A recovery to worry: Revival in employment has left out salaried jobs

The recovery is largely in informal jobs. The situation has worsened for the salaried class

Most of the employment that was lost immediately after the imposition of a nationwide lockdown has been restored. An estimated 121.5 million jobs were forfeited by the lockdown in its first month, in April 2020. This loss narrowed down to 100.3 million in May and then dramatically to a much smaller 29.9 million in June. July 2020 saw a further reduction in this loss of jobs to 11 million.

The recovery in jobs reflects, to a great extent, an unlocking of the economy from the draconian cessation of practically all economic activities, save a few, in late March and through most of April. Perhaps, it also reflects the desperation of Indians to get back to some employment after a rather prolonged involuntary break.

The recovery is largely in informal jobs. The situation has worsened for the relatively better jobs: salaried jobs. In this sense, it is a recovery to worry about.

Small traders, hawkers and daily-wage labourers were the worst hit by the lockdown in April. Of the 121.5 million jobs lost in that month, 91.2 million were among these. Large numbers of these people lost their source of livelihood so quickly because their employment is almost entirely informal. They have employment in hand only when the economy around them is humming. When this economy shuts down, they lose their employment during that period. Similarly, as the economy unlocks in steps, these jobs come back almost in lockstep.

Of the 91.2 million such jobs lost in April, 14.4 million came back in May, 44.5 million in June and 25.5 million in July. Only 6.8 million remain to return.
 

Many entrepreneurs also declared themselves unemployed during the lockdown. These included businessmen who own fixed assets and hire people for business purposes; self-employed professionals like doctors, lawyers or accountants; and other self-employed entrepreneurs like taxi operators. Collectively, they make for an estimated 78 million. Of these, 8.2 million declared themselves unemployed in April. Most of them came back to employment by July 2020.

The other two large categories of employment have seen different outcomes from the lockdown.

First, we see an extraordinary rush into farming. According to estimates from Consumer Pyramids Household Survey, there were 111.3 million people who declared their occupation as farming in 2019-20. This estimate rose to 117 million in March 2020 and remained there in April as well. There is never any loss of employment in farming. People just migrate out of farming, mostly voluntarily, in search of better paying employment. But, people who can, do migrate into farming when they lose non-farming jobs. This explains why the lockdown had practically no impact on farm employment in April. In May, employment in farming inched up to 118.5 million.

Then, in June 2020, farm employment zoomed up to 130 million. Good rains and the consequent aggressive sowing absorbed a lot of the labour that was losing jobs in the non-farm sectors because of the lockdown. Employment remained high in July at 126 million, although it was lower than in June. It is tempting to conjecture that the 4-million fall in farm employment indicates reverse migration. But, there is no data to support such an inference.

The second story that is contrary to the convincing recovery in employment seen by July is the performance of salaried employees. While all kinds of work are equally honourable, jobs have a qualitative pecking order. For example, a regular salaried job is better than an informal arrangement of employment in the unorganised sector. Salaried jobs are also more resilient to economic shocks than other forms of employment.

But, unlike in the case of other types of employment, the plight of salaried employees has worsened since the lockdown began. In April, they lost 17.7 million jobs. By July, their losses had swelled to 18.9 million.

While salaried jobs are not lost easily, once lost they are also far more difficult to retrieve. Therefore, their ballooning numbers are a source of worry. Salaried jobs in July 2020 were 22 per cent lower than their level in the last fiscal year. This is a data nugget that is worth worrying about.

The writer is MD and CEO, CMIE P Ltd