Livelihoods at stake for millions as employment crisis gets the coronavirus

India's economy, even when it is growing, doesn't create enough quality jobs, and a nationwide lockdown to contain Covid-19 has created an employment calamity, writes Mahesh Vyas

The average number of persons employed in India during 2019-20 was 403.8 million, according to estimates derived from CMIE's Consumer Pyramids Household Survey (CPHS). In the past four years, this number hasn't progressed much.

Four years ago, in 2016-17, this number was in fact much higher at 406.1 million. It receded to 405.9 million in 2017-18 and then further to 400.9 million in 2018-19 before recovering slightly to the 403.8 million estimate for 2019-20.

In spite of sustained growth in the real GDP, large representative household surveys in India have systematically shown that employment does not grow. On the contrary, employment often shrinks even as growth continues.

Further, the quality of jobs leaves much to be desired. Indian jobs are predominantly informal and in unorganised sectors. There is little security in most jobs, although employment laws are considered so rigid that entrepreneurs prefer to stay away from labour-intensive industries.

The vulnerability of workers is seen during the prolonged lockdown that India is in the midst of today to contain the spread of coronavirus. Most of the 403.8 million people employed in India today are vulnerable to substantial income and job losses because of the nature of the work they do. The problem is structural. No amount of persuasion from even the prime minister can save the day for these vulnerable workers because of the structural weaknesses of employment in India.

Pictures of disoriented and anxious migrant workers walking along highways in the hope of reaching their villages are graphic in conveying the vulnerability of vast swathes of India's labour force.

Without work and vulnerable

A small proportion of the working-age population is able to find work and even they are highly vulnerable to economic disruptions.

Less than 40 per cent of the working-age population was employed in 2019-20. This population consists of all those aged 15 years and above. It's over a billion in number and grows by about 2 million every month, or 24 million a year. By comparison, less than 3 million were added to the count of employed persons in the entire 2019-20 financial year. In contrast, about 6 million got added to the count of the unemployed. As many as 11 million didn't even bother to look for jobs. This is not a good thing, for India needs more hands to the till, more feet on streets and more skills and brains deployed in jobs.

Does this mean that India's working age population is largely unwilling to work? Unlikely. What is more likely is that quality jobs are scarce. Those that don't even look for jobs find the general working conditions quite pathetic. CPHS provides us with an insight regarding this vulnerability of Indian workers.

Nearly a third of the employed people in India are small traders and daily-wage workers; they are the most vulnerable. Their livelihood depends entirely upon the economy functioning every day. They have no fixed assets in the true sense of the term: Imagine the old woman selling bananas on the pavement, the cobbler at the street corner or a painter hired on a daily-wage basis. If their city or village shuts for a day, they lose income. There are no paid leaves for them. In urban India, most of these people live in congested rooms that depend upon a cruel reality that everybody is not expected to be home most of the time.

The lockdown brings an unimaginable misery to them. There is no income and maintaining social distance is unimaginable for them. For all practical purposes, all of them have lost both employment and income during the lockdown. Such people at present are of the order of 130 million.

Famers and small entrepreneurs

Another 113 million are used to living in perpetual risks. They are farmers, many of whom have seen their rabi crop wither because of the lockdown. Vegetables and fruits could not be harvested. Labour was not available and threshers could not move.

These two categories — small traders and daily-wage earners and farmers — together account for about 60 per cent of the employed people in India. They have no cover whatsoever against the loss of livelihood in the lockdown.

Then there is the third category of self-employed entrepreneurs. Over the past four years, there has been a steady increase in self-employed entrepreneurs. In 2016, they accounted for 8 per cent of the total employed. By 2019, their share had gone up to nearly 14 per cent. This sharp increase in their numbers implies that a majority of them are in nascent stages of their entrepreneurship. It is unlikely that they will be able to weather the storm of a prolonged lockdown. Their potential failure as entrepreneurs because of the lockdown does not augur well for a country that has tried hard to create self-employed entrepreneurs in recent years.

That leaves only a little over 21 per cent of the employed, the salaried employees. They may have some cover during these times of a lockdown. The government's advice to companies that they should not lay off labour and continue paying them wages applies to this relatively small proportion of the total workforce in India. Even then, this workforce will face challenges because more than a third of the medium-to-large companies are making losses. Their ability to retain and pay staff in these difficult economic conditions is doubtful.

An increasing proportion of these salaried employees is contractual. Such people can be laid off easily, and many are indeed being. So, even these 21 per cent of workers are not equally safe during an economic crisis.

We know that coronavirus does not discriminate. It can potentially strike anyone who comes into its contact, but the attack has a probability distribution and the human body can build antibodies against it. The lockdown, on other hand, is attacking all groups. No employed person will come out better from it. The lockdown may save us from the infection but the cost will be a huge loss of livelihood. In many cases, the loss of livelihood may be irrecoverable. In many cases, the loss could increase vulnerability to health problems far beyond coronavirus.

It may be good to use this crisis as a learning lesson from where we fix our labour markets to make jobs less vulnerable and the health services industry better equipped to handle such challenges.

The author is MD & CEO of Centre for Monitoring Indian Economy (CMIE)