India’s Unemployment Rate May Have Shot Up to 23% After COVID-19 Lockdown: CMIE

The estimates come with a caveat that normal survey operations were disrupted after the lockdown, leading to a lower-than-normal sample size.

New Delhi: The national lockdown may have led to significant job losses across the country, with the overall unemployment rate hitting over 23% in the last week of March 2020, according to estimates put out by the Centre for Monitoring Indian Economy (CMIE).

India currently does not have official high-frequency employment data. Data put out by the CMIE, which in the past have been subjected to political slugfests, come from its weekly job surveys.

The organisation’s latest estimates show that the employment situation worsened from the beginning of March 2020, before the lockdown was put in place, and then rapidly spiked in the last week of the month and the first week of April 2020.

“In March 2020, the labour participation rate fell to an all-time low, the unemployment rate shot up sharply and the employment rate fell to its all-time low,” wrote Mahesh Vyas, CMIE’s chief executive, on the organisation’s website.

“The unemployment rate in March was 8.7%. This is the highest unemployment rate in 43 months…The unemployment rate during this last week [of March] was 23.8%. Labour participation rate fell to 39% and the employment rate was a mere 30%,” Vyas added.

The ‘unemployment rate’ essentially represents the percentage of people who were looking for jobs who failed to find one.

Worrying jobs situation. Credit: CMIE

The organisation’s weekly tracker is based on a ‘panel’, which effectively means its observations are derived by following a sample of people (a panel) over time at a regular frequency.

CMIE’s latest data for March 2020 however comes with an important caveat – namely that the organisation’s normal survey operations were interrupted following the nationwide lockdown announced on March 24.

Its overall sample size for March 2020 is 83,929 observations, which while “not small”, is less than the usual sample size of over 117,000 individuals.

Similarly, after March 24, while the survey was suspended, CMIE’s enumerators who were in the field continued to report observations and by March 30, the organisation was able 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. The unemployment rate during this last week was 23.8%. Labour participation rate fell to 39% and the employment rate was a mere 30%,” Vyas notes.

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

The COVID-19 pandemic and consequent lockdown restrictions have caused crippling job losses in many other economies. In the United States for instance, nearly 10 million workers have filed unemployment claims in the past fortnight.

In India, experts like former chief statistician Pronab Sen reckon that about 50 million people may have lost their jobs just in the last two weeks.