Home >Economy >Urban unemployment nears 10% as states reimpose curbs

India’s job market is facing the heat again with urban unemployment climbing to almost 10% following curbs and partial lockdowns in several states.

The job market, which was slowly recovering over the past few months, now looks to erase the gains and is poised for a tough time at least in the short run, new data pointed out.

According to fresh data from the Centre for Monitoring Indian Economy (CMIE), urban unemployment climbed to 9.81% in the week ended 11 April as against 7.72% in the week ended 28 March and 7.24% for the whole of March.

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Worrying sings

The sudden rise shows how the second wave of covid-19 cases and ensuing partial restrictions in cities and urban centres are impacting the labour market. While India had reported around 70,000 new positive cases on 31 March, the number on 11 April was almost 170,000.

The unemployment spike is not confined to just urban centres—the national unemployment rate and rural joblessness too have risen sharply in past two weeks, CMIE data shows.

While the national unemployment rate was 6.65% in the week ended 28 March, it went up to 8.58% in the week ended 11 April. Rural unemployment rose to 8% from 6.18% in the same period.

Economists said the hardest hit are the informal sector and, in the formal space, retail and hospitality.

“When you put a night curfew or weekend restrictions, it’s the informal sector that gets impacted the most as they do sizeable business in the evening and on weekends. If the business is low, it’s very obvious that the manpower requirement—let’s say in urban markets and trading centres—will be low. The market or shop clusters get impacted, hampering jobs," said Arup Mitra, a professor of economics at Delhi University.

“It’s a tough time in the labour market. 2020 was tough and as we were recovering, you now know that we are in the middle of a second wave. While the informal sector is getting impacted more, formal sectors like hospitality, retail and tourism have started showing the stretch due to covid restrictions. So, the job market observing a shrink is a direct outcome of this. Vaccination will be key to restricting the damage," added K.R. Shyam Sundar, a labour economist.

“If the second reverse migration, which has started slowly, gains momentum, then you will see a tough time in rural labour market too," he warned.

The Confederation of All India Traders (CAIT) claimed that in the past week alone, there has been a 30% business loss in retail markets due to state-level restrictions.

States such as Maharashtra, Gujarat, Chhattisgarh, Punjab, Delhi, Karnataka and Uttar Pradesh have announced restrictions and night curfews in several urban districts.

Neeti Sharma, senior vice president at staffing firm Teamlease Services, said that while key segments in manufacturing and services have not got impacted due to their preparedness, as well as work from home protocols, a surging pandemic will impact them too.

“Market demand, industrial output and jobs are interlinked. Industrial states going for a lockdown will have a direct bearing on the employment market," Sharma said.

The country has been witnessing a tough job environment ever since the nationwide lockdown began in March 2020. The business loss and economic downturn has resulted in massive job and income loss for both formal and informal sector workers.

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