How Lockdown Has Impacted Employment in India?

2020 Employment Stats in India

A country’s economy is dependent on various industrial sectors, all connected in a vast web of codependency. At the centre of this is the working professional. Be it in the formal or informal sector, the employed members of the nation are the backbone of the economy. What happens when a global pandemic strikes? Covid-19 took the world by complete surprise, the pandemic has resulted in indiscriminate job losses across industries owing to strict lockdown measures imposed worldwide. The International Labour Organisation (ILO) has reported a loss of 400 million jobs globally, during April-June 2020 (annual second quarter). For a vast portion of the workforce, especially the informal sector, unemployment means no food, no shelter and no healthcare. With over 7 million total cases,  India is one of the worst hit countries by the novel Covid-19. With hopes of curbing the spread of Covid-19, a  strict nationwide lockdown was imposed in the last week of March 2020 which continued till end of May 2020. Except a few essential sectors, all industrial activity was shut and a lot of jobs were lost. In this article we will explore the nature of unemployment in India that rose during the lockdown and how it has impacted industries and workers alike.

Unemployment In The Formal And Informal Job Sectors

The formal sector comprises jobs with assured regular wages, defined working hours and taxable incomes. These can be government (state or centre) and private sector jobs. On the other hand, informal sector jobs do not have set working hours or regular wages. Most informal sectors do not provide job security and workers may be let off without prior notice, this puts them in a very vulnerable position. In India, the majority of the primary workforce is concentrated in the informal sector. Migrant labourers make a huge chunk of the informal sector workforce, they often relocate from rural to urban areas in search for jobs. It is not surprising that both the formal and informal sectors have incurred drastic job losses due to the lockdown. Professional white collar jobs are thought to grant financial stability and  job safety but unfortunately the lockdown has witnessed losses of 18.9 million salaried jobs during the months of April 2020- July 2020. It is very difficult to lose a professional salaried job and even more difficult to get back into the workforce. Whereas, informal jobs are easier to retrieve once lost. In the beginning of the lockdown, it was the informal workforce which was affected the most, especially migrant labourers. Since they do not have a social safety net, migrant labourers undertook a mass exodus to reach their rural hometowns, with trains and bus services shut down they undertook the journeys on foot. Furthermore, small industries and businesses discontinued to function as they relied heavily on manual labour granted by the informal sector. About 93 million informal sector workers lost their livelihoods during the lockdown as estimated by the Periodic Labour Force Survey (PLFS).

Souce: Unemploymentindia

The drastic rise in the unemployment rate during April and May 2020 was due to the strict lockdown. As the lockdown was eased, the rates went down. However,  it will take a long time to recover because the employment rate and labour participation is still stagnant. The labour force of a country comprises people involved in active employment and people who are unemployed but are actively looking for work. Employment rate is the proportion of the working age population that is actively employed. There was a drastic fall in the employment rate during May-June 2020, things have started to look better from the month of July and August. However, the employment rate seems to be stagnant, it isn’t increasing at a speed enough to recover back to pre-lockdown times. This could be because the labour force is shrinking due to less labour participation which in turn has worsened the dynamic growth of the labour market.

Most Affected Economic Sectors

Every economic sector has fallen into a rough patch. Industries which are highly labour intensive seem to have taken the worst hit. While industries such as Information Technology and consultancy have adapted to this novel situation and asked employees to work from home. A lot of industries cannot afford this luxury. Manufacturing sectors have taken a huge blow, due to the decreased labor supply. Automobile and auto-parts industries along with textile industries have fallen into a slump, due to fallen income there is hardly any consumer demand in this sector.  The auto sector will continue to languish for a while and the industrial workers will have to look for other sources of income. Tourism, hospitality, and aviation sectors have been forced to undertake mass employee layoffs as they are unable to support such a workforce. These industries will most likely not be able to function to their full capacity for the next twelve months. Growth of construction and real estate sectors have come to a standstill due to a lockdown. This industry is highly dependent on the migrant labour force which relocated to their hometowns once the lockdown started. Now that the lockdown is being lifted in a phase-wise manner some workers are returning and the industry is picking itself up. However, consumers are reluctant to invest in any new real estate ventures and this decreased demand has affected the employers capacity to support a full workforce. Other key sectors with high numbers of unemployment in the informal sector are; trade, transport, communications, non-food retail and finance.

Conclusion: What Does The Future Hold?

Covid-19 is not leaving anytime soon. Millions of casualties later experts are warning of an impending second wave in the winter months. We must be prepared to face higher unemployment rates if the second wave is as intense as the first one. Workers might explore  other sources of income to sustenance. Currently, the unemployment rate is 6.7% as reported by the Centre for Monitoring Indian Economy Pvt. Ltd. Urban job losses have been more severe than rural unemployment.

Embracing the new normal will be a sure- shot to survival, workers have to evolve their skills in order to fit into the changing demands of the job market. Industries are bound to increasingly rely on automation and technology. Many jobs might be rendered obsolete but this will also open up the avenue for millions of new jobs. The government should strengthen the already existing financial safety nets and employment schemes such as MGNREGS (Mahatma Gandhi National Rural Employment Generation Scheme). Due to a shut down in global trade, a lot of industries will turn to manufacturing raw materials locally, this will open up new job prospects, helping the informal job sector. All in all, things might not look very bright given the current vantage point and it will take a while for unemployment rates to go down given the unpredictability of the pandemic. In a year or so, India will bounce back even stronger with a secure and skilled workforce.

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FAQ

Q. Which methods are used to find the rate of unemployment?

A. The rate of unemployment is acquired using four data sources; Labor Force Sample Surveys Official Estimates, Social Insurance Statistics, and Employment Office Statistics.