October 2020 is the first month that has recorded a fall in employment since May 2020, CMIE said.
Even as India continues to recover from the fallout of coronavirus pandemic, 5.5 lakh jobs were lost in October. This is the first time since May 2020 that the unemployment rate has increased.
"October 2020 is the first month since the recovery began in May that has recorded a fall in employment. It fell from 38 percent in September to 37.8 percent in October," the Centre for Monitoring Indian Economy (CMIE) said.
"This fall of 1.56 percentage points is not entirely extraordinary as it is likely to reflect a trend of falling employment rates independent of the lockdown," it added.
The unemployment rate had fallen to 6.67 percent in September from 8.35 percent in August, according to CMIE data.
Noting that October was a month of elections in Bihar, Madhya Pradesh and Uttar Pradesh, CMIE said it was also a festival month and a kharif-crop harvest month but "none of this could help improve the demand for labour".
"This fall in employment came when demand for employment was rising. The count of the unemployed who were willing to work increased by 12 million in October," it said in a weekly analysis of the labour market for the week ended November 1.
CMIE also cautioned on further fall in the employment rate. "The employment rate has been falling every year since 2016-17. It fell by 1.13 percentage points in 2017-18, then by 1.46 percentage points in 2018-19 and by 0.46 percentage points in 2019-20. If this trend were to continue, 2020-21 would see another fall of about one percentage point in the employment rate even if there was no lockdown," it said.Meanwhile, the labour participation rate stood at 40.66 percent in October 2020, the same as it was in September 2020. The unemployment rate, however, rose to 7 percent in the month, increasing from 6.7 percent in September 2020.