Second Covid Wave: Employment Rates Paint A Bleak Picture

Employment rates in the country have become a casualty to Covid-19, with the second wave of the pandemic reversing gains from September to January, when economic activity had picked up. Employment rates have dipped anywhere between 15 and 17 per cent in April and May, according to various estimates.

Centre for Monitoring Indian Economy (CMIE) estimates that during April and May alone, 25 million jobs were lost, while incomes of 97 per cent of families were hit, some more drastically than others.

“The employment rate fell to 35.3 per cent in May 2021, from 36.8 per cent in April 2021, a very sharp fall for a single month,” says Mahesh Vyas, managing director and CEO of CMIE. The employment rate has never dropped by 1.5 percentage points or more in any month in the past. During the first Covid wave and subsequent nationwide lockdown, unemployment rose to 24 per cent. This time though, without a national lockdown, the unemployment rate rose from 8 per cent in April to over 14 per cent in May.

Ravi Srivastava, director, Centre for Employment Studies, Insitute for Human Development, feels the drop in employment rates is possibly much higher than estimated by CMIE, as there has been a significant decline in employment growth which has not been marked by any rise in employment rates overall or decline in employment rates in the agriculture sector. “The impact on contract-based work and manufacturing is close to 17-18 per cent as compared to what it was during the peak lockdown period,” says Srivastava.

With industrial and commercial activities in many of the business and manufacturing hubs such as National Capital Region (NCR) and Mumbai taking a hit, and consumer sentiments dipping again, many MSME units are running at half their installed capacity, while some have shut operations, resulting in workers being left without jobs, states Dr Vinoj Abraham, associate professor, Centre for Development Studies.

The labour expert states that outside agriculture, which offers seasonal opportunities, employment rates have dipped significantly. It would currently be around 70-80 per cent of what it was at the peak of the earlier, national lockdown. The dip in employment rates in some of the large sectors like hotels, tourism, hospitality, construction, manufacturing and other contact-based sectors could be higher.

In 2019, unemployment was around 7 per cent, which is close to normal in the country. But in the last year or more, there has been no job growth barring a few sectors like retail and tech-driven enterprises, while jobs in services sectors like hospitality and tourism have not revived since the first wave. Exports are the only positive factor with demand picking up in some of the larger global markets.

The economy is not expected to pick up as projected earlier this year, so GDP growth projections are being scaled down from around 11 per cent to about 8 per cent. “There will be challenges on employment growth due to slower than expected recovery,” states Vyas.

Abraham points out that besides CMIE data, IIP numbers too have turned worse again. The indications are not good even compared to the previous crisis period, though things may not look so bad. “When compared to 2019, the situation is much worse, though no national survey has been done,” states Abraham. An in-depth study by Kerala-based CDS at the beginning of the second wave (before the regional lockdowns) in a few villages under Kadakkavoor gram panchayat near Trivandrum, revealed that one-third of working people have lost jobs, while half the working population has faced a loss of wages. What started as a study of migrants has revealed a sharp drop in family incomes as one-fourth of those working overseas have returned home, while remittances from others have declined sharply. A telling scenario is of women from middle-income families seeking NREGA jobs.

Labour experts point out that what’s not being talked about is people who are going out of labour force due to “discouraged employment” as in the case of women (data suggests that more women have gone back to households particularly in agriculture areas) and young people ready to join the workforce. The only change is that last time, the rural sector had shown some resilience. But this time, the impact of Covid is largely in rural areas. Mounting evidence from the countryside suggests there is a lot of under-reporting of Covid cases and deaths. The second wave has hit all sections of society and not just the poor or urban populations.

M A Britto, founding member, Tamil Nadu Alliance for Migrant Workers, states that though most migrant workers have returned to Tamil Nadu, basically to collect their dues, things are not looking good in brick kilns, construction, spinning, garments, and leather sectors in particular, as most enterprises are not back in full swing and are thus in no position to take back all the workers or pay them full wages.

Umi Daniel, director, Migration and Education, Aide et Action International, points out that in Surat, most people have so far not returned home unlike last year. “The reason is different this time, as most migrant workers have not been able to earn enough since September to pay off the loans taken to return to their villages with their families,” says Daniel. The rise in Covid cases in villages has also proved to be a deterrent.

There is so far no report about how many of the migrant workers in Surat and other commercial hubs have been affected due to manufacturing units cutting down production. The fact that remittances to families back home in the villages have virtually dried up indicates that all is not well with workers who opted to return to urban places to seek or rejoin work. “Studies in Odisha show that prior to the second wave of Covid, there was a 40 per cent to 70 per cent drop in an average monthly income of families in the rural areas. This could be true of other parts of the country,” says Benoy Peter, executive director, Centre for Migration and Inclusive Development.

If the Covid crisis gets prolonged and more casual or contract workers remain without jobs, they may be forced to go back to their villages. As the second wave has hit rural areas more, the entire government system seems impacted and unable to respond adequately.