India’s unemployment rate drops to 6.5% in January; the employment rate climbs to 37.9%: CMIE

The year 2021 started on a positive note for India as it saw a significant drop in the unemployment rate and an equally impressive increase in the employment rate in January, according to private think tank CMIE. Employment in India, however, remained below what it was before pre-COVID levels, but there were also fewer unemployed people ready to work, he said.

According to data from the Indian Economic Monitoring Center (CMIE), the unemployment rate fell to 6.5% in January 2021 from 9.1% in December 2020, while the employment rate jumped to 37 , 9% against 36.9%.

Almost 12 million additional people were employed in January to 400.7 million compared to 388.8 million in December 2020, which is the highest since the lockdown began in March 2020. The sharp increase in employment in January also made up for the loss over the past three months.

“This is important because monthly changes in employment rarely crossed the 5 million mark before the lockdown. The increase in January was double that maximum change. Moreover, after the first months of sharp decline and increase In employment during the lockdown, the recovery process slowed down and then stalled before the recovery even ended. Employment declined in each of the three months from October to December 2020. The recovery in January 2021 is therefore a welcome relief, ”said Mahesh Vyas, CEO of CMIE.

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CMIE data showed that the increase in employment in January reduced the number of unemployed to 27.9 million. “It is the unemployed who are ready to work and who are actively looking for a job. This is an exceptionally low number. On average, 33 million people who were ready to work and were looking for work were unemployed in 2019-2020. It is now less than 28 million, ”he said.

According to the CMIE, the drop in the number of unemployed in January translated into a drop in the unemployment rate in the same month. The unemployment rate has been volatile over the past six months, ranging from a low of 6.5% in November 2020 to a high of 9.1% in December 2020. The average unemployment rate during this period of six months was higher at around 7.4. percent.

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“The most recent two months, December 2020 and January 2021, have seen an unusual increase in this volatility. In December 2020, India added 11.3 million unemployed. In January 2021, India saw the number of unemployed drop by 10.7 million. These are extraordinary variations. Perhaps the sharp increase in the number of unemployed in December 2020 was extraordinary. And, in January 2021, India returned to its normal number of unemployed, which appears to average around 28 million. This is the average number of unemployed since September 2020, with the exception of December when it climbed to 38 million, “he said.

The CMIE said its household consumer pyramid survey captures two levels of the unemployed – those who are actively looking for work and those who are not. A person is only considered unemployed if he is willing to work but does not have a job. The CMIE distinguishes these people between those who are actively looking for work and those who are not.

In January 2021, there were 27.9 million unemployed people actively looking for work, while there were 12.1 million who were also unemployed and willing to work but not actively looking for work. The CMIE does not take them into account in its calculation of the unemployment rate.

The total number of unemployed people who were ready to work but did not have a job in January 2021 was 40 million. While that is a significant number, it is the lowest in more than two years, he said.