According to the Centre for Monitoring Indian Economy (CMIE)’s Consumer Pyramids Household Survey, employment in India fell from 408.9 million in 2019-20 to 387.2 million in 2020-21 and then recovered to 401.8 million in 2021-22.
Evidently, the recovery in 2021-22 was inadequate. Employment was still 1.7%, or 7 million short of the employment level of the pre-pandemic year of 2019-20. But this overstates the impact of the pandemic. Employment was on a declining trend even before the pandemic: it was falling at the rate of about 0.31% per annum. If that trend had continued uninterrupted by the pandemic, employment would have fallen by about 2.5 million from 408.9 million in 2019-20 to 406.3 million in 2021-22. And so, the hit to employment that can be attributed to the shock of the pandemic is about 4.5 million jobs.
This loss of 4.5 million jobs because of the pandemic is the more lasting net impact. The immediate impact was much bigger. Nearly 78 million jobs were lost during the quarter of June 2020, which roughly coincides with the first wave of COVID-19. Similarly, 13 million jobs were lost during the second wave during the quarter of June 2021. Most jobs lost during lockdowns or other mobility restrictions are of the informal kinds. These come back when the restrictions on mobility are lifted.
If the economy expands by about 7.5% in 2022-23, we expect about 6 million jobs to come back. That would still leave a deficit of a million even as many more get added to the working age population and the labour force.
As India struggles to generate the jobs it requires to engage all the additional people who enter the labour force in a year, the count of the unemployed and those out of the labour force keeps rising. In 2021-22, the unemployed who were actively seeking work but were unable to find any were estimated at 33 million. This was higher than the pre-pandemic levels.
The 7 million jobs lost over the two years since the COVID-19 outbreak is unevenly distributed, so it may be difficult to cover most of this loss anytime soon.
Working from home
It has been seen in the past that women suffer job losses disproportionately during economic shocks. The phenomenon repeated itself during the pandemic. Women accounted for less than 11% of all jobs in 2019-20, but they accounted for nearly 52% of the 7 million job losses since then. In urban India, it was worse: women accounted for only 9% of total employment but accounted for a massive 76% of the job losses. The impact of this is a sharp fall in the labour participation of women. The female labour force participation rate among urban women was abysmally low at 9.4% in 2019-20 and fell to 7% in 2021-22.
Hopes that working from home would facilitate women to join the labour force in large numbers have been belied. Working from home with the rest of the family also at home made it harder for women compared to the hardship of commuting to work. It has been difficult to raise women’s participation in the labour force and offer appropriate jobs in adequate numbers to aspiring women. It would be difficult to cover the 3.6 million loss of employment among women during the pandemic.
Working from home also does not help those who have to necessarily go to work for a living as well, such as small traders/vendors and daily wage labourers, The immediate impact of the lockdowns and other restrictions on mobility was very severe on them. The earnings of these people depend entirely upon their ability to reach markets and trade their goods or services for daily earnings. They account for the largest share of employment in India. Before the pandemic, in 2019-20, about 131 million or 32% of the total employment was in this form..
In April 2020, when India was subjected to the most stringent lockdown, 79 million small traders and daily wage labourers lost employment. By July 2020, most of them were back to work. The lockdowns demonstrated both the vulnerability and the flexibility of this category of workers. They could enter and exit the labour markets with ease. Employment in the form of small traders and daily wage labourers was declining at the rate of 9.3%. In the two years of the pandemic, this rate of fall fell to 2.4% per annum.
The pandemic has reversed a trend of rising entrepreneurs. The count of entrepreneurs who, like small traders and daily wage labourers, also have the freedom to work when conditions permit has also come down – from 78 million in 2019-20 to 75 million in 2021-22. This fall of about 1% is in sharp contrast to the 13% per annum growth in entrepreneurs before the pandemic. It is possible that the lockdowns dealt a fatal blow to the younger enterprises that had entered the markets only recently. But we expect entrepreneurship to rise again principally because of a lack of salaried jobs.
The biggest relative fall in employment is in the category of salaried employees (6.8%). About 5.9 million salaried employees have lost employment in the two years of the pandemic. Unlike daily wage labourers, small traders and entrepreneurs, salaried employees cannot go back to work at will. A loss of a salaried job in hand can be regained only if an appropriate new job is found. But except for a few high-skill jobs, finding a new salaried job is difficult. Investments into new large enterprises make this task particularly difficult. A salaried job is also the most coveted form of employment. But juntil the investment cycle restarts, it may be difficult to see any uptick in salaried jobs. Employing women and providing salaried jobs are the two big challenges that the pandemic has posed that are going to be difficult to tackle soon.
Mahesh Vyas is Managing Director and CEO, CMIE
