Employment Rate Hits All-Time Low In March, Says Think-Tank CMIE

'Really Worrisome:' Employment Rate Hits All-Time Low In March, Says Think-Tank CMIE

India’s labour participation rate crashed to an all-time low in March, marking a steep fall compared to January, Mumbai-based think-tank Centre for Monitoring Indian Economy (CMIE) said on Tuesday. The labour participation rate or LPR, a gauge of active workforce, dropped below the 42 per cent mark for the first time ever, the CMIE said in a report. In March, the labour participation rate stood at 41.9 per cent andthe employment rate was at 38.2 per cent – both all-time lows. The report comes as India entered the fourteenth day of a 21-day nationwide lockdown to curb the spread of the deadly coronavirus (COVID-19) pandemic.

Here are 10 things to know:

  1. “It (LPR) seems to have nosedived in March after having struggled to remain stable over the past two years. Then, there is a precipitous fall,” wrote Mahesh Vyas, head of the Mumbai-based think tank, in a post.

  2. Between January and March, the labour participation rate has fallen an entire percentage point – from 42.96 per cent in January to 41.90 per cent in March, as the number of employed people fell from 411 million to 396 million, while the number of the unemployed increased from 32 million to 38 million, according to the CMIE.

  3. “Labour statistics for March 2020 are worrisome. And, those for the past two weeks are much worse,” said Mr Vyas of the CMIE.

  4. “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,” he added. “Of course, it gets much worse as we move into the lockdown.”

  5. The labour force consists of all employed persons and persons who are unemployed and are actively looking for jobs.

  6. “These are very big variations and are subject to the usual sampling errors,” Mr Vyas wrote. 

  7. He however added that there is clearly “a significant fall in employment and there is a simultaneous significant increase in unemployment in March 2020”.

  8. Even before the lockdown, which began on March 25, the country’s economy suffered from a prolonged period of slowing growth. For the financial year 2019-20, official estimates peg the annual expansion rate of GDP at 5 per cent – the slowest since the 2008-09 global financial crisis. 

  9. Many economist groups have estimated a much worse situation for the economy due to the fallout from the coronavirus outbreak. 

  10. Earlier this month, Fitch Ratings said India’s GDP may expand 2 per cent in financial year 2021 – the slowest pace since the liberisation of the economy 30 years ago. Previously, Moody’s Investors Service had slashed its estimate of the country’s growth in 2020 to 2.5 per cent from an earlier estimate of 5.3 per cent, saying the coronavirus pandemic will cause unprecedented shock to the global economy.




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