The economy may be limping towards normalcy after the Covid-19 second wave, but the job market continues to show extended signs of stress — the loss of employment in the contact-intensive sectors now appears to be accompanied by a progressive shift towards low-paying subsistence work.
Multiple data sets point to differences in the way the first wave impacted workers compared to the trends visible in the job market after the second wave. The biggest brunt after the first wave was borne by women across both rural and urban areas, alongside services and construction sector jobs. Post the second wave, the impact seems to be more pronounced in case of better quality jobs in urban areas, especially salaried jobs.
Also, while both the farm and non-farm sectors accounted for employment generation in rural areas after the first wave last year, a visible increase in rural jobs is being driven by the seasonal farm sector post the second wave. Non-farm sector jobs, however, seem to have been negatively impacted, unlike after the first wave.
On the positive side, the one exception is the construction sector job market, which is markedly improved this time around compared to the period after the first wave.
There are clear indicators of the economic distress and lack of opportunities in the government’s latest annual PLFS (Periodic Labour Force Survey) data, which points to workers being forced into low productivity and low paying work, thereby aggravating the under-employment problem. This seems to be further corroborated by the more updated CMIE’s Pyramid Household Surveys.
The latest annual PLFS (July-June 2019-20) data showed a higher share of self-employed in total employment (53.5 per cent in the 12 months to July 2020 from 52.1 per cent in the same period in the previous year). Worse still, even within the self-employed category, the big increase is among those categorised as “unpaid family workers/helpers in household enterprises” — the poorest quality employment — up from 13.3 per cent (in terms of its share in total employment) in 2018-19 to 15.9 per cent in 2019-20.
This trend seems to be continuing, if CMIE data till July 2021 is anything to go by, which testifies to an improvement in growth of employment mostly among agricultural labourers and construction workers.
The disproportionate impact on better quality jobs is clearly evident in the CMIE data too, which shows that salaried jobs, at 76.5 million in July 2021, were actually 3.2 million less than they were in June, notwithstanding the broader economic uptick in July. The July number is 3.6 million short of the pre-second wave level of 80 million in January-March 2021.
Economists said manufacturing activity has still not reached pre-Covid levels, and the small and medium-level enterprises have seen a hit alongside the high-contact intensive services sector.
“What seems to be happening is that the employment is shifting from relatively higher pay, higher activity work to low pay subsistence work. So although unemployment is still very high, where it really is showing up is disguised unemployment, which is people working because they have no choice. What it means in effect is that the process we have had for over 20 years of people moving up the income ladder, the whole story about the expanding middle class, that story has been badly dented. The middle class has shrunk. And it’s going to take a while for that to come back. That is what it seems to be,” Pronab Sen, Chairman, Standing Committee on Economic Statistics, and former Chief Statistician of India said.
The unemployment numbers for the self-employed category are not showing up on a large scale because workers there are taking up any work for survival. “They aren’t getting work so they are trying to do something of their own, but that does not make it productive,” Sen explained.
That industrial output is up, but still below the pre-Covid levels, is also reflective in the sluggish uptick in the jobs market. While factory output grew 13.6 per cent in June, it is still only little over 91 per cent of the level seen in February 2020. Manufacturing and mining output in June were at 90.2 per cent and 85.6 per cent, respectively, of the pre-Covid period, with electricity generation accounting for most of the upward momentum in the data.
The slow pace of vaccination, and a longer interval between doses, has delayed the return of confidence levels, especially in the services sectors.
“Wherever there was contact-intensive activity, they were affected big time. Now air and rail travel is slowly resuming, but people whose jobs are linked to travel such as ticketing agents, hotel employees are yet to see work pick up to pre-Covid levels. Manufacturing sector also hasn’t reached pre-Covid levels yet. So it shows impact on MSMEs. Employment is affected in those sectors, but how much is the sequential effect, it is difficult to put in numbers,” Devendra Kumar Pant, Chief Economist, India Ratings said.
The disproportionate impact of better quality jobs is clearly evident in the CMIE data. Compared to the levels in 2019-20, while employment in July 2021 was down by 2.3 per cent, the decline in salaried jobs, according to CMIE, is 11.7 per cent. Business persons have seen a loss of 7.5 per cent.
Lower-end jobs are less impacted — small traders and daily wage labourers suffered a much smaller loss of 3.2 per cent. CMIE says some of these people who lost jobs migrated to becoming farmers and so the count of farmers has grown by 9.6 per cent.
But even in the rural areas, unlike the last time, the growth of employment in July 2021 was mostly among agricultural labourers and construction workers — signifying poor quality of employment. It is mostly informal and at least in the case of agriculture, there is a strong likelihood that temporary jobs could go away after the kharif harvest, according to the CMIE study.
A constrained non-farm jobs scenario in the rural areas, however, is bad news, as it effectively squeezes out the options for workers, with the resultant lower wages and potential distress in the jobs market in the hinterland adding to the broader negative sentiment in the country’s employment market.
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