The employment rate fell even as labour participation rate declined to an all-time low in March, with the unemployment rate jumping to 23.8% in the last week of the month. According to the business data firm, labour participation rate in March declined to 41.9% from 42.6% in February.
"We had feared a fall in labour participation rate because of the national shutdown to contain the spread of Coronavirus. But, this fall seems to have happened even before the lockdown. Of course, it gets much worse as we move into the lockdown," wrote Mahesh Vyas, managing director and chief executive officer of Centre for Monitoring Indian Economy, in a post.
Prime Minister Narendra Modi announced a nationwide lockdown for 21 days starting Mar 25 to curb the spread of coronavirus. While essential services continue to operate, the closure of businesses--formal and informal--have resulted in the loss of jobs, most visible in the movement of migrant workers from the Capital over the last couple of weeks. More than 4,000 people have tested positive for coronavirus in India, resulting in over a hundred deaths. Globally, more than 1.2 mln people have tested positive, while nearly 68,000 have died.
According to the Centre for Monitoring Indian Economy's findings, the country's labour force fell by 9 mln in March on account of the number of employed persons falling by 15 mln to 396 mln and the number of unemployed increasing by 6 mln to 38 mln. "These are very big variations and are subject to the usual sampling errors. It therefore, may not be very wise to focus on the magnitude of those movements but on the certainty of the movements. It is evident that there was a significant fall in employment and there is a simultaneous significant increase in unemployment in March 2020. And, this is what shows up in the rather sharp rise in the unemployment rate," Vyas added.
While unemployment skyrocketed to 23.8% in the last week of March, for the month as a whole it was at a 43-month high of 8.7%. Though the sample size of Centre for Monitoring Indian Economy's household survey was reduced to 83,929 observations in March from the usual number of more than 117,000, Vyas said it was "large enough to yield robust estimates".