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    Lockdown threatens to undo a hard-won success for India's employment woes

    Synopsis

    Potential employers searched from 55 towns — this was also earlier limited to larger cities. Queries came from places as diverse as Jalandhar, Jaunpur, Ajmer and Rajkot. Even factory owners signed up to search for unskilled or semi-skilled workers. While this showed that the blue-collared jobseekers in small towns were tech-savvy, the alarming trend was the widespread desperation for employment in an economy besieged by a pandemic-induced crisis.

    As the nationwide lockdown was eased in June, Punit Jain, cofounder and director of Helper4U, an online employment agency for domestic and office help, spotted a peculiar trend. Jain noticed the geography of jobseekers on the platform was expanding rapidly.

    Before the Covid-19 pandemic struck, a majority of the registations on the platform were from big cities — 80% from Mumbai, Delhi and Pune. The company — which primarily hosts those seeking placement as housemaids, cooks, drivers, office attendants, caregivers and babysitters — was now seeing registration from jobseekers in about 130 towns across India.

    Potential employers searched from 55 towns — this was also earlier limited to larger cities. Queries came from places as diverse as Jalandhar, Jaunpur, Ajmer and Rajkot. Even factory owners signed up to search for unskilled or semi-skilled workers. While this showed that the blue-collared jobseekers in small towns were tech-savvy, the alarming trend was the widespread desperation for employment in an economy besieged by a pandemic-induced crisis.

    As Covid-19 infection spread across the country, the government had in March announced a lockdown. It crippled an economy that was already slowing down and rendered millions of people jobless. Migrant workers in urban areas were the worst hit. They suddenly found themselves without a job and in many cases, even a place to stay. Unable to support themselves in cities, these people headed back in droves to their homes in villages and small towns. Many are eking out a living on small farms and subsisting on government dole, with no certainty what the future has in store for them. When seen from this perspective, the rise in employment queries from distant places becomes more comprehensible.

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    It also indicates a setback for the country that has been trying to move people from farms to factories for over 40 years. There were sustained efforts to get the young and the predominantly unskilled workforce employed in low-productive farm labour to upskill and move to more formal industries. But these gains seem to have been reversed now. Fear of the disease, stigma and distances are still holding back many workers from returning to work, though many of them are in financial distress.

    Thousands of people who were earlier employed in manufacturing and services have now little choice but to get back to farming or allied jobs closer home. A large number of them might even stay back permanently, slamming the brakes on the formalisation process.

    Back in cities, Jain says, families are now reluctant to hire household staff who work in multiple places. “There is high demand for maids, babysitters and caregivers. But employers want them to work exclusively for them,” Jain says. That means employers have to pay higher salaries and many a time also provide a place for the staff to live.

    This significantly shrinks the pool of employers and jobseekers. Not many families can afford fulltime maids and live-in cooks. And most workers are reluctant to relocate. “Even those who are desperate for jobs, especially women, are unwilling to move cities,” says Jain.

    In some industries such as construction, the reverse migration of labourers had led to a spurt in wages. Now wages are settling back to the pre-pandemic levels. Prashant Gupta, founder and CEO of construction industry job matching platform Bandhoo, says labour supply is still not normal but building sites that pay higher wages and have better amenities are well staffed. Delhi-based Gupta says the wage spike of May and June is flattening now, though local workers still expect higher pay. In many places, contractors have started bussing in labour from other states. The increased supply is also pushing down wages.

    As thousands of small industries and establishments struggle to recover from the disruption, the labour market has been thrown out of gear. Upgrading skills and moving to better paying, steady employment was tough even in the best of times for unskilled workers. The situation has become worse now.

    Future Shock: An adverse sex ratio will start affecting workforce diversity in a decade

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    (P is projected | Source: Youth in India-2017 by Ministry of Statistics and Programme Implementation; World Bank)

    A recent study by economists Rajesh Raj, Simon Schotte and Kunal Sen — for the United Nations University World Institute for Development Economics Research (UNU-WIDER), looking at the possibilities of informal workers moving to formal jobs in India — found that workers in informal jobs were probably stuck for life. “The prospects for a large proportion of India’s working poor moving to better jobs are extremely limited,” says Sen, director of UNU-WIDER.

    The study found that very few workers in the informal sector managed to shift to formal employment even in the heydays of the economy — between 2004 and 2012, when GDP growth averaged over 8%. The status of nearly 73% of those who were employed in the informal sector in 2004 remained unchanged in 2012. “Lower tier construction workers and agricultural wage labourers are very unlikely to move out of these dead-end jobs,” says Raj, associate professor of economics at Sikkim University and the lead author of the paper.

    Opportunities are better and brighter for those working as drivers, cooks and office attendants in big cities. They have better prospects of learning a new skill or finding more paying apprenticeships. On a farm, however, these people end up doing low-wage labour. “Farm work is just disguised unemployment,” says Mahesh Vyas, managing director and CEO of the Centre for Monitoring Indian Economy. “It is the last resort where they can subsist on the bare minimum. There is no improvement in productivity. We should be wary of increasing farm jobs.”

    CMIE has found continuous deterioration in salaried jobs. Many jobs that disappeared when the pandemic began are back but new ones are being lost. India lost 17 million jobs in April; this rose to 21 million in August. But it also created 10 million new jobs, bringing the net loss down to 11 million, says Vyas. Many units are not running at full capacity. But returning unskilled and semi-skilled workers are finding jobs, says Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small and Medium Enterprises. However, Bhardwaj says, the big losses have been in sales and middle and lower management.

    That means a large number of entry-level jobs for those upgrading from low-skill employment has disappeared and those who were holding them are also probably unemployed. The UNU-WIDER study found higher levels of education increased the probability of informal workers getting absorbed into formal employment and those in lowlevel informal jobs filling those vacancies. That transition would slow down as entrylevel formal sector jobs disappear. These jobs take a long time to come back and that depends entirely on the pace of growth of the economy.

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    Entry-level jobs declined by 20% within the first few weeks of the lockdown. This trend intensified as the lockdown persisted, reaching 40% by the end of May relative to pre-lockdown averages, say Gaurav Chiplunkar of University of Virginia, Erin M Kelly of the World Bank and Gregory Lane of American University, in a paper published on September 8 by Ideas for India, an economics and policy portal set up by a group of economists at the International Growth Centre.

    “We expect these trends to impact youth more significantly as they typically have less experience and are targeting entry-level jobs. This suggests that a greater share of young jobseekers may struggle to gain a foothold in the labour market for as long as Covid and the restrictions persist,” say the authors of the paper, Which jobs were ‘lost’ during India’s Covid-19 lockdowns? Evidence from online vacancy postings.

    Even a return to the pre-pandemic status quo is unlikely to bring back those jobs as economic activity had already slowed in the first quarter of 2020. The trend of workers moving from farms to factories had started to slow before the Covid-19-enforced shutdown was announced. Some reverse migration of workers to farms was also spotted in states such as Madhya Pradesh, Uttar Pradesh and Rajasthan as far back as 2017-18, says Jayan Jose Thomas, associate professor of economics at IIT, Delhi.

    India’s enviable youth bulge could soon become a liability if it does not train and gainfully employ them. “The window of demographic opportunity is closing fast. India faces the prospect of growing old before growing rich,” says Thomas. He points to the World Bank estimates that forecast the population of the young would begin to decline in India from this year, while the growth of older age groups would increase faster.

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    Between 2020 and 2030, the population of 0-29 year olds would decline by 8.9 million, whereas the population aged 30 years or older would increase by 138.7 million, the Bank had said. The pandemic could not have come at a worse time for India. It was gradually recovering from the twin shocks of demonetisation and a poorly implemented goods and services tax regime. With a business-friendly labour code ready and global supply chains looking at India as a possible destination, the country had a real chance of finding wellpaying jobs for its nearly half-a-billion-strong workforce. Those hopes could be dashed if the coronavirus continues to impact economic activity.

    Jain of Helper4U says mobility of women is far more restricted than that of men. That is likely to reduce even more and worsen the already shrinking participation rate of women in the labour force.

    In 2017, the World Bank estimated that about 20 million women dropped out of India’s labour force between 2004-05 and 2011-12. Its study — Precarious Drop: Reassessing Patterns of Female Labor Force Participation in India — said India ranked the lowest in South Asia, measured by the proportion of women in the workforce. Globally, only the Arab world ranked lower.

    Another study, Youth in India, by the Central Statistics Office found that the sex ratio among the young population has been consistently declining since 1991. It was forecast to reach 904 in 2021 and 898 in 2031. The combination of an adverse sex ratio and low participation of women will reduce workforce diversity. That means a triple whammy awaits the economy. The window of demographic opportunity is closing fast, the transition from informal to formal employment is stagnating and there is a possible reversal in the movement of workers from farms to manufacturing and services jobs, says IIT-Delhi’s Thomas. That doesn’t augur well for the Indian economy.

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    42 Comments on this Story

    sanujit roy5 days ago
    every month people loosing job
    dnyanesh1234 6 days ago
    Migrant workers who took trains to their natives are taking trains to return back. In one or two months things will get back to normal. This country is on the move. Even in this pandemic FDI is flowing in. Have left leaning media forgotten about China hate sentiment widely seen or has chosen to ignore. Article is not worth reading
    Krishna Kumar Malani6 days ago
    Honestly this is wonderful research! India however I feel will bounce back in a year or two and the effect will not be as painful as we think. Several sectors are already showing signs of strong recovery and we hope that this will continue! Jai Hind
    The Economic Times