Unemployment rate shoots up to 8.4% in August as rural jobs disappear

Economy


Unemployment in India shot up in August, largely on the back of loss of work under the Mahatma Gandhi National Rural Employment Guarantee scheme and end of sowing of the Kharif crop leading to greater jump in unemployment in rural India. This is a reversal in trend since April when more jobs were created in the hinterland.

This has halted the overall employment rate in the country in August which fell marginally to 37.5% compared to 37.6% in July while significantly pushing up the unemployment rate at 8.4%, the Centre for Monitoring Indian Economy said.

The unemployment rate, which has been falling so far after scaling a peak of 23.5% in April and May, increased from 7.4% in July to 8.4% in August. “This is a significant jump,” CMIE said.

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Though the labour force increased from 424 million in July 2020 to 428 million in August, the increase only added to the count of unemployed which increased from 32 million to 36 million.

CMIE analysis shows the recovery in employment stopped, or at least halted in August with employment in August 0.2 million lower than in July. Employment in August 2020 was 10.7 million lower than it was in August 2019 and continued to remain lower than in any month in the pre-lockdown period since at least January 2016 when CMIE started measuring labour statistics directly.

“On a net basis, none of the increase in the labour force could translate into an increase in employment. It just showed an increase in the count of the unemployed,” CMIE said, adding the deterioration in labour market conditions in August was essentially located in rural India.

CMIE further said that the rural India, that led the recovery story till July has pulled back hard and faced a double whammy in August 2020.

According to CMIE, rural India saw a fall in MGNREGS employment and a fall in kharif-sowing related employment. As a result, overall employment in rural India declined by 3.7 million with employment in farming down by 0.7 million last month and job losses in the rural non-farming sectors at 3 million. “This is a sign of growing stress in the hinterlands,” it cautioned.



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