Covid 2.0 triggers fresh unemployment

New Delhi: The unemployment rate in the country has touched a four-month high as localised lockdowns imposed in many states have impacted over 70 lakh jobs. The situation could get worse if the Covid-19 situation does not come under control by May.

The Centre for Monitoring Indian Economy (CMIE), a Mumbai-based economic think-tank, said the national unemployment rate in the country has touched a four-month high of nearly 8 per cent in April. In contrast, the national unemployment rate in March was 6.5 per cent.

CMIE said the unemployment outlook remains weak due to restrictions imposed to contain the unprecedented rise in Covid-19 cases. CMIE MD Mahesh Vyas said the Covid-19 situation in the country is likely to impact employment generation in the coming months.

Experts had earlier said the impact of Covid-19 on various indicators of the economy would depend on how fast cases are contained. At the moment, the situation in India looks grim as the country continues to report over 3.5 lakh cases and over 3,400 deaths on a daily basis.

Mahesh Vyas said the jump in unemployment rate is directly related to the localised lockdowns imposed by many states, adding that over 70 lakh jobs were lost in April in comparison to March.

CMIE data indicates that the impact of lockdowns has resulted in a higher rate of unemployment in urban areas. The unemployment rate in urban areas edged up to 9.78 per cent in April, compared to 7.13 per cent in rural areas.

Data from the think tank had earlier indicated that there has been a decline in the labour participation rate (LPR) in April as well. It also noted that the current wave of unemployment in the country is mostly affecting the informal or gig economy workers.

While white-collar jobs have not been affected yet, hiring activity dipped in April. It is worth mentioning that decline in job positing activity started in March 2021 and the frequency has further dipped in April due to the ongoing Covid-19 situation.