As India unlocks, formal sector jobs in the Government space and the private sector are facing various churns from lay-offs, delayed payments, reduced salaries and so on
The Coronavirus pandemic and the global economic recession have destroyed the jobs of millions of people across the world at staggering levels. Due to the lockdown and social-distancing, many casual, regular workers and self-employed people were unable to work and had to lose their livelihoods. Understandably, this has aggravated the already grim employment situation worldwide, particularly in developing regions such as South Asia, for both white and blue collared workers.
The job loss scenario in South Asia: As per the latest report by the International Labour Organisation (ILO), nearly 400 million full-time jobs were lost this year by the second quarter (Q2 April-June). South Asia significantly accounted for 110 million of the total 235 million full-time jobs estimated to be lost during the Q2. There were 21 million full-time job losses in the first quarter (Q1) and 110 million in the Q2 of this year. Since Q1, it is estimated that job losses increased by over 400 per cent in both South Asia and Africa.
Another report highlighted the major reduction in working hours that had occurred in Latin America (20 per cent) and South Asia (18 per cent) in Q2. Job losses were the highest in the informal sector, given the casual and temporary nature of jobs in the services and industrial sectors, owing to severe lockdowns. The South Asian region has the highest share (75 per cent) of the informal workforce, especially in India, as 81 per cent of those employed work in the informal sector.
Job losses in India during the lockdown: Livelihoods of most of the people were affected during the lockdown and the pandemic in India, especially of those engaged in the informal sector. Although there have not been any official estimates, several surveys conducted in the country highlight the misery of the people who have been left jobless. An important finding from several studies during the lockdown was that on an average, six out of 10 workers had lost their jobs or livelihood sources. Seven out of 10 casual labourers had lost their jobs, while six out of 10 self-employed respondents could not pursue their usual economic activities and four out of 10 regular workers had been retrenched.
Frighteningly, as many as 41 lakh youths in the country faced a job loss due to the contagion-induced lockdowns while construction and farm sector workers accounted for the majority of lay-offs, according to a joint report by the ILO and the Asian Development Bank (ADB). While the Government has not released any data pertaining to job losses during the lockdown, it acknowledges the quantum of migrants, around 1.5 crore, who returned to their homes. The estimates by the Government indicate that around eight-10 crore workers were affected due to the lockdown, mostly those who were in the informal sector and whose work was non-agricultural in nature.
Based upon the data analysis of the Periodic Labour Force Survey (PLFS) to understand the likely impact on informal workers in urban areas during and after the lockdown period, we estimated that about 93 million people were involved in five sectors that have been the most affected, namely manufacturing, trade, hotel and restaurant, construction, transport, storage and communications, finance, business and real estate. Out of the total 93 million informal workers in these sectors, 50 per cent are self-employed, 20 per cent are casual workers on daily wages and 30 per cent are salaried or contract employees without any social safety net.
Job losses as India unlocks: Similar to the independent survey findings, the Centre for Monitoring Indian Economy (CMIE), an independent think-tank, also estimated that 21 million people have rejoined work after the Government began the “unlocking” of the economy. The reversal of job loss — if not incomes — has been achieved and the employment rate is moving towards pre-lockdown levels.
Almost two-thirds of the jobs added (14.4 million) were of self-employed (small traders) and wage labourers. The CMIE report also mentioned that about 6.8 million daily wage earners lost their jobs since April and 15 million people took to farming during this period either as self-employed or casual labour. This reveals that the loss of jobs in the self-employment and casual labour category is a temporary phenomenon, which is not true in case of full-time salaried jobs. Salaried people (both permanent and temporary) who have lost their jobs may not get back to employment in the near future. Particularly, white-collar jobs, once lost, are far more difficult to retrieve.
White-collar job losses: The CMIE reported that about 18.9 million salaried people lost their jobs during the lockdown. Such jobs were estimated at 86.1 million in 2019-20, which fell to 67.2 million by July. These are preferred forms of employment for most people as they offer better terms of employment and wages. The biggest loss of jobs among salaried employees was of white-collar professionals, which included 5.9 million workers between May and August. This group includes engineers, software engineers, physicians, journalists, accountants, analysts, teachers and mostly those who are professionally qualified and were employed in some private or Government organisation. However, the pandemic did not impact white-collar clerical employees too much. These largely include employees ranging from secretaries, office clerks to BPO/KPO workers and data-entry operators. They possibly shifted to the work from home (WFH) mode, said the CMIE report. Since the lockdown was announced, several companies across sectors have taken to job cuts, along with salary reductions and leave without pay.
This exposed the fragility of India’s formal sector, which was traditionally considered the ideal place in the labour market. The report also highlighted the support the formal sector requires for resilience. These ballooning numbers of job losses for formal white-collar workers, having higher value addition, are depicting a worrisome picture of the Indian job market. There is considerable research that indicates that job losses can result in permanent economic damage if workers stay unemployed for too long. This is the key concern of policymakers in the country and other stakeholders today.
Towards resilience for formal jobs: The COVID-19 pandemic and the global economic recession, undoubtedly, have put a major strain on national economies and the employment scenario. In India, apart from the agriculture sector, which has shown a positive growth rate, both the manufacturing and services sector are under major stress. This has serious implications for the informal and casual workers, small and medium enterprises as well as big businesses.
As India unlocks, there are recoveries recorded for casual workers and for the self-employed ones with obvious limitations for the economic activities that can be undertaken for the moment. For the regular/salaried workers (permanent and temporary employees) job losses and revised terms of contract and salaries, owing to the poor performance of businesses and enterprises, have revealed the fragile state of affairs. This is a serious cause of concern for the Indian economy.
Many countries across the world, such as the US and the UK, are providing various kinds of support to businesses and salaried workers to stem job losses and the problems arising from them. They are taking various measures such as contribution to salaries, unemployment allowances, loans and so on, often surpassing the debt limits, to help their citizens during the ongoing pandemic and recession. As we move towards the “new normal” of COVID-19 protocols, WFH, a virtual economy, digitisation and automation of work processes, more and more white-collar jobs will be threatened.
In India, the Government has urged businesses to keep jobs intact without any potential and significant support. As India unlocks, formal sector jobs in the Government space and the private sector are facing various churns from lay-offs, delayed payments, reduced salaries and so on.
Clearly, the Government needs to act now and focus on regeneration of economic activities as well as stimulation of aggregate demands, giving due consideration to those who have lost their jobs in the formal sector, and also to businesses rendered vulnerable by the pandemic. The road towards an Atmanirbhar Bharat and “New India” should ensure resilience in the formal economy, give immediate support and harness our data and digital capabilities to make a significant impact on the lives of people.
(Balwant is Research Director, IMPRI and Senior Fellow, IHD and Kumar is Director, IMPRI