India saw an addition of a massive 16 million jobs in July 2021. This is about thrice the population of Singapore. But, all the additional employment provided by India in July was of poor quality. 18.6 million additional people were employed as small traders and daily wage labourers. Most of these were engaged in agriculture where 11.2 million additional people were employed. The number of salaried jobs, which are mostly bette quality jobs, fell by 3.2 million in the same month.
During the month of July we had tracked a steady improvement in labour statistics the labour participation rate and the employment rate were rising while the unemployment rate was falling. We saw this in the weekly estimates and in the 30-day moving averages. It was evident from these weekly data snippets that new jobs were being created during July. However, while these weekly ratios do indicate the change in employment correctly, they cannot reveal changes in the quality of employment or the sectoral composition of the change. For this, we must wait till the end of the month.
The big jump in employment seen in agriculture in July is a reflection of the increase in sowing activities. Monsoon has been playing truant this year. This has delayed kharif sowing activities. By end of June 2021 kharif sowing was more than 20 per cent lower than it was in the corresponding period of 2020. By end of July it was less than 5 per cent lower than a year ago. 65.3 million hectares were sown during July compared to 19.5 million hectares in June. This could be the reason why we see the sharp increase in employment in agriculture.
Employment in agriculture usually rises in July. This seems to be a seasonal pattern. Often, the increase begins in June, peaks in July and sometimes remains elevated in August. This is the kharif time of sowing and post-sowing agricultural activities. Employment then rises again in November during the kharif harvesting season. Agriculture absorbs an additional 8-12 million persons in the month of July. In this year the absorption in July was on the higher side at 11.2 million.
This seasonal absorption of labour into agricultural activities is different from the large scale migration of labour into agriculture as farmers. This happens when other sources of employment start drying up as witnessed in 2020 during the pandemic. The rise of employment in form of farmers seen in 2020 was mostly disguised unemployment.
In July 2021, while employment in agriculture grew by 11.2 million, employment as farmers grew by only 1.8 million. Employment in agriculture mostly consists of two kinds of occupations farmers and farm labourers. The latter, farm labourers are a part of daily wage labourers. It is this category that seems to have increased dramatically during July.
It is likely that as the kharif sowing season comes to an end, these agricultural labourers will lose this source of employment. The economy will need to provide adequate alternate sources of employment to this labour when the season ends.
Unless the economy grows at a healthy clip, these people will find it difficult to find alternate jobs. In three of the five months of August for which data is available since 2016, the agricultural sector shed, on an average, about 3 million jobs. The absorption of such numbers exiting from agriculture in other sectors would be a challenge given the sluggish pace of economic recovery so far this year.
In July, the construction sector absorbed an additional 5.4 million people. The manufacturing sector shed 0.8 million. The services sector could absorb only an additional half amillion.
The growth of employment in July was therefore mostly among agricultural labourers and construction workers. This, with due respect to all forms of labour, is poor quality of employment. It is mostly informal and at least in the case of agriculture, very likely temporary in nature.
The relatively better quality jobs fell in July. Salaried jobs, at 76.5 million in the month, were 3.2 million less than they were in June. These were also 3.6 million short of the pre-second wave level of 80 million in January-March 2021. Compared to the pre-pandemic times when salaried jobs were of the order of 87 million, the fall is much larger at over 10 million. The several lockdowns since April 2020 and their debilitating effects on the economy have cost the salaried job workers the most.
Compared to the levels in 2019-20, employment in July 2021 was down by 2.3 per cent. But, the decline in salaried jobs is much larger at 11.7 per cent. Business persons have seen a loss of 7.5 per cent and small traders and daily wage labourers suffered a much smaller loss of 3.2 per cent. Some of these people who lost jobs migrated to becoming farmers and so the count of farmers has grown by 9.6 per cent.
Small traders and daily wage labourers suffered much bigger job losses during the lockdowns than others. But, they relatively easily revert to their occupation when the lockdowns are lifted. This is the nature of the employment of a daily wage labourer. But, salaried jobs are not similarly elastic. It is difficult to retrieve a lost salaried job. As a result, the cumulative impact of the steady loss in salaried jobs during the several lockdowns and their after effects is much worse.
Till investments do not pick up it may be difficult to see most of those 10 million salaried jobs lost since 2019-20 to come back. This could be the biggest hurdle to India’s recovery.