By Dr Santosh Kumar Mohapatra*
The worst contraction in GDP in April-June 2020 is a matter of hot debate now. But what is more disconcerting is the loss of jobs and livelihoods especially bloodbath of jobs. The common people don’t understand GDP or any macro indicators. But they feel the pinch when losing jobs or source of livelihoods. This is more pervasive now due to coronavirus induced health crisis as well as recession. Coronavirus induced crisis has triggered jobs blood bath creating a sense of insecurity and consternation.
Analysts have been warning about the spectre of unemployment ever since the country was put under a 21 days lockdown on March 25 by Prime Minister Narendra Modi to tame the spread of the coronavirus infections. According to the Centre for Monitoring Indian Economy (CMIE),
the unemployment rate has been rising steadily since its low point of 3.4 per cent in July 2017.
The unemployment rate largely remained under 8 per cent from April 2019 till February 2020, except in July and October when it surpassed the 8 per cent mark. Before the start of the pandemic, the average unemployment rate (joblessness rate) was 7.16 per cent in January which had increased 7.34 per cent in February 2020.
However, the overall unemployment rate stood at 8.74 per cent in March, (worst in 43 months) highest since August 2016 when demonetisation happened. In August 2016, the unemployment rate was 9.59 per cent. While the unemployment rate was recorded at 9.35 per cent in urban areas, it stood at 8.45 per cent in rural parts of the country.
As per data from the Centre for Monitoring of Indian Economy (CMIE), due to lockdown to prevent the spread of COVID-19, India’s unemployment rate climbed to 23.8 per cent in the week ended March 29 and a staggering 27.1 per cent in the week ended May 3, 2020 from the pre-lockdown week ended March 22 when the rate was 8.4 per cent and some 12.15 crores Indians were out of jobs in April.
According to CMIE data, 9.13 crore including daily wagers and those working with small traders were out of jobs in April followed by 1.82 crore employment loss of entrepreneurs, and 1.78 crores among the salaried class. The data showed that some 58 lakh farmers went back to work as farming activity picked up post-April 20 due to a staggering easing of lockdown in parts of India, providing a silver line in the current scenario.
Compared to 40.4 crore people employed, on average, in 2019-20, employment had fallen to 28.2 crore in April 2020 due to lockdown. However, after lifting of the lockdown, jobs created again in the informal and unorganized sector, but formal jobs have not spurred.
The employment rate fell 11.9 percentage points – from an average of 39.1 per cent during January-March 2020 to 27.2 per cent in April. This recovered by 2 percentage points to 29.2 per cent in May and by much bigger, 6.7 percentage points in June to 35.9 per cent. In July, the recovery is modest at 1.7 percentage points to 37.6 per cent.
What is worrisome is that according to the centre for Monitoring Indian Economy (CMIE)’s latest report salaried jobs have taken the biggest hit in the current Covid-19 induced lockdown. About 2.1 crore salaried people in India lost their jobs since April. In April, 1.77 crore salaried jobs were lost, followed by 1 lakh job losses of salaried employees in May.
What is disconcerting is that after 39 lakh salaried jobs recovered in June, 48 lakh jobs lost in July and 33 lakh jobs being lost in August. Salaried jobs were estimated at 8.61 crores in 2019-20. This fell to 6.84 crores in April 2020. By July 2020, their count had fallen further to 6.72 crore million. It again declined to fail to 6.51 crore in August.
In India, due to faulty policies of government and reluctance of corporate sectors to create more jobs, salaried jobs have stagnated in recent times. In 2017-18 they grew by 1.6 per cent then in 2018-19 they grew by a meagre 0.1 per cent before contracting by 1.8 per cent in 2019-20. As a result, salaried jobs in 2019-20, at 8.61 crores were lower than their level of 8.63 crores in 2016-17. This is before the lockdown hit salaried jobs.
The job losses are not confined to only the support staff among salaried employees but also include industrial workers and white-collar workers. So far, only 21 per cent of the employment in India is in the form of salaried employees and these are the people considered to be more resilient to economic shocks according to the think-tank. Youth between the age of 15-24 years will be hit harder than adults between the age group of 25 and older.
“Tackling the Covid-19 youth employment crisis in Asia and the Pacific” Asian Development Bank (ADB) and International Labour Organisation (ILO) points out that as many as 6.1 million young people (15-24 years) may lose jobs in India in 2020 if the containment of the virus takes six months (roughly till September).
It is not that before Coronavirus afflicting Indian economy, there were enough employment opportunities, but things have gone from bad to worse in the aftermath of Coronavirus spreading its tentacles. However, evidence from multiple sources points to a far more serious crisis of employment generation than is accepted.
India’s unemployment rate had hit a 45-year-high of 6.1 per cent in 2017-18, as per the National Sample Survey Office’s (NSSO’s) periodic labour force survey (PLFS) (July 2017-June 2018) of the Ministry of Statistics and Programme Implementation (MoSPI).
The unemployment rate was at its highest level since 1972-73 – a period from when the jobs data is comparable, the news agency quoted as saying. MoSPI officials said that the number of households surveyed was 433339 (246809 in rural areas and 46006 in urban areas). The figure for the overall unemployment rate at 6.1 per cent is 2.77 times the same figure for 2012.
Unemployment was higher in urban areas as compared to rural. For the rural areas, the unemployment rate was 5.3 per cent, while in the urban areas it was 7.8 per cent. Among the rural men, the unemployment rate was 5.8 per cent while among the women it was 3.8 per cent. While among the urban men it was 7.8 per cent and 5.7 per cent among urban women. The unemployment rate among youth reached a record high level in 2017-18 as compared to the previous year and ‘much higher compared to that in the overall population.
For educated rural females, the unemployment rate ranged between 9.7 per cent to 15.2 per cent between 2004-05 to 2011-12, which rose to 17.3 per cent in 2017-18. In the case of rural educated males, the joblessness rate surged to 10.5 per cent in 2017-18 from 3.5-4.4 per cent between 2004-05 to 2011-12. For instance, the rate of joblessness among rural males in the age group of 15-29 years had jumped more than three folds to 17.4 per cent in 2017-18 versus 5 per cent in 2011-12. In the case of female youth in rural areas, the unemployment rate stood at 13.6 per cent in 2017-18 as compared to 4.8 per cent in 2011-12.
The youth is moving away from the agriculture sector as it is becoming less remunerative and moving to urban areas. On the sectoral front, the construction sector, which was one of the biggest employers in urban areas, witnessed a major turmoil in the sector. In a similar trend, the labour force participating rate (LFPR) –the portion of the population working or seeking a job -declined from 36.9 per cent in 2017-18 as against 39.5 per cent in 2011-12.
Providing public employment is the responsibility of a functioning government; but current numbers show a decline across all aspects, raising doubts on strategy. Sensible people have long recognized that high levels of public employees tend to be associated with a better quality of life for people in a society. But the neoliberal policy has shrunk the role of the state on generating employment
According to data presented in Lok Sabha, there has been a decline of 89 per cent in the direct recruitment in central government ministries and departments in 2015 as compared to 2013. Further, another data emerged from answers to various questions in Parliament reveals that about 24 lakh posts are lying vacant with both the central and state governments across the country as on July 2018. According to a report by TOI, a reply in Rajya Sabha revealed that more than 10 lakh jobs are lying vacant for the positions of the teacher in the elementary and secondary level.
The vacancies are also lying with the central government-sponsored “Sarva Shiksha Abhiyan”. Apart from the number of vacant posts mentioned in the Upper House of Indian Parliament, an answer to a question on March 27, 2018, in the lower house, stated that around 4.4 lakh vacancies are lying in civil and district armed police forces. In a reply to a separate question in the Lok Sabha, around 90,000-odd positions are vacant in state armed police forces. A total of 5.4 lakh positions are lying vacant in the police forces.
A Lok Sabha questioned raised on July 18, 2018, stated that there are over 5,800 vacancies in various courts across the country. Similar to this, more than 1.2 lakh positions are lying vacant in the defence services and paramilitary forces. In a separate question replied on March 16, 2018, pointed that there is around 2.5 lakh vacant posts among non-gazetted staff in the Indian railways out of which notification to fill in 89,000 seats were already announced.
In postal departments, more than 54,000 vacancies are available. Another Rajya Sabha question answered on February 6, 2018, showed that there are nearly 1.5 lakh vacancies in these centres. Apart from all these, nearly 16,000 posts are lying vacant comprising doctors, specialists, nurses and other medical staff. What is reprehensible that the government apparently making no endeavour to fill these vacancies when India is at the cusp of one of the biggest unemployment crises since Independence?
If this overall picture is disturbing, it becomes more worrisome when you look at specific survey results. When job creation is declining in the organized sector which is necessary to absorb educated youth, total employment in India has been dropped by 9 million between 2011-12 and 2017-18.
An early one, by Laveesh Bhandari and Amresh Dubey, commissioned by the PM’s Economic Advisory Council, shows employment grew from 433 million to 457 million between 2011-12 and 2017-18. But more recently, two others come to the opposite conclusion. But, the new academic published by Azim Premji University titled “India’s Employment Crisis: Rising Education Levels and Falling Non-Agricultural Job Growth” said that employment fell from 474 million in 2011-12 to 465 million in 2017-18.
This happened for the first time in India’s history. A piece by Himanshu in Mint claims the fall was greater, from 472.5 million to 457 million. The paper is written by Santosh Mehrotra and Jajati K Parida and published by the Centre of Sustainable Employment at the Azim Premji University. Mehrotra teaches Economics at Jawaharlal Nehru University while Parida is a Professor at the Central University of Punjab.
The Mehrotra and Parida survey offer a plausible explanation for why jobs have shrunk. It shows between 2011-12 and 2017-18 agricultural jobs fell by a massive 27 million, a decline of 11.5 per cent. The rest of the economy did not generate enough new jobs to make up. Perhaps more perturbing is specific findings on youth unemployment.
The survey by Mehrotra and Parida shows the total number of unemployed youth (15-29 years) went up marginally from 8.9 million to 9 million between 2004-05 and 2011-12 but jumped to 25.1 million by 2017-18. The MGNREGA appears to corroborate this. The total number of young workers (18-30) seeking employment under MGNREGA is rising. It was one crore in 2013-14. It declined to 58.69 lakh in 2017-18. It again rose to 70.71 lakh. a year later in 2018-19.
That trend seems to be continuing. As of October 21,2019, it’s reached 57.57 lakh.One reflection of this is the number of young people (15-29) who are neither part of the labour force nor in education or training. It’s risen to over 100 million in 2017-18. It was 83 million in 2011-12.
The conclusion Mehrotra and Parida reach concerns all of us. “The slow growth (or scarcity) of non-farm jobs and the rising open unemployment together have resulted in a massive increase of disheartened youth… these are young people who are disheartened by the state of affairs and are neither looking for jobs nor are they interested in studying or training themselves.” It seems India’s youth — its future — is opting out.
The “Jobless growth” was fast turning into the “jobless growth”. In a study published in the Economic and Political Weekly, K.P. Kannan and G. Raveendran break down the latest Periodic Labour Force Survey (PLFS) findings to suggest that the Indian economy is losing its ability to absorb new entrants to the work-force with less-educated rural women suffering the most. This has gone from bad to worse since the implementation of draconian demonetization and defective GST. No new jobs are created informal or organized sector.
According to the State of Working India, 2019 (SWI 2019) report – an analysis by Bengaluru-based Azim Premji University researchers- fifty lakh men lost their jobs between 2016 and 2018. The beginning of the decline in unemployment coincided with Prime Minister Narendra Modi’s demonetization of high-value currency notes on November 8, 2016.
According to the report titled India’s Turning Point, an economic agenda to spur growth and jobs released by McKinsey Global Institute on 26 August 2020, India needs to create 90 million non-farm jobs between 2023 and 2030 to absorb new workers and an additional 30 million workers who could move from farm work to more productive non-farm sectors.
In other words, to absorb this influx, the country will need about 12 million additional gainful non-farm jobs every year starting in fiscal-year 2023, triple the four million non-farm jobs created annually between 2012 and 2018. McKinsey looked beyond the pandemic with scenarios beginning in fiscal 2023, “assuming India takes steps to transition out of the COVID-19 recession by then”.
If an additional 55 million women enter the labour force, at least partially correcting historical under-representation, India’s job creation imperative would be greater. Choosing a high-growth path that creates 90 million gainful jobs requires India to simultaneously increase its rate of employment growth sharply and maintain its historically strong productivity growth.
What is perplexing is that employment elasticity with respect to GDP has been declining in India. Lower elasticities, as a result, are indicative of what some economists call ‘jobless growth phases’.
Reaching a high of 0.50 in the period between 1999–2000 and 2004–05, it came down precariously close to zero at 0.04 during the period between 2004–05 and 2009–10. In simple words, employment elasticity means that for every Rs. 100 increase in GDP, only four new employment opportunities were created in this period.
On the other hand, in the period between 1999-2000 and 2004–05, for every Rs. 100 increase in GDP, 50 new employment opportunities were created. After that, it showed a slight improvement during 2009–10 to 2011–12 by increasing marginally to 0.08 per cent and was projected to be 0.17 for the year 2014–15. For the year 2015–16, employment elasticity was projected to be around 0.08 indicating a bigger problem in the near future.
Unemployment is the number one intractable problem in India and stands as a great impediment to social stability. If this problem is not tackled then it will destroy the moral fabric of society and trigger social upheaval. Before the 2014 Lok Sabha election, Narendra Modi had promised to create 2 crore jobs a year. But this promise has turned out to be an illusion. This promise, much like the promise of “achche din”, has turned out to be a gargantuan jumla.
The domestic challenges of our economy are intimidating in their complexity and devastating in their impact on society. Since the introduction of neo-liberalism, India has witnessed high growth but it has led to job losses too. Capital and technology have led to the displacement of labour leading retrenchment, the decline of real wages, and contractual employment instead of the permanence of jobs. It is highly imperative on the parts of government to create more jobs now otherwise there will be social instability, upheaval and explosion.
The author is an Odisha-based columnist/ economist and social thinker. Email: [email protected]
DISCLAIMER: The views expressed in the article are solely those of the author and do not in any way represent the views of Sambad English.