India's Unemployment Rate Rises to 23%: CMIE

The unemployment rate in March was 8.7 per cent, highest in 43 months said CMIE CEO

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Post the countrywide lockdown announced on 25 March, the overall unemployment rate in India may have spiked to 23 per cent, suggests Centre for Monitoring Indian Economy (CMIE) data.

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The unemployment rate had started to rise in early March, oscillating between 7 and 8.7 per cent and rose sharply in last week of March and first week April post the lockdown announcement, CMIE data showed. “The unemployment rate in March was 8.7 per cent. This is the highest unemployment rate in 43 months…The rate has climbed rather steeply from the 7.16 per cent level of January 2020,” said Mahesh Vyas, MD and CEO, CMIE in an article published on the website.

The 98 basis point increase in March 2020 over the previous month is the largest monthly increase recorded, Vyas added.

The unemployment rate is determined by three factors, all of which must be satisfied—the person should not be employed, should be willing to be employed and should be actively looking for employment.

In line with the rising unemployment rate, the labor participation rate (LPR) has decreased steadily since the beginning of this year. It fell an entire percentage point from 42.96 per cent in January 2020 to 41.9 per cent in March 2020. This is the first time that the LPR has fallen below 42 per cent, stated Vyas.

CMIE has put out the data with a disclaimer that the survey operations were disrupted post the nationwide lockdown announced on 24 March. Due to this the sample size for March 2020 findings was much smaller than the usual numbers.

Despite suspension of the survey in the last week, workers on the field on March 24 and March 25 continued to report observations, Vyas stated. “By March 30 we did manage to get observations over telephonic interviews. As a result, CPHS (Consumer Pyramids Household Survey) yielded 2,289 observations in the last week of March. These were evenly spread over rural and urban areas,” he said.

“Telephonic interviews caught pace in the week ended April 5. We had 9,429 observations. These yielded an unemployment rate of 23.4 per cent during this week; an LPR of 36 per cent and an employment rate of 27.7 per cent.”