Salaried class losing jobs faster than expected this year

It is now in the open. The biggest loss of employment in 2020-21 was suffered by the salaried employees as against the popular belief that they were safest in terms of employment and source of earning during the COVID-19 lockdown and subsequent restrictions. The situation is most likely to deteriorate in absence of any comprehensive job retention programme as is evident from the data since the beginning of the second wave of the corona virus pandemic since February this year.

The latest CMIE report reveals that the salaried jobs registered a sharp decline during 2020-21 to the tune of 9.8 million. The total salaried jobs in 2019-20 were 85.9 million which by the end of March 2021 reduced to 76.2 million. It clearly indicates that all the initiatives of the Modi government for retention of jobs failed. It may be due to the ad hoc nature of the initiatives, and therefore government clearly needs to learn from its failure to make some better strategy now.

The protection of the existing jobs is of paramount importance in the present surge of COVID-19 which may continue to make us suffer for some months from now. We may be enforced to impose stricter restriction on movements of the people than that has already been imposed impacting around 57 per cent of India.

The present restrictions are mostly imposed in the urban India where the most salaried jobs are. According the employment date of 2019-20, urban India accounted for 58 per cent of all salaried jobs in the country. The job loss in urban India during 2020-21 was, however, only 38 per cent of the total job loss of 9.8 million. It means further salaried job loss will occur more in urban India.

Salaried jobs in rural India accounted for 42 per cent, but it suffered more than the urban India during 2020-21 with 62 per cent of the job loss which was over 6 million in absolute terms. Further loss in rural salaried jobs may be less than urban India, but a threat is looming large. In the second wave, tier 2 and tier 3 cities and nearby villages are reporting more cases, which may disturb the overall employment scenario in the rural areas.

What happened to the employees who have lost jobs in the first COVID-19 wave? The CMIE report suggests an answer to the question by stating – most of those are likely to have migrated to farming. The report has additionally said that nearly 3 million businesspersons in rural India were rendered unemployed. They could also have migrated to farming. It is clearly reflected in the job data which show an increase of 9 million jobs in the agriculture sector.

Such a large number of shifts of the newly unemployed from their old jobs to the new one in farming clearly indicates a heavy load on agriculture which cannot sustain it without substantial increase in agriculture productivity. Here, it must be noted that this shift is not from the urban areas to rural areas, but from non-farm jobs in the rural India to farm jobs. The increase in jobs in agriculture sector in March 2021 indicates this fact.

Migration from urban areas to rural areas due to loss of job in cities has also increased the burden on the agriculture sector and the rural areas. The data for the first fortnight of April 2021 indicates that a large number of people are migrating from the urban to rural areas. This trend shows the job loss in the urban areas, both salaried and non-salaried. Majority of the migration in this second wave is happening from urban areas of Maharashtra, Gujarat, and Delhi.

Since most of the migrants are from Uttar Pradesh, Bihar and other eastern states, there could be sharp rise in unemployed people in those states when they would return, and adversely impact the economy of the states that are deserted by the migrants. Sectors like retails, restaurant, manufacturing, service etc are already impacted. Transport and logistics are also being reportedly affected. Disruption of production and supply has started which may worsen in coming days.

The data of the March 2021 shows that most of the loss of salaried jobs was registered in rural India. However, as compared to last year, urban India lost 3.7 million salaried jobs. New restrictions in the urban areas are further going to reduce the salaried employment in April or beyond. Lakhs of people who had lost jobs in the first wave are yet to get their jobs back, and they cannot hope for getting them in near future when number of jobs is diminishing fast. Finding any kind of new jobs in this scenario has become difficult, not to talk about decent jobs.

The second wave has made the economic recovery more difficult, and therefore the employment scenario. Labour participation in March 2021 was 40.2 per cent as against 42.7 in 2019-20. Employment rate is down to 37.6 per cent as against 39.4 per cent. Unemployment rate is still high at 6.5 per cent though lower than 7.6 per cent of 2019-20.

It has been estimated that the present wave could add up to well over 120 million in job loss, that is, 30 per cent of total employed in various sectors including migrant labours employed informally in unorganized sector, daily wage earners, and small traders. The first two weeks date of April 2021 shows that unemployment rate has risen to over 8 per cent with a 40 per cent fall in labour participation rate.

As of March 2021, total employment was 398 million which was 5.4 million lesser than 403.5 million in 2019-20. This data can be misleading because it hides the much bigger casualty, because people losing jobs moved from one kind of job to the others. Large number about 8 per cent migrated to agriculture which grew only by 2-3 per cent. It increased the employment count hiding the real loss.

Modi government must analyse the data more carefully and address the real problem of job loss and unemployment urgently.

(IPA Service)

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