India's urban unemployment declines in July-Sept 2021, but stays above pre-second COVID wave levels

The fall in daily new COVID-19 cases after the second wave of the coronavirus pandemic and the resultant relaxation of restrictions on the movement and activity allowed India's urban unemployment rate to decline to 9.8 percent in July-September 2021 from 12.6 percent the previous quarter, according to a report released on March 22 by the Ministry of Statistics and Programme Implementation.

The urban unemployment rate for people aged 15 and above was 9.3 percent in January-March 2021, the statistics ministry's Periodic Labour Force Survey (PLFS) report said.

Data showing a fall in unemployment after the second wave is along the expected lines and mirrors the pattern in 2020 after the economy opened following one of the most draconian lockdowns imposed to contain the spread of the virus.

While the labour force data is released with a significant delay, it is the only official data available on India's employment situation.

While the urban unemployment rate dropped considerably in the third quarter of 2021, it remained well above the pre-pandemic levels. Worryingly, the large fall in unemployment was accompanied by only a nominal increase in the Labour Force Participation Rate (LFPR), which edged up to 46.9 percent from 46.8 percent the previous quarter.

Female unemployment rate was lower after the second wave than immediately before it, standing at 11.6 percent in July-September 2021 as against 11.8 percent in January-March 2021. However, the LFPR for females was 130 basis points lower in the latter period.

However, the fall in the female unemployment rate in July-September 2021 was helped by fewer number of women looking for work after the second wave, with the female LFPR falling to 19.9 percent from 20.1 percent in April-June 2021.

For males, the LFPR was the same before and after the second wave at 73.5 percent. However, the unemployment rate was 70 basis points higher.

The statistics ministry's quarterly PLFS report covers urban areas and measures the unemployment rate in terms of Current Weekly Status.

A person is considered unemployed in a week if they don't work even for an hour on any day despite being available for work at least for an hour on any day. The employment status is determined on the basis of a reference period of the last seven days preceding the date of the survey.