The unemployment rate is one of the most important lead indicators of an economy. Centre for Monitoring Indian Economy CMIE estimates this important indicator for the country, states, and Union territories on a daily and monthly basis. According to the latest data by CMIE, India has recorded a high unemployment rate in the past four months amid rising Omicron cases. The unemployment rate in India has hit a four-month high of 7.91 percent in December as compared to seven percent and 7.75 percent in November and October 2021. The year 2022 is thus opening with a gloomy scenario.
According to the report, the urban unemployment rate rose to 9.30% in December while rural employment stood at 7.28%. Both urban and rural unemployment saw a significant rise from 8.21% and 6.44%, respectively, in the previous month.
2021 saw the more devastating second wave of Covid-19 in the country but it did not lead to loss of jobs by the same magnitude as the first wave, most likely because the second wave was not accompanied by a strict shutdown of economic activity. The latest spike seems to be linked to the Omicron-driven Covid surge, according to Yeshab Giri, chief commercial officer – staffing at HR consultancy firm Randstad India.
“Due to rising Omicron cases, many employees have reverse-migrated to their home towns. Restricted attendance in offices could be the cause of stalling in the hiring plans of many companies across sectors,” said Giri, according to whom this is a temporary phase.
Meanwhile, a study conducted recently has revealed that coronavirus has once again emerged as the top-most cause of worry Worldwide, due to the growing spread of the omicron variant. For Indians, who believe the country is moving in the right direction, the pandemic is the third leading cause of worry.
“India is placed 2nd in the pecking order in optimism, Saudi Arabia comes up tops with at least 86% of its citizens polled believing their country is moving in the right direction,” said the Research.
The urban unemployment rate rose to 9.3 percent in December from 8.2 percent in the previous month while the rural unemployment rate increased to 7.3 percent from 6.4 percent, the data showed. Among states, Haryana witnessed the highest jobless rate in December at 34.1%, followed by Rajasthan (27.1%), Jharkhand (17.3%, Bihar (16%), J&K (15%), and Tripura (14.7%).In the past year, unemployment in India was highest in the month of May 2021 when it rose to 11.84 percent.
During the COVID 19 pandemic-affected years, the Unemployment rate in urban areas rose to 20.9% during the April-June quarter of 2020, more than double the unemployment rate in the same quarter the previous year (8.9%). The new Omicron variant of COVID-19 has only worsened the unemployment rate. There is great uncertainty in the labor market, and nobody knows what will happen next, chiefly because of Omicron.
With the sharply rising number of daily cases reported in India over the past few days, economic recovery will face some disruption. But can the new variant severely impact India’s economic recovery? Experts had earlier said that the fresh wave of infections triggered by the Omicron variant may start calming down by February before rising rapidly. Key areas such as manufacturing and industrial activity are unlikely to face any significant disruption due to the fresh curbs. Thus it may be safe to assume that the disruption caused by Omicron is only short-term. At present, core indicators suggest that the economy is recovering steadily despite rising inflation and global supply chain disruptions.
In India, issues of unemployment, financial and political corruption, and coronavirus will need maximum focus to mitigate their impact. However, it is important to note that the declining trend in the unemployment rate was revealed in December, even before the shutdowns regarding the new wave started happening.
By, Srishti Sahu