Unemployment in urban areas surges to 10-month high of 11.72% amid lockdowns

With state-specific lockdowns in place to curb the spread of second wave of coronavirus, urban unemployment in India has gone up to near 12%, the highest in more than 10 months.

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

At the national level, unemployment rate rose to 8.67% in the week ended May 9 from 7.4% in the week ended April 25. Rural unemployment during the same period also rose from 6.37% to 7.29%. Like urban, the latest figures are also higher for both rural and national level unemployment rates published for the month of April 2021, by CMIE.

Economists say unemployment rate may rise further in the coming weeks if the ongoing state-specific lockdowns continue. These lockdowns have affected employment in the unorganised sector. Baring some essential services, people engaged in other businesses are mostly unemployed due to the lockdown as demand for their services has come down.

Hindustan Times citing labour economist KR Shyam Sundar mentioned in a report that 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%, as per CMIE data.

“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,” the publication quoted Sundar as saying. He further mentioned that economic sentiment has a role to play in the jobs market.

“Besides, the urban informal sector and urban service support system have almost collapsed. Urban trading set-ups like markets are almost non-functional, 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 added.

Meanwhile, CMIE chief Mahesh Vyas, on their official website, has said, “The second wave of covid-19 has stalled economic recovery. Professional forecasting agencies have been scaling back their projections for the year. New investments that could create jobs in large numbers are unlikely to be made during the year”.