Unemployment rate down to 8.7%, LPR fall a cause for concern

by Joseph K. Clark

It peaked at 23.52% in April last year amidst country-wide lockdown but started falling from then onwards. In May last year, the country’s unemployment rate was 21.73%.

The unemployment rate came down further to 8.72% for the week ended June 27 from 9.35% in the previous week but remained higher than 8.16% recorded at the beginning of the second Covid-19 wave in early April.

Centre for Monitoring Indian Economic’s (CMIE) MD & CEO Mahesh Vyas noted that the labor participation rate (LPR) has fallen to 39.6% from 40.5% a week earlier.


“The unemployment rate has fallen on a fallen LPR. The LPR fell from 40.5% in the previous week to 39.6%. As a result, despite the fall in the unemployment rate, the employment rate has fallen from 36.7% in the previous week to 36.2% in the week ended June 27. This is not a good development,” Vyas told FE.

LPR is an age-specific proportion between persons either working or actively seeking work and the total population in the working-age group, usually 15 years and above. The unemployment rate is a ratio between persons who are not currently in a job but are actively searching for one and the total labor force.

For the week ended June 27, however, both rural and urban areas have contributed to the decline in the overall unemployment rate. While in urban areas, the rate fell to 8.98% from 10.3% a week ago, the unemployment rate declined to 8.6% in rural areas from 8.92% on June 20.

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