Scars of the pandemic

by Mahesh Vyas

According to CMIE’s Consumer Pyramids Household Survey, employment in India fell from 408.9 million in 2019-20 to 387.2 million in 2020-21 and then it recovered to 401.8 million in 2021-22.

Evidently, the recovery in 2021-22 was inadequate. Employment was still 1.7 per cent or 7 million short of the employment level of the pre-pandemic year of 2019-20. But, this overstates the impact of the pandemic. Employment was on a declining trend even before the pandemic. It was falling at the rate of about 0.31 per cent per annum. If that trend had continued uninterrupted by 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 about 4.5 million jobs.

This loss of 4.5 million jobs because of the pandemic is the more lasting net impact. The immediate impact was much bigger. Nearly 78 million jobs were lost during the quarter of June 2020 which roughly coincides with the first wave of the Covid-19 virus. Similarly, 13 million jobs were lost during the second wave in the quarter of June 2021. Most jobs lost during lockdowns or other mobility restrictions are of the informal kinds. These come back when the restrictions on mobility are lifted.

If the economy expands by about 7.5 per cent in 2022-23, we expect about 6 million jobs to come back. That would still leave a deficit of a million even as many more would naturally get added to the working age population and the labour force.

As India struggles to generate the jobs it requires to engage all the additional people that enter the labour force in a year, the count of the unemployed and those out of the labour force keeps rising. In 2021-22, the unemployed who were actively seeking work but were unable to find any are estimated at 33 million. This is higher than the pre-pandemic levels.

The 7 million jobs lost over the two years since the pandemic stormed India is unevenly distributed such that it may be difficult to cover most of this loss anytime soon.

It has been seen in the past that women suffer job losses disproportionately during economic shocks. The phenomenon repeated itself during the pandemic. Women accounted for less than 11 per cent of all jobs in 2019-20. But, they accounted for nearly 52 per cent of the 7 million job losses since then. It gets worse in urban India. Women accounted for only 9 per cent of total employment in urban India but they accounted for a massive 76 per cent of the job losses here. The impact of this is a sharp fall in the labour participation of women. The female labour force participation rate among urban women was abysmally low at 9.4 per cent in 2019-20 this has since fallen to 7 per cent in 2021-22.

Hopes that work-from-home would facilitate women joining the labour force in large numbers have been belied. Work from home with the rest of the family also being at home made it a lot harder for women compared to the hardship of commuting to work. It has been difficult to raise women’s participation in the labour force and offer appropriate jobs in adequate numbers to aspiring women. It would be difficult to cover the 3.6 million loss of employment among women during the pandemic.

Work from home does not help those who have to necessarily go to work for a living as well, like small traders / vendors and daily wages labourers. The immediate impact of the lockdowns and other restrictions on mobility was very severe on them. The earnings of these people depend entirely upon their ability to reach markets and trade their goods or services for daily earnings. They account for the largest share of employment in India. Before the pandemic, in 2019-20, about 131 million or 32 per cent 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 labourers lost employment. By July 2020, by when restrictions on mobility were largely relaxed, most of them were back to work. The lockdowns demonstrated both, the vulnerability and the flexibility of this category of workers. They could enter and exit the labour markets with ease. Employment in the form of small traders and daily wage labourers was declining at the rate of 9.3 per cent. In the two years of the pandemic this rate of fall fell to 2.4 per cent per annum.

The pandemic has reversed a trend of rising entrepreneurs. The count of entrepreneurs who, like small traders and daily wage labourers, also have the freedom to revert back to work when conditions permit, has also come down from 78 million in 2019-20 to 75 million in 2021-22. This fall of about 1 per cent is in sharp contrast to the 13 per cent per annum growth in entrepreneurs before the pandemic. It is possible that the lockdowns dealt a fatal blow to the younger enterprises that had entered the markets only recently. But, we expect entrepreneurship to rise again principally because of a lack of salaried jobs.

The biggest relative fall in employment is in the category of salaried employees. These fell by 6.8 per cent. About 5.9 million salaried employees have lost employment in the two years of the pandemic. Unlike daily wage labourers, small traders and entrepreneurs, salaried employees cannot go back to work at will. A loss of a salaried job in hand can be regained only if an appropriate new job is found. But, except for a few high-skill jobs finding a new salaried job is difficult. Investments into new large enterprises make this task particularly difficult.

A salaried job is also the most coveted form of employment. But, till the investments cycle does not restart, it may be difficult to see any uptick in salaried jobs.

Employing women and providing salaried jobs in general are the two big scars of the pandemic that would be difficult to erase soon.