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Unemployment rate rises to 33-month high of 7.8% in June, says CMIE

Unemployment rate rose to a 33-month high in the month of June 2019 and employment rate fell to its lowest mark since January 2016, according to a report by Centre for Monitoring Indian Economy (CMIE). The report showed that the employment rate slumped to 39.42 per cent, whereas unemployment rate in June 2019 climbed to 7.91 per cent. The former is too low and the latter is too high, the Mumbai-based think tank said in its report.

The unemployment rate in May 2019 was at 7.2 per cent and a lot lower in June 2018 at 5.8 per cent. The unemployment rate of 7.91 per cent is the highest since September 2016, marking  a 33-month high.

"The unemployment rate had risen sharply initially during the month of June 2019. During the week ended June 9, the unemployment rate was at its peak at 9 per cent. But, it has climbed down steadily since then. It was 8.5 per cent in the second week and then it fell further down to 7.4 per cent and finally to 7 per cent in the last week," CMIE said in its report.

Meanwhile, employment rate continued its fall, landing at the lowest level seen since CMIE started recording job data in January 2016, the report said.

"As of the first quarter of 2019-20, the employment rate was 39.6 per cent. This is the lowest quarterly employment rate at least since 2016. This ratio had improved smartly during the March 2019 quarter to 39.9 per cent from 39.7 per cent in the previous quarter. But, this increase could not be sustained and the ratio fell to its lowest level in the June 2019 quarter," the CMIE report said.

The employment rate has been steadily falling since June 2016 quarter and has declined by 3 percentage points over the past three years. This implies a fall in total employment, CMIE said.

However, the overall labour participation rate inched up after the dismal rural labour participation rate was offset by a higher urban labour participation rate. The overall labour participation rate was recorded at 42.8 per cent in June 2019, as compared to 42.74 per cent in May 2019 and 42.54 per cent in April 2019. Labour participation rate refers to the population between 16-64 years that is employed or is actively looking for jobs.

"The increase in the unemployment rate in June is partly the result of this increase in the labour participation rate. While labour did move into the labour markets, the markets could not absorb them entirely," CMIE said.

In the report, CMIE attributed the dire job scenario in June 2019 to a delayed monsoon. With the investment climate offering no hope, the job market is looking at a tough time ahead.

"This steady deterioration in the employment conditions in India can be stemmed or reversed only if the investment climate improves. India however, seems to show no signs of any improvement on this front. New investment proposals turned out to be much worse during the first quarter of 2019-20," CMIE said.

"Given that the monsoon predictions this year are not great, the continuing fall in investment enthusiasm does not augur very well for employment prospects in the near future," it further added.

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