,” Sundar argued.