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Why A Fall In India’s Unemployment Rate In September Can Be Misleading

September witnessed a drop in India’s Unemployment Rate with the statistic falling to 6.67% in September, down from 8.35% in August, but the Centre for Monitoring Indian Economy (CMIE) says that this fall is ‘is hardly a cause for celebration’.

According to CMIE, the Unemployment rate is falling due to a lack of people participating in the labour market as people are choosing not to actively look for jobs in the aftermath of the destruction that the pandemic has brought to the already flailing economy. 

“The fall in the unemployment rate is meaningless and misleading”

According to CMIE, “The average labour participation rate in the first three weeks of September was 40.7 per cent. The 30-day moving average as of September 20 was 40.3 per cent. These compare poorly with the 40.96 per cent pencilled in August.”

The fall in the average labour participation rate indicates that less number of people are employed and the ones who are unemployed are not looking for employment. The labour force in the market as a whole is decreasing, thus suggesting that people are now sitting out the pandemic having being disillusioned by the disarray of the economy in the current times. 

Reduction in the labour force in 2020

The unemployment rate in urban areas has fallen to 8.45% in September, compared to 9.83% in August while in rural areas it is down to 5.86% from the previous month’s 7.65%. 

The unemployment rate is further expected to fall down in the coming weeks, however, CMIE warns that such statistics may appear to be misleading as although the unemployment rate is decreasing so is the active labour force. As people are not even willing to participate in the labour market, the economy will be harmed. 

The fall in the unemployment rate seen in recent weeks is meaningless and misleading in the face of a falling labour participation rate and a falling trend in the employment rate,” said CMIE on its website. 

Also Read: Indian Engineers And MBAs Are Taking Manual Labour Jobs To Beat Unemployment As Job Crisis Grows

India’s unemployment problem in the lockdown

India’s unemployment statistics were only collected and examined by the government once every five years until 2016 when CMIE started publishing monthly statistics. 

After the coronavirus-induced lockdown was imposed, India’s unemployment rates skyrocketed, millions lost their jobs, and even after the lockdown was eased in certain areas, workers found themselves with a fall in their earnings compared to pre-lockdown times. 

Unemployment rates in India (2020)

India’s unemployment rate even peaked as high as 23.52% back in April. 

Recovery from the devastating effects of the ongoing pandemic should be dealt with carefully and though the economy is seemingly going to be in a slump as an effect of the pandemic and the longstanding lockdown period, it is imperative that the government engages in a well-planned recovery plan fo the economy of the nation.

Image Credits: Google Images

Sources: CMIE, Financial Express, Moneycontrol

Find the blogger: @RoshniKahaHain

This post is tagged under: India’s unemployment rate, unemployment in India, Centre for Monitoring Indian Economy, rising unemployment in india, CMIE, lockdown, economy, unemployment rate in india graph, lockdown effect on indian economy, lockdown effect on employment, india unemployment rate 2020, coronavirus pandemic economy impact, why unemployment rate is low in india

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Why A Fall In India’s Unemployment Rate In September Can Be Misleading


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