Another 7 million jobs lost in India amidst COVID-19 pandemic

The COVID-19 pandemic has plummeted the number of job vacancies, thereby, drastically increasing the rate of unemployment. As the second wave of pandemic ravages the country, close to seven million jobs have been lost in the month of April. India’s unemployment rate rose to nearly 8%, that is the highest in the last four months. With state administrations planning to extend lockdowns to curb a record surge in virus cases the outlook of any economic activity appears to be grim for the future as well.

CMIE Managing Director Mahesh explained via a telephonic conversation that “There is a fall in the jobs available. This could be due to the lockdowns…since the virus is still quite intense and we are stressed on the medical health-services front, it’s likely that the situation will remain tense in May as well.” 

As per reports the national unemployment rate in April jumped to 7.97% from 6.5% in March and 6.89% in February. The urban unemployment increased from 7.27% in March to 9.78% in April. With over 7 million (73.5 lakh) job losses in the last four months, the number of employees, both salaried and non-salaried, fell to 39.08 crore in April from 39.81 crore in March, for the straight third month.

On the other hand, coming to the employment rate, it fell to 36.79% in April from 37.56% in March, which is a four-month low. The number of people who were unemployed yet not actively looking for jobs has increased to 1.94 crore in April from 1.60 crore in March.

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The huge number of job losses is being attributed to a series of curbs, including lockdowns, being declared by state governments to keep in check the spread of the second wave of COVID-19 infections. Due to the closure of economic activities, numerous people working in various cities and towns have left for their homes and villages, like the migrant workers did last year when a countrywide lockdown was imposed. 

With the constantly increasing caseload and lockdowns, the path ahead for economic activities looks bleak. On Monday Barclays Bank Plc lowered its forecast by one percentage point to 10%, as “there is growing uncertainty around the number of cases and fatalities,” Rahul Bajoria (economist) wrote in a research note. “Slowing vaccinations are also hurting India’s recovery prospects.”

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A separate survey released by IHS Markit on Monday, showed the manufacturing sector was still losing jobs in April, though the rate of contraction was the weakest in the current 13-month sequence of job shedding. 

The CMIE data, which is tracked by economists closely in the absence of real-time employment data from the government shows joblessness is more acute in urban areas as laborers have or are returning to their villages as a result of economic activities which have come to a standstill. 

In April the labour-force participation rate, which includes the number of people with jobs and those seeking work, declined to just below 40%. “It’s a double whammy for the economy,” Vyas said. “Some people get disappointed and leave the labour market. The problem is the inability of the Indian economy to generate sufficient jobs for people who want them, so incomes are falling.”

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