4. India lost 2.1 crore salaried jobs by the end of August, down from
8.6 crore in 2019-20 to 6.5 crore last month. “[Around] 21 million
salaried job losses cannot be confined to only of the support staff
among salaried employees.The damage is likely to be deeper,
among industrial workers and also white collar workers,” the CMIE
said.
7. How years of jobless growth have come back to haunt India
during Covid-19 pandemic
Millions of Indians have lost jobs in the formal sector since April
due to the economic stress caused by novel coronavirus.
However, the pandemic is not the only reason behind the
ongoing job crisis in the country.
8. GROWTH HURDLE
Five months into the lockdown, India has witnessed a sharp
decline in the number of jobs in the formal sector — the largest
source of salaried employment in the country.
Even after unlocking the economy, there has been no
improvement in the salaried jobs space.The government has cited
the unprecedented economic crisis behind the job situation in the
country.
However, the coronavirus pandemic may not be the only reason
why salaried jobs — one of the most secure forms of employment
— are losing prominence in India.
Unemployment in the country had been a problem since 2017-18.
A government job survey, whose publication was delayed just
ahead of 2019 Lok Sabha election, showed how the country’s
unemployment reached a four-decade high of 6.1 per cent in 2017-
18.
9. report noted that unemployment was higher in urban areas in
comparison to rural areas — an indication that salaried jobs have
been dwindling in India for at least three years.
10. Data show that despite India’s rapid growth before 2019, salaried
jobs grew at a snail’s pace. Salaried jobs grew from 21.2 per cent in
2016-17 to just 21.6 per cent in 2017-18. It inched to 21.9 per cent
in 2018-19. India was clocking a real GrossValueAdded (GVA) rate
of 6-8 per cent per annum all this while.
But the period of jobless growth hit a roadblock in 2019-20 when
salaried employment fell to 21.3 per cent.The CMIE explained that
the stagnation in the salaried job market in spite of India’s
economic growth in recent years is not the only anomaly.The
CMIE found it “equally odd” that India has been witnessing a rapid
increase in entrepreneurship without any increase in salaried jobs.
It is no secret that entrepreneurship has been rising in India over
the past years. By FY20, India had over 7.8 crore entrepreneurs.
But surprisingly, the increase in entrepreneurship did not add
more salaried jobs which remained steady at 8.6 crore.
This indicates that much of the entrepreneurship growth in India
was self-employed and consisted only of very small-scale
businesses.
11. THE URBAN JOB MELTDOWN
The fact that all salaried jobs put together account for just 21-22
per cent of total employment in India is worrying as it directly
impacts a large share of private consumption.
“There are many more farmers than salaried jobs. And, there are
even more daily wage labourers. Farmers and daily wage earners
together account for nearly two-thirds of the Indian working
population,” said CMIE.
12. It indicates that a large part of India’s workforce is employed by
the informal sector, where it is easy comparatively easier to get
jobs. However, such form of employment heavily depends on
demand originating from the urban economy, comprising mostly
of salaried jobs.
With the sudden meltdown of salaried jobs in India, the informal
economy is also feeling the heat with thousands of small-scale
traders and hawkers shutting shop.
13. Only the rural economy has seen a steady rise during the
lockdown period as farming became the last resort for those who
lost their urban jobs. Most daily wage labourers who were forced
to return to their native places were the main reason behind a 14
million rise in farm employment.
However, rural growth is not enough for an economy which needs
at least 10 lakh formal jobs to be created every year to support the
country’s rising youth population.
Salaried job holders working in urban areas are among the worst-
hit workers during the coronavirus pandemic in India.
14.
15. According to the latest report by think-tankCentre for Monitoring
Indian Economy (CMIE) the employment rate had fallen to an all-
time low of 38.2 percent in March 2020. It stated, “The fall since
January 2020 is particularly steep – almost spectacular. It seems to
have nosedived in March after having struggled to remain stable
over the past two years.Then, there is a precipitous fall.”
Further, CMIE also pointed out that the labour participation rate in
March this year was 41.9 percent, as compared to 42.6 percent in
February, suggesting the fall happened even before the lockdown.
16. Lockdown impact: Every fourth person in India is unemployed
Urban India is ailing more with 26.3 per cent of unemployment
while rural parts of the country have reported 23.7 per cent of the
unemployment rate
ban India is ailing more with 26.3 per cent of unemployment while
rural parts of the country have reported 23.7 per cent of the
unemployment rate.
17. Rural unemployment was expected to increase as the industries
were allowed to restart as well as MNREGA works to have started
after May 17.
The states with more industrial units like Maharashtra, Karnataka,
and Gujarat saw a steep decline in employment post lockdown.
Gujarat had an unemployment rate of 6.7 in March which shot up
to 18.7 inApril.
Maharashtra saw more than a three-fold increase from 5.8 to 20.9
per cent. Karnataka, on the other hand, reported 29.8 per cent of
unemployment inApril from a mere 3.5 per cent in March.The
state has one of the best track records in keeping the
unemployment rate low for years.
18. The migrant source states – Bihar (46.6) and Jharkhand (47.1) –
have reported more than 50 per cent unemployment for the
current month. Odisha reported a 23.8 per cent rate while UP
reported 21.5 per cent of the unemployment rate.Tamil Nadu has
the highest rate of unemployment for the current month at 49.8
per cent.
The ground reality could be worse.The reason could be the
‘disguised unemployment’ which gets slipped off during the
normal calculation.
Disguised unemployment means when the labour is employed
within a company or institution but is not actually contributing to
the output of the organization.This had been the case for many
industries for over two months.Thus, the crisis looks much bigger.
19. Reasons of fall
DuringCOVID
19
Reductions in trade
As countries face enduring lockdowns across the globe,
unemployment is rising each day as quality of life decreases for
many.Aside from this, loss of livelihood is a loss of access to
goods, as many nations have experienced reduced availability of
products due to stricter border controls and trading mechanisms.
Many across the developing world are employed via the informal
sector in marketplaces that are now closed due to social
distancing efforts and lockdowns. Hence more needs to be done
to not only boost employment but to restock the marketplace
domestically.
20. Solution
Investing locally
To remedy this, the panel spoke about the need for governments
to invest in local production of goods via innovation and
industrialization.
This increase in domestic production has the potential to not only
to support and formalize the work done by many in the informal
sector but also bides against future shortages given that the
supply of goods would be domestic, thereby lessening the chance
of supply side disruptions.
21. Looking out for the most vulnerable
With growing unemployment, more and more people are being
pushed into poverty, reversing the global progress on ending
poverty back to pre-1998 levels.With a totalizing effect on society,
governments must make a real effort to look after the most
vulnerable.
The panel pointed to the need for development of tailor-made
fiscal policies specifically intended to help certain subsets of the
population, such as youth and women.These relief efforts present
an opportunity for countries to address the underlying issues in
society such as gender pay inequality, and youth
underemployment.
As vulnerable subsets of the population are dealing with unique
obstacles in attaining economic agency, the policies to remedy
them must be equally unique to create true change.
22. Building back better
Lastly, in the fight againstCOVID-19 the panel spoke about the
need for coordination and collaboration amongst countries. In this
new world order, unprecedented action needs to be taken in
ensuring no country is left to languish in their fight against the
virus.
23. Welcome to Jobless Growth: Why India is facing an
unemployment crisis
