As COVID-19 Deepens The Employment Crisis In India
S Niyati
The sharp rise in India’s unemployment rate between 2011-12 and 2017-18 is a manifestation of misguided economic policies undertaken by the Modi government since 2014. A report by the Azim Premji University (APU) in 2019 notes a loss of five million jobs between 2016 and 2018 that coincides with demonetisation in November 2016. Several newspaper reports have also suggested massive job losses because of demonetisation. Besides this, the ill-planned implementation of the Goods and Services Tax (GST) hit many small and medium traders, and thus affected the livelihoods of self-employed persons and workers in small and medium enterprises. Along with the neoliberal policies introduced in 1991, these economic decisions have put many sections of the working-class in dire economic conditions.
Unemployment rate rose from 2% in 2011-12 to 6% in 2017-18. The impact was more in the urban sector (8% unemployment) than in the rural sector (5.5%). In the rural sector, even today, 60% of the population depends on agriculture and allied activities for their livelihood. However, over time, labour intensity in agriculture has been decreasing with the mechanisation of various agricultural operations. With the lack of other employment opportunities in villages, men migrate to towns and cities for employment, and women either pull out of the workforce or continue working in farms. In the urban sector, the public sector was a large employer until the 1990’s. However, employment in this sector has collapsed because of reduced public spending. In urban areas, 60% work in services and 35% in manufacturing activities. Construction, manufacturing, and wholesale and retail trade provide a large proportion of urban employment. Almost 70% of the work in the sector is devoid of social security benefits and formal job contracts.
Implications of the unemployment crisis are differentiated across age groups, education levels, caste, and gender. The unemployment rate for the younger population (between 18 and 40 years) is 10% vis-à-vis 1% among those above 40 years. More particularly, unemployment among youth from urban areas is as high as 12 per cent. The situation is worse for educated young persons in urban areas. The unemployment rate among young graduates is 23%. Such high unemployment among the educated youth is because of meagre employment creation in the public sector.
Social discrimination in the job market makes the situation worse for persons belonging to marginalised social groups. A large proportion of Scheduled Caste persons work as casual wage workers in public works and others in rural areas, and in the construction and manufacturing sector in urban areas. Unemployment rate among the SC persons in the urban sector is 12.2% while for the others it is 11%. The crisis is worse for SC educated youth, who experience 27% unemployment, while the others have 22% unemployment rate. It reflects the various barriers that stop people from marginalised social groups from entering the private sector.
Declining female work participation in India has been a worrying trend since 2011-12. The increase in unemployment rates has been more for men than women, but that is because women have pulled out of active job-seeking in the market. Several economists attribute this situation to the improved economic condition of the household and enrollment in education. Many other concerns explain the declining engagement of women in productive work. In India, 55% and 43% of women in urban and rural areas respectively involve only in attending domestic duties. The increasing burden of care-work on women is a fallout of the traditional understanding of the woman’s role in a household, deeply rooted in patriarchal values. In a capitalist society, there is a surge towards the dismantling of public provisioning of care and infrastructure that enables women to participate in productive work – care centres at offices, working women’s hostels, and the like. Another essential aspect often ignored is the reduced demand for work that also pushes women out of productive work – mechanisation of crop operations, the collapse of public sector employment, and the like.
The current unemployment crisis has only intensified during the COVID-19 lockdown, which was suddenly implemented without preparation and adequate relief provided by the government. Unemployment rate in the country rose from 6% in February to 24% in May 2020. The Centre for Monitoring Indian Economy (CMIE) report suggests that around six crore of the Indian youth, between 20 and 35 years of age, have lost jobs in this period. Similar findings have been produced by several surveys conducted by research organisations, firms, and individual researchers. A rapid assessment survey conducted by the Foundation for Agrarian Studies (FAS) in Bangalore, covering 21 villages in 12 states, pointed out that during the peak harvesting season in irrigated regions, cultivators resorted to combining harvesters to complete the task fast. It led to loss of employment in agriculture. The suspension of other non-agricultural activities like beedi rolling, stone quarrying, and limited MGNREGS work has added to the woes of the working class in India.
The Covid-19 Livelihood Survey conducted by APU reported that 80% of urban workers faced loss of employment in this period, and 61% witnessed a reduction in average weekly earnings. Various reports on job losses compiled by Bloomberg Quint and others also noted that 13 crore jobs could have been lost following the economic disruptions caused by the lockdown. In the urban sector, tourism and aviation, real estate, retail, auto manufacturing, domestic work services, education, restaurants, and media are the worst-hit industries. Tourism and aviation industries have laid off four crore employees. Many urban informal women workers have lost employment due to the suspension of domestic work. Around 20 lakh would have lost their jobs in private bus and taxi services, suggested the Bus and Car Operators Confederation of India (BOCI). Even in the education sector, many teachers recruited on contracts were laid off. Disruptions in circulation and reduced advertising have brought down employment opportunities in print media and broadcasting industries. Rightly summarising the situation, a survey of 1124 companies conducted by MyHiringClub.com reports 73% reported pay cuts, and 60% reported a reduction of jobs. Around 50% of the employees in the tourism and aviation industries lost their jobs. Even though the Information and Technology (IT) sector appears to be less vulnerable, a report by NASSCOM suggests possible layoffs from October 2020, if the economic distress continues. The urban informal sector employment has suffered significant blows. The economic crisis in real estate has also affected the employment opportunities of inter-state migrants, who form 70% of the workforce in construction activities. A report by the Centre for Equity Studies (CES) reported that 90% of migrant workers under contracts lost their jobs and had to return to their villages.
This grim situation will have several immediate consequences. One of them is rising indebtedness. Many wage workers have had to rely on personal and informal loans to sustain their lives during the lockdown. Small and marginal farmers, who mostly rely on informal moneylending, are in distress because of the inability to sell their produce and repay their loans. The announcement for moratorium applies for formal institutional loans and a large section of small farmers and working-class do not have access to formal loans. The youth, relying on education loans for studies, has also been facing severe setbacks with job losses. Newspaper reports suggest a rise in mental health issues because of unemployment and indebtedness.
In a situation like this, it is imperative to announce policies that will provide livelihood protection to the working class. Immediate employment creation and income transfers to all those affected by unemployment is essential. Expansion of MGNREGS in rural areas, the efficient functioning of urban employment guarantee schemes like the Ayyankali Urban Employment Guarantee Scheme (AUEGS) in Kerala, providing universal access to the public distribution system and social security measures are a few ways by which this period of economic deprivation can be overcome.
The worsening unemployment situation is an immediate fallout of the current economic crisis and this situation will have long-term implications on economic growth and social stability. Without adequate measures, this rising unemployment can reduce mass consumption, and thus affect the aggregate demand in the economy. Quite obviously, all of this will widen the existing societal disparities. Such a scenario would only intensify differentiation across the various axes. The struggle against unemployment, therefore, is a struggle against capitalist domination over labour.
S. Niyati is a senior research scholar at the Indian Statistical Institute (ISI), Bangalore, Karnataka.
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