According to the Consumer Pyramid Household Survey of the Center for Monitoring Indian Economy (CMIE), employment in India fell from 408.9 million in 2019-20 to 387.2 million in 2020-21 and then to 401.8 million in 2021-22.
Obviously, the recovery in 2021-22 was inadequate. Employment was still at 1.7% or 7 million less than the pre-pandemic year 2019-20 employment level. But it exacerbates the impact of the pandemic. Employment had a declining trend even before the pandemic: it was falling at a rate of about 0.31% per year. Had this trend continued unabated from 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 around 4.5 million jobs.
This loss of 4.5 million jobs is a more permanent net effect due to the pandemic. The immediate effect was huge. About 78 million jobs were lost during the June 2020 quarter, which roughly coincides with the first wave of COVID-19. Similarly, 13 million jobs were lost during the second wave during the June 2021 quarter. Most of the jobs lost during the lockdown or other mobility restrictions are of the informal type. These return when the restriction on mobility is removed.
If the economy grows by about 7.5% in 2022-23, we expect about 6 million jobs to come back. This would still leave a deficit of one million, adding even more to the working-age population and labor force.
As India struggles to create jobs it needs to include all the additional people entering the labor force in a year, the number of unemployed and out of the labor force continues to grow. In 2021-22, the unemployed who were actively looking for work but could not find any work were estimated at 33 million. This was higher than pre-pandemic levels.
7 million jobs have been lost in the two years since the unequally distributed outbreak of the COVID-19 outbreak, so it may be difficult to cover this loss too soon.
working from home
In the past it has been observed that women suffer disproportionately in job losses during economic shocks. The phenomenon repeated itself during the pandemic. The share of women in all jobs in 2019-20 was less than 11%, but since then their share in the loss of 70 lakh jobs was around 52%. In urban India, it was worse: women accounted for only 9% of total employment, but accounted for a massive 76 percent of job losses. Its effect is a sharp decline in women’s labor participation. The female labor force participation rate among urban women was 9.4% in 2019-20 and fell to 7% in 2021-22.
The hope that working from home will facilitate women to join the labor force in large numbers has turned out to be false. Working from home with the rest of the family also makes it difficult for women to come to work in comparison. It has been difficult to increase the participation of women in the labor force and to provide adequate number of suitable jobs to the willing 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 also have to go to work for a living, such as small traders/vendors and daily wage labourers, the immediate impact of the lockdown and other restrictions on mobility was very severe on them. The earnings of these people depend entirely on their ability to access the markets and trade their goods or services for daily earnings. They are responsible for the largest share of employment in India. Before the pandemic, in 2019-20, about 131 million i.e. 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 workers lost jobs. By July 2020, most of them were back at work. The lockdown demonstrated both the vulnerability and resilience of this category of workers. They could easily enter and exit the labor markets. Employment in the form of small traders and daily wage laborers was declining at the rate of 9.3%. In the two years after the pandemic, this rate of decline fell to 2.4% per year.
The pandemic has reversed the trend of budding entrepreneurs. The number of entrepreneurs who, like small traders and daily wage workers, have the freedom to operate even when conditions permit have been reduced – from 78 million in 2019-20 to 75 million in 2021-22. This drop of about 1% is in contrast to the 13% per year growth in entrepreneurs before the pandemic. It is possible that the lockdown may have dealt a fatal blow to the young enterprises who entered the markets recently. But we expect entrepreneurship to pick up again, mainly due to the paucity of salaried jobs.
The largest relative decline in employment is in the category of salaried workers (6.8%). About 5.9 million salaried workers have lost jobs in the two years of the pandemic. Unlike daily wage workers, small traders and entrepreneurs, salaried workers cannot go back to work of their own accord. The loss of a salaried job in hand can be reversed only when a suitable new job is found. But it is difficult to find a new salaried job, except in a few high-skill jobs. Investing in new large enterprises makes this task particularly difficult. A salaried job is also the most coveted form of employment. But until the investment cycle starts again, it may be difficult to see any uptick in salaried jobs. Employing women and providing salaried jobs are two major challenges posed by the pandemic which will soon be difficult to tackle.
Mahesh Vyas is the Managing Director and CEO of CMIE