Urban unemployment rate dips to single digit after 8 weeks

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This is a rate everyone loves to see go down. With the decentralised-but-pervasive restrictions easing in all major states, unemployment rates in the country have crawled down from the double-digit territory and settled in the single-digit zone after a gap of more than eight weeks.

Double-digit unemployment rates are not normal in this country.

May 6 black day

 The 30-day moving average as measured by the Centre for Monitoring Indian Economy (CMIE) entered the double-digit zone on May 6 when urban unemployment was recorded at 10.2%. It returned to the single digit territory on July 3 – after a gap of 59 days.

CMIE said this was only the second time since the April-June 2020 period (marked by a nationwide stringent lockdown) that the urban unemployment entered the double-digit zone.

CMIE puts out three types of unemployment data – one for the urban sector, one for the rural sector and another for the pan India figures.

Single digits

On July 3, the 30-day moving average unemployment rate for all-India, urban and rural were 8.71%, 9.74% and 8.23%, respectively.

On July 2, these figures were 8.92%, 10.03% and 8.41%, respectively.

After hitting the double-digit figure in the first week of May, unemployment rates kept rising for the next few weeks. In the second week of June unemployment in the urban areas even surpassed 15%.

Urban unemployment

“The urban unemployment rate has been on the rise since early April 2021. On April 1, the 30-day moving average urban unemployment rate was 7.2%. By May 1, it had reached 9.6% and then by May 23 it was 12.7%,” CMIE said.

Among the months, May suffered the peak of unemployment woes this year. The pan-India rate stood at 11.90% while the urban and rural sector recorded 14.73% and 10.63%, respectively. In no other month since the first wave receded did all three rates stand in the double-digit territory.

In June, the situation improved slightly – the all-India rate eased to 9.17% and the rural rate dropped to 10.63%, while the urban sector recorded 10.07%.

 May, the worst

“May 2021 is the fourth consecutive month of a fall in employment. The cumulative fall in employment since January 2021 is 25.3 million,” CMIE said in early June.

However, both during the first and second wave of the infection the rural sector suffered relatively less unemployment.

Bright spots

Though urban unemployment rose to highs in May, hiring portal Monster.com said that in a few sectors such as information technology (both hardware and software), banking, financial services and insurance showed some recruitment activity during the month.

According to a report by the agency, hiring showed some activity in Kolkata, Bengaluru, Kochi and Pune.

Year-on-year (May 2021 vs May 2020) data indicated that the tech hubs of the country displayed growth in hiring with Bengaluru (+46%) and Hyderabad (+26%) standing out.