Livelihoods: India’s unemployment rate rose to nearly eight percent—the highest in four months—with at least 7.35 million job losses in April 2021. According to data from the Centre for Monitoring Indian Economy (CMIE), the number of employees—salaried and non-salaried—fell from 398.14 million in March 2021 to 390.79 million in April 2021.
The number of employed people was 400.7 million in January 2021 while the unemployment rate that month was 6.52 percent.
In rural India, a record 2.84 million salaried people lost their jobs in April 2021, reducing the number of salaried people in rural pockets from 30.72 million in March 2021 to 27.87 million in April 2021. This is the third consecutive month of job losses.
Job losses are being attributed to curbs announced to contain the second wave of COVID-19 such as lockdowns by state governments. This has motivated several people to move back to their home towns and villages.
For the salaried class in the rural belt, job losses have been almost four-and-a half times more than its counterpart in urban areas. This will adversely impact rural consumption and economic recovery, and push the middle class into poverty. The four key implications of this will be observed in spending, healthcare, poverty alleviation, and middle class well-being.
“The fall in the number of people employed is massive and it encompasses regular salaried workers, casual workers and self-employed. There are three problems now in the labour market—fall in the number of employed people, fall in labour force participation and the rise in people unemployed yet not looking for jobs. It’s a critical situation,” explained Arup Mitra, a professor of economics at the Institute of Economic Growth, Delhi University
April 2021 has seen a decline in the rate of labour force participation. Employment rates fell from 37.56 percent to 36.79 percent, which is a four-month low, and the number of people who were unemployed and yet not actively looking for jobs increased from 15.99 million in March 2021 to 19.43 million in April 2021.
“The increasing number of unemployed people not actively looking for jobs suggests people have withdrawn from the labour market; one, the infection has now spread to rural India; and, two, due to closures, there are not enough jobs available. Look at formal sectors like retail, hospitality, tourism and travel industries, and look at informal and semi-formal segments workers who were in household jobs, office support systems, etc. They have gone down significantly in April,” Mitra added.
The effect of the pandemic on the job market and economic activity is much more severe this year, especially in rural areas. Experts say that the government should take the necessary steps to provide financial support and provide jobs through employment schemes such as NREGA.
Read this article to understand how the Union Budget fails to address the problem of rural employment.