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Unemployment rate falls rapidly in June: CMIE data – Times of India

A man sprays disinfectant at Vikasa Soudha in Bengaluru after a staffer tested positive for Covid, on Tuesday.

NEW DELHI: The country’s unemployment rate has fallen dramatically in June as more people return to work. The labour participation rate has also significantly improved after the easing of lockdown restrictions.
“After clocking 23.5% in April and May, the unemployment rate first dropped to 17.5% in the first week of June and then took a steeper fall to 11.6% in the second week. This fall is almost as dramatic as the rise in unemployment when the lockdown began,” said Mahesh Vyas, managing director and CEO of private economic thinktank CMIE, on Tuesday.
He said the labour participation rate (LPR) was 40.4% in the week ended June 14. The rate had fallen from 42.6% in the week ended March 22, which was just before the lockdown, to 39.2% in the first week of the lockdown and further to 36.1% in the first week of April. It continued falling till the week ended April 26 when it reached its lowest level of 35.4%, according to Vyas.
The LPR– which is the measure of working population—has been recovering since the last week of April. At 40.4% in the week of June 14 it was not too far from its pre-lockdown level of around 42.7%.
“What is encouraging is the smart recovery from around 36% in early May. An increase in the LPR along with a fall in the unemployment rate implies an increase in the employment rate. An increase in the employment rate, is the desired outcome. It, in fact, is a far more important indicator of the health of the economy than the unemployment rate,” said Vyas.
The strict lockdown imposed in late March had stalled economic activity and hurt several key sectors. April saw a sharp rise in unemployment as several firms recorded job losses. There was a massive outflow of migrant workers from cities as they returned home to their villages and other towns.
Vyas said much of the labour participation that was lost during the lockdown has been regained but, the gain in employment has been lesser. This is because the unemployment rate is still too high. The labour participation rate in the week ended June 14 was 94.7% of its level in the week just before the lockdown, which is the week of March 22. However, the employment rate during the week ended June 14 was only 91.4% of its pre-lockdown level, he added.
“The return of labour to participate in the economy and the simultaneous fall in the unemployment rate suggest that the lockdown is being lifted effectively across the country. People are getting back to work. The worst seems to be over. It is very likely that the recovery is mostly among the informal, self-employed workers who cannot afford to be away from work for too long,” said Vyas.

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