covid continues to bleed employment in india

~ By Trinanjan Chakraborty

With the covid-19 second wave forcing almost the entire country into a lockdown type scenario, the employment situation in India continues to be grim. CMIE unemployment rate for the country which stood at 7.97% in April, is likely to be higher in May with economic activities by and large suspended in almost all states. The 30-day CMIE unemployment moving average as on 27-May, stood at 11.3%. The situation is most grim in Haryana (35.1%), Rajasthan (28.0%), Delhi (27.3%) and Goa (25.7%).

Meanwhile, in a worrying trend, the National Pension Scheme (NPS) payroll data shows that government hiring, a major contributor of employment has dwindled significantly in FY21.

Central govt new NPS subscribers – last 3 FY (source: MoSPI)

In the FY21, the addition to the central payroll dropped by 26%. The trend is also similar for state govts. with the NPS addition in FY21 dropping by 1,07, 000 from previous the financial year – a drop of ~22%. Other metrics also portray a similar drop in employment. New enrollments in the Employment Provident Fund Organization (EPFO) and Employee State Insurance Corporation (ESIC) in the FY21 have dropped by 22.6% and 24% respectively, MoSPI data released earlier this week show. While the EPF scheme is mandatory for workers not earning more than Rs. 15,000 a month in organizations having more than 20 employees, the ESIC, on the other hand, provides insurance and medical benefits to those workers whose monthly wages do not exceed Rs. 21,000 in a month in establishments having 10 or more workers.

A recent report by compiled basis estimates of hiring consultants reports loss of 7.5 million salaried jobs between February & May, 2021 across sectors like Travel & tourism, Hospitality (hotels, restaurants etc.) and organized Retail. This drop is worse even than the 2007-09 financial crisis during which an estimated 5 million jobs were lost.

Job loss by sectors: Feb-May’21 (source: report)

However, the impact on unorganized sector is likely to be even more severe. CMIE data for April showed that 7.35 million jobs – salaried + non-salaried – were lost in April’21 alone. From 400.7 mn in January, CMIE’s estimate of no. of employed people went down 390.8 mn in April and the trend is set to continue in May.

Although the 2nd wave of the pandemic is on a downward trajectory, it is also a fact that almost all states are under some kind of lockdown/restrictions. As these start getting loosened in June, risks of the infection rising again remains. Moreover, most domain experts have cautioned of a 3rd wave later in the year. Faster vaccination right now is the only hope to prevent the severity of such an occurrence and ensure that employment and overall economic activity returns to a positive trajectory.

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