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NEW DELHI: An employment crisis may be facing the country as several crucial sectors of the economy have been severely affected by the Covid-19 outbreak that threatens to push more people into poverty, engulfing both workers in the formal as well as informal sector.
The blockade triggered a massive wave of migration across the country and closed units in sectors such as small, medium, and microenterprises, hotels, restaurants, movie theaters, shopping malls, multiplexes, airlines, manufacturing units, stores, and markets. This has led to job cuts as companies slipped away to deal with the emergency.
Latest monthly data from economic expert group CMIE showed that India’s unemployment rate soared 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 lower in Punjab, Chhattisgarh and Telangana at 2.9%, 3.4% and 6.2%, the results of the CMIE survey showed. The latest figures for the week through May 3 showed the unemployment rate reached 27.1%, the highest so far, according to the CMIE job 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. On Tuesday he said in his publication that Data through May 3 indicated that the rate could increase further.
“The situation on the employment front is very serious,” said Vyas. 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 that the unemployment rate increased from 23% initially to 24% and then to 26% during April. It dropped to 21% in the past week as the blockade eased somewhat in rural India after April 20. Obviously, a new extension of the blockage will make things worse for labor and relaxation can bring instant relief, albeit small, “Vyas said.
Pronab Sen, India’s former chief statistician, said rural areas may be less affected as the agricultural sector has not been much affected, 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 will have a major impact on the country’s efforts to reduce poverty.
Experts said that workers in the informal sector have been the most affected by the impact of the pandemic.
“A large proportion of India’s workforce, which comprises the informal sector, has been affected. Those 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, “said D.K. 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, around 400 million workers are at risk of falling into poverty during the crisis and are expected to eliminate 6.7% of workers. hours worldwide in the second quarter of 2020, equivalent to 195 million full-time workers.
Economists said the long-term impact on jobs will depend on how the recovery is regulated.
“Government intervention at the time of the crisis is very important to mitigate pain in homes. However, if the recovery takes longer, it can have a significant impact on employment and poverty, “said Devendra Pant, chief economist at IndiaRatings.
Experts also said that the country’s record of lifting millions out of poverty could suffer a serious setback. Between 2011 and 2015, more than 90 million Indians escaped extreme poverty and improved their living standards thanks to solid economic growth, according to the World Bank.
Well-known economist Ashok Gulati expects the unemployment and poverty situation to deteriorate. “The question is how much and for how long. Even malnutrition and infant mortality can increase, “said Gulati, Infosys professor of agriculture at the Indian Research Council on International Economic Relations (ICRIER).
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The blockade triggered a massive wave of migration across the country and closed units in sectors such as small, medium, and microenterprises, hotels, restaurants, movie theaters, shopping malls, multiplexes, airlines, manufacturing units, stores, and markets. This has led to job cuts as companies slipped away to deal with the emergency.
Latest monthly data from economic expert group CMIE showed that India’s unemployment rate soared 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 lower in Punjab, Chhattisgarh and Telangana at 2.9%, 3.4% and 6.2%, the results of the CMIE survey showed. The latest figures for the week through May 3 showed the unemployment rate reached 27.1%, the highest so far, according to the CMIE job 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. On Tuesday he said in his publication that Data through May 3 indicated that the rate could increase further.
“The situation on the employment front is very serious,” said Vyas. 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 that the unemployment rate increased from 23% initially to 24% and then to 26% during April. It dropped to 21% in the past week as the blockade eased somewhat in rural India after April 20. Obviously, a new extension of the blockage will make things worse for labor and relaxation can bring instant relief, albeit small, “Vyas said.
Pronab Sen, India’s former chief statistician, said rural areas may be less affected as the agricultural sector has not been much affected, 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 will have a major impact on the country’s efforts to reduce poverty.
Experts said that workers in the informal sector have been the most affected by the impact of the pandemic.
“A large proportion of India’s workforce, which comprises the informal sector, has been affected. Those 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, “said D.K. 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, around 400 million workers are at risk of falling into poverty during the crisis and are expected to eliminate 6.7% of workers. hours worldwide in the second quarter of 2020, equivalent to 195 million full-time workers.
Economists said the long-term impact on jobs will depend on how the recovery is regulated.
“Government intervention at the time of the crisis is very important to mitigate pain in homes. However, if the recovery takes longer, it can have a significant impact on employment and poverty, “said Devendra Pant, chief economist at IndiaRatings.
Experts also said that the country’s record of lifting millions out of poverty could suffer a serious setback. Between 2011 and 2015, more than 90 million Indians escaped extreme poverty and improved their living standards thanks to solid economic growth, according to the World Bank.
Well-known economist Ashok Gulati expects the unemployment and poverty situation to deteriorate. “The question is how much and for how long. Even malnutrition and infant mortality can increase, “said Gulati, Infosys professor of agriculture at the Indian Research Council on International Economic Relations (ICRIER).
