One in four Indians in the working age is unemployed as corporate layoffs continue— making crisis worse and delaying economic recovery
- According to the Centre for Monitoring Indian Economy (CMIE), the unemployment rate stood at 24.3% during the week ending May 24.
- In fact, the urban unemployment rate stood at nearly 27% during the week ending May 17 — higher than the rural unemployment rate.
- This comes in the backdrop of the ongoing job and salary cuts.
- This has directly impacted the labour participation rate (LPR), which dropped to 38.7% during the same week.
- According to Dun & Bradstreet (D&B), the job loss and salary cuts will slow down the economic recovery even after the pandemic.
This indicates that the relaxations in the lockdown since April 20 have not shown any positive impact on the unemployment rate as of now. In fact, the urban unemployment rate stood at nearly 27% during the week ending May 17 — higher than the rural unemployment rate. This means, less than 25% of the urban working age population is employed.
This comes in the backdrop of the ongoing job crisis due to the lockdown. Companies are aggressively downsizing employees and implementing salary cuts to keep up with the running costs.
Recently, apparel major Raymond fired hundreds of employees to overcome mounting losses. With this, it joined startups like Ola, Uber, Zomato and Swiggy, which cited COVID-19 crisis to lay off employees and cut salaries.
Ola and Swiggy fired 1,1100 and 1,400 employees, owing to the fall in revenues. While Zomato laid off 13% of the workforce. In addition to this, many companies like Uber, Gartner and energy major Schlumberger have even revoked job offers extended to the fresh graduates at premier institutions like Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs).
This has directly impacted the labour participation rate (LPR), which dropped to 38.7% during the same week.
*Source: Media reports
|Companies that laid off employees during lockdown||Estimated job losses|
The impact of the pandemic is such that experts believe that the economy is likely to slip into recession in the third quarter of 2020-21. According to Dun & Bradstreet (D&B), the job loss and salary cuts will slow down the recovery even after the pandemic.
“The D&B India Chief Economist Arun Singh stated that the multiplier effect of the stimulus measures on the economy will depend on three key aspects, the time taken for effecting the withdrawal of the lockdown, the efficacy of implementation and duration of execution of the measures announced,” the CMIE report says.
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