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Home » Health » Covid-19 Second Wave Hits Jobs Hard| EXPLAINED

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Covid-19 Second Wave Hits Jobs Hard| EXPLAINED

Kolkata: People, including migrant workers rush to board a bus to leave the city. (PTI Photo/Swapan Mahapatra)

Covid-19 has wreaked havoc on lives and livelihoods in India. In January, the number of people employed was 400.7 million, but major job losses came in with the surge in Covid cases in the subsequent months. According to data from the Centre for Monitoring Indian Economy (CMIE), the number of employees, both salaried and non-salaried, fell from 398.14 million in March to 390.79 million in April. 

Many businesses announced temporary shutdowns across different parts of the country. To name a few, Hero MotoCorp Ltd, Royal Enfield, Harley-Davidson shut down temporarily. Zomato fired 13% employees, announced 50% salary cuts and Swiggy laid off 1,100 employees. Millions are out of work and out of money amid the second wave of coronavirus pandemic in the country. Millions of India’s engineers are unemployed or stuck in unrelated jobs.

With the second wave of pandemic 7.35 million people lost their jobs in the month of April, according to data released by the Centre for Monitoring India Economy. The lockdowns that followed have taken India’s unemployment rate to a four-month high of 8 percent since December, 2020, as per CMIE but, recently the Centre has refuted this figure.

On April 20, in an address to the nation, Prime Minister Narendra Modi advised states to look at lockdowns as a last resort because of its impact on the economy. Even after the PM’s announcement, several states went into lockdown to contain the spread of Covid-19, which was claiming lives in record numbers.

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“April 2021 turned out to be worse than expectations. We had expected labour participation rate to stabilise at its March 2021 level. The LPR had dropped sharply in March already after a modest fall in February. But, the LPR fell for a third consecutive month in April,” CMIE’s CEO Mahesh Vyas said.

New Delhi: A migrant labourer after he was served cooked food (PTI Photo/Kamal Kishore)

An analysis by the Business Standard reveals that in the month of April, the labour-force participation rate, which includes the number of people with jobs and those seeking work, declined to just below 40%. 

In 2021, the national unemployment rate touched 7.97% in April as against 6.5% in March and 6.89% in February. The urban unemployment increased to 9.78% as against 7.27% in March as per the centre’s proprietary data.

During April 2020 – February 2021, India saw 10,113 companies shut down operations officially, as per the press release by the Ministry of Corporate Affairs.

Delhi, with 2,394 shutdowns, fared the worst. Uttar Pradesh (1,936), Tamil Nadu (1,322) and Maharashtra (1,279) saw a large number of companies shut down during the Covid-19 lockdown, according to the Ministry of Corporate Affairs.

The crisis has caused severe problems in the urban parts of the country. These areas are witnessing higher stress at 9.78% and rural joblessness stood at 7.13%. Evidently, the localised nature of lockdowns, better adaptation of people to work from home protocols, online delivery models, e-commerce and digital payments are at work, according to the Reserve Bank of India (RBI) .

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“The impact of the second wave on the real economy seems to be limited so far in comparison with the first wave. Evidently, the localised nature of lockdowns, better adaptation of people to work from home protocols, online delivery models, e-commerce and digital payments are at work,” said the article, authored by RBI Deputy Governor MD Patra and other officials.

Malda: Migrant labourers return from Delhi (PTI Photo)

According to a research report, the second wave of covid-19 will hit the economy by reminding consumers to save rather than spend, unlike 2020’s decline that was mainly driven by supply disruptions.

 I do not know about the peaking of the Covid wave, but I can see stress on the employment front.

What has caused the jump in unemployment rate?

On 3 May, Vyas of CMIE in an interview with the Press Trust of India, said “The situation on the employment front is expected to continue to remain challenging going forward as well. In the month of April, compared to March, we have lost 75 lakh jobs. That is what has caused the jump in the unemployment rate.” 

Vyas further said that the situation right now is not as dire as the one witnessed in the first lockdown, when the unemployment rate had touched up to 24%.

The International Monetary Fund described the current global situation as the worst economic downturn since the Great Depression of the 1930s.

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What are the Consequences of large-scale Migration of workers?

According to The Hindu, lakhs of workers returned back to India’s villages after the nationwide lockdown was announced in March 2020, their condition has not changed much. Last year in September, the Modi government told the Parliament that it does not have data of migrant workers who died during the lockdown. The ministry admitted that more than 1 crore migrants made their way back to their home states from various corners of the country.

Migration has also resulted in job loss for urban areas among both the salaried and the non-salaried. The migration in this second wave is happening from the urban areas of Maharashtra, Gujarat, Delhi, Uttar Pradesh, Bihar and other eastern states. This might adversely impact the economy of the states that the migrant workers are deserting.

What will be the further impact on the economy?

The Reserve Bank of India’s survey released on April 7 reveals that consumer confidence fell to 53.1 in March 2021 from 55.5 in January 2021, as per the RBI survey released on April 5. “Consumer confidence for the current period weakened in March as the current situation index dipped further in negative territory on the back of deteriorating sentiments on general economic situation, income and prices,” said the survey.

The road ahead is fraught with danger, but India’s destiny lies not in the second wave, but in life beyond it.

While speaking with The Hindustan Times on 4 May, a labour economist KR Shyam Sundar said, “The next two-three months will be crucial and the job market stability will depend on how well we manage the crisis. But the good part is salaried jobs in urban India are not getting impacted like last year as businesses have developed resilience and they have already reduced headcount significantly in 2020 and a further cut in human resource will impact their operations and revenue”.

READ: Covid-19: Key Things to Note About The Indian Variant 

WHAT THE ILO IS SAYING? 

The Global wage report 2020-21 reflects that in India, Informal workers suffered a 22.6% fall in wages, and formal sector employees had their salaries cut by 3.6% on an average, according to a report by the International Labour Organization published on December 2, 2020.

The International Labour Organization said, “the impact of the pandemic far exceeds that of the 2008-2009 financial crisis”. 

Looking at the current global scenario, on April 29, ILO called for urgent, targeted and flexible measures to support workers and businesses, particularly smaller enterprises, those in the informal economy and others who are vulnerable worldwide.

As the pandemic and the jobs crisis evolve, the need to protect the most vulnerable becomes even more urgent.

Although globally, the economic impact is not reflected in the agriculture sector yet, the risk of food insecurity is now “emerging”. Over time, workers in this sector may be increasingly impacted, particularly if the virus spreads further into rural areas, ILO said.                   

WATCH: Coronavirus Bihar Update: Migrant Workers Forced To Return Home After States Lockdown

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