One in 4 employees lost a job in India in March and April: CMIE
NEW DELHI: An employment crisis is facing the country in the face, as several crucial sectors of the economy have been severely affected by the coronavirus blockade. Threatens to push more people to poverty , wrapping both formal and.
The latest monthly data from the CMIE economic expert group showed that India unemployment rate shot up to 23.5% in April. Among large states, unemployment was highest in Tamil Nadu, Jharkhand, and Bihar at 49.8%, 47.1%, and 46.6% respectively. It was lowest in Punjab, Chhattisgarh, and Telangana at 2.9%, 3.4%, and 6.2%, the CMIE survey results showed.
The latest figures for the week up to May 3 showed the unemployment rate rising even further to 27.1%, the highest so far, according to the CMIE jobs survey.
“The estimated loss of employment between March and April 2020 is 114 million. Given that the total employee count is around 400 million, the loss of 114 million implies that one in four people employed lost their job, said Mahesh Vyas, managing director and CEO of CMIE. He said in his post on Tuesday that data through May 3 indicated that the rate could increase further.
The situation on the employment front is very serious, Vyas said. He said that the labor participation rate (a measure of the active labor force in the economy) is extremely low and in April it was 35.6%. Vyas said an extension of the blockade could worsen the situation.
“We saw the unemployment rate rise from 23% initially to 24% and then 26% during April. It came down to 21% in the last week as the lockdown was eased a bit in rural India post April 20. Evidently, a further extension of the lockdown will make matters much worse for labour and relaxation can bring some instant, albeit small relief,” said Vyas. Large-scale migration could exacerbate the situation by leading to a shortage of skilled labour in certain sectors.
Among the most affected are small, medium and micro-enterprises, hotels and restaurants, multiplexes, retailers, airlines, manufacturing and the media. This has led to job cuts as companies rushed to deal with the emergency.
Pronab Sen, who was India's chief statistician, said rural areas may be less affected as the agricultural sector has not been hit too hard, but there remains uncertainty about farmers' net income.
“Urban poverty is going to be a serious concern,” Sen said, adding that the CMIE figures were a reflection of what is happening on the ground. He also said it would have a major impact on the country’s efforts to reduce poverty . Experts said informal sector workers have borne the brunt of the impact of the pandemic.
A large proportion of India's workforce, which comprises the informal sector, has been affected. The most affected are daily wage earners and those without job security. In India, casual workers make up around 25% of the workforce. These workers would receive the first blow, due to closings and layoffs. The most affected industries (construction, a large part of manufacturing and transport) have a considerable proportion of casual workers; for example, they make up about 83% of the construction workforce, D.K. said. Joshi, chief economist at the Crisil rating agency.
“Even in the salaried category, approximately 38% do not have job security, which implies that they do not have a valid employment contract, are not eligible for paid vacations and do not have social security benefits. Services such as accommodation and food services and airlines have been severely affected. Continuing closure, therefore, has serious livelihood consequences for these categories of labor, ”said Joshi.
Last month, the International Labor Organization warned that in India, with almost 90% of people working in the informal economy, about 400 million workers are at risk of falling deeper into poverty during the crisis and it is expected to wipe out 6.7% of working hours globally in the second quarter of 2020 – equivalent to 195 million full-time workers.
Economists said the long term impact on jobs would depend on how the recovery is scripted. “Government intervention at the time of the crisis is very important to mitigate the pain on households. However, if recovery takes more time, it may lead to a significant impact on employment and the poverty situation," said Devendra Pant, chief economist at IndiaRatings.
Experts also said that the country’s track record of lifting millions from poverty may suffer a serious setback. Between 2011-15, more than 90 million Indians escaped extreme poverty and improved their living standards thanks to robust economic growth, according to the World Bank.
Noted economist Ashok Gulati expects the unemployment and poverty situation to deteriorate. “The question is by how much and for how long? Even malnutrition and infant mortality may go up,” warned Gulati, Infosys chair professor for Agriculture at the Indian Council for Research on International Economic Relations (ICRIER).