India’s labour market showed surprising strength in the second week of June, restoring many jobs that were lost to the economic upheaval caused by the nationwide lockdown, and offering some substance to the hope that the worst may be over.
The national unemployment rate fell sharply to 11.63% in the week ended June 14 from 17.51% in the previous week, bringing the job loss rate closer to the levels prevailing before the lockdown, a survey by the Centre for Monitoring Indian Economy (CMIE) found.
The improvement comes as offices, shops and self-employment avenues reopened after the government lifted nearly all lockdown curbs after more than two months. The ongoing summer crop planting season and the rural job guarantee plan also provided employment opportunities to people in the villages.
Consequently, the rural job loss rate saw a steeper drop than the overall unemployment figures, CMIE said, declining to 10.96% in the week to June 14 from 17.71% in the previous week. That compares with the job loss rate of 8.29% in rural India and 8.41% nationally in the week to March 22, three days before the lockdown was implemented.
The urban unemployment rate at 13.1% is higher than both the rural and overall job loss rate, CMIE said.
Economists and job market experts, however, warned that the improvement is largely because of a growth in casual work and self-employment activities, and should not be interpreted as growth in formal sector jobs. Industrial activity has started picking up, but wage employment and a recovery in formal sector jobs will take a much longer time, they argued.
“The lockdown had wiped out the self-employment space, and when the unlocking has picked up, this category of people are going back to earn their livelihood, which is showing in this survey findings,” said Muralidharan Thyagarajan, chairman of TMI Group, a staffing company.
“If we analyse the available data points and the ground-level interactions with people and corporates, we can say non-wage work is coming back. At least 75% of people in the labour market are in non-wage work, earning a livelihood through self-employment, including agricultural work and casual jobs,” Thyagarajan said. “The decent formal sector jobs will take over a year to recover from the Covid-19 pain.”