Tamil Nadu’s unemployment rate shoots up as state locks down for COVID

Tamil Nadu’s unemployment rate has increased alarmingly between April and May this year as the state went into an intense lockdown from May 24 onwards in view of the second wave of COVID-19. Tamil Nadu has the maximum increase in unemployment rate between April and May compared to other states which were in lockdown in April too.

As per CMIE unemployment moving average monthly data, more than 10 million people across the country would have lost their employment as the country’s unemployment rate increased to 11.9 per cent. In April and May last year Tamil Nadu’s unemployment rate was 49.8 per cent and 33.2 per cent.

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While the unemployment rate in Tamil Nadu in April this year was 2.3 per cent, one of the lowest among states, it increased to 28 per cent, thereby coming to the third place among states. Delhi has the maximum unemployment rate of 45.6 per cent followed by Haryana with 29.1 per cent and Tamil Nadu. Haryana has seen its unemployment rate declining from 35.1 per cent in April to 29.1 per cent in May.

“Tamil Nadu has a large number of MSMEs which provide employment to lakhs. This section of society has been hit badly due to the lockdown as many industries have been shut down. All those who are employed in these factories are without jobs. Similarly in the hospitality sector, many are without employment. These are the reasons for increase in unemployment rate in Tamil Nadu and definitely it will come down when the lockdown is lifted,” said a senior officer.

Overall, the unemployment rate in the country has increased to double digits, like it was seen last year, after the lockdown in April and May. The increase in unemployment rate has come to be seen in the last two weeks of May as many states went for lockdown. As per the CMIE data, the 30-day-moving unemployment average was 11.8 per cent after hitting a high of 14.8 per cent in the middle of May.

“The urban unemployment rate has been on the rise since early April 2021. On April 1, the 30-day moving average urban unemployment rate was 7.2 per cent. By May 1, it had reached 9.6 per cent and then by May 23 it was 12.7 per cent. In contrast, the rise of unemployment in rural India is a more recent phenomenon,” said CMIE CEO Mahesh Vyas.

We see evidence of loss of employment in the steady fall in the employment rate during May 2021, said Vyas.

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“The employment rate was 36.8 per cent in April 2021. The 30-day moving average employment rate on May 23 was 35.8 per cent. This 100 basis point fall in the employment rate translates into a fall in employment of the order of 10 million. This would be much more than the 7.35 million fall in employment recorded in April 2021. Employment has been falling since January 2021. It had fallen by about 10 million between January and April 2021. May 2021 could see a similar fall,” said Vyas.