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India’s unemployment rate recovers to pre-Covid level of 6.9% in February: CMIE

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India’s unemployment rate in February stood at 6.9 per cent, much lower than 7.8 per cent clocked in February 2020, suggesting the unemployment rate has recovered to pre-Covid levels. However, the rate of labour participation and employment rate last month continued to be low, reflecting an exodus of labour from the labour markets in the face of lack of jobs, the Centre for Monitoring Indian Economy said.

“The unemployment rate has recovered to its pre-lockdown levels. However, recovery in the labour force participation rate and the employment rate remain significantly lower than their levels before the lockdown,” CMIE said in its weekly analysis on Thursday.

CMIE data shows the labour participation rate was 40.5 per cent in February 2021, slightly lower than the 40.6 per cent recorded in January 2021 and 42.6 per cent in February 2020. “This means that the proportion of working age people who are employed or are unemployed and are actively seeking employment has declined,” CMIE said.

“The return of the unemployment rate to pre-lockdown times is not worth celebrating because it is more a reflection of a shrinking labour force than a decline in the count of the unemployed.”

— CMIE

India’s employment rate dropped to 37.7 per cent in February compared to 39.4 per cent in 2019-20. “The slide in the employment rate over the last three years continues. The rate has recovered from the steep fall earlier in fiscal 2020-21. But it has merely reverted to its trend of a steady fall that was established before the lockdown,” it said.

According to CMIE, the return of the unemployment rate to pre-lockdown times is not worth celebrating because it is more a reflection of a shrinking labour force than a decline in the count of the unemployed.

CMIE further said that the count of the employed has declined quite sharply in the period. During July-February of the previous fiscal, on average, 405.3 million persons were employed. In comparison, during the corresponding period of the current year, 395.2 million persons were employed. This implies over 10 million less jobs this year than the previous year, it said.

“So, the post-lockdown period is characterised by a 2.5 per cent fall in employment and 6.2 per cent fall in the count of the unemployed. This translates into a 2.8 per cent contraction of the labour force,” it added.



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