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‘I Can’t Find A Job’ — Employment Pain Persists Even As Economy Reopens

Even as high frequency indicators have shown an uptick, employment indicators continue to lag.

Residents of Indira colony, Visakhapatnam. (Source: Association for Urban and Tribal Development)
Residents of Indira colony, Visakhapatnam. (Source: Association for Urban and Tribal Development)

At most slums in Visakhapatnam, the mood remains bleak even as the Indian economy steadily opens up.

Many of the dwellers here were working as construction workers, drivers and domestic help. As many as half of them are yet to find work again, says Pragada Srinavasu, secretary at the Association for Urban and Tribal Development, which runs shelter homes and works with slum dwellers in the city. Even government-sponsored development projects are yet to resume work because of a cash crunch with the local administration, Srinavasu says.

The experience Srinavasu speaks of is replicated across the country, where employment — formal and informal — continues to lag other indicators which are showing a pick-up in economic activity.

India has no official real-time data on unemployment.

The unemployment rate as compiled by the Centre For Monitoring Indian Economy stood at 6.98% in October compared to 6.67% in September. This, according to a blog on CMIE website, is actually below the 7.6% reported in 2019-20 but it masks the fact that the country’s active workforce has declined.

“At 40.6% in October 2020, the labour participation rate was also much lower compared to 42.9% in October last year,” Mahesh Vyas, managing director of CMIE, wrote on his website. The figure had never dropped below 42% before the lockdown, Vyas wrote. “October was a festival month and a kharif-crop harvest month, it was also a month of much electioneering in Bihar, Madhya Pradesh and also Uttar Pradesh. None of this could help improve the demand for labour,” he said.

A view of Indira colony, Visakhapatnam. Source: Association for Urban and Tribal Development
A view of Indira colony, Visakhapatnam. Source: Association for Urban and Tribal Development

Other indicators, too, show a slow pick-up in employment.

The Purchasing Managers’ Index, a survey-based gauge of India’s manufacturing and services sectors, shows that while activity in both segment rebounded in October, employment remained weak.

  • Across the manufacturing sector, employment continued to fall for the seventh consecutive month in October, although the pace of decline eased, said IHS Markit.
  • The services sector also shed jobs in September and October, IHS Markit said, adding that the pace of job shedding was “solid.”

Considering that uncertainty remains over the course of the pandemic, employers are bound to exercise caution because of the massive employee cost implications to firms, said Rituparna Chakraborty, co-founder and executive vice president at TeamLease.

“Hiring is a long term decision and employers are unlikely to respond to green shoots in the economy by massively stepping up hiring,” said Chakraborty, adding that for any pickup in employment, employers would need to see stability for the next 2-3 quarters.

Urban Jobs: Improving But Not Quickly

Across job listing websites, the offers for employment remained below last year, suggesting that even in the formal and urban job market, the pick-up is slow.

  • The Naukri JobSpeak Index by online recruitment classifieds company Naukri.com, was down by 23% over a year ago in September 2020, compared to a contraction of 35% in August. Data for October is not yet out.
  • Hiring on Indeed was down by 21% in October, compared from a contraction of 34% in September.
  • The Monster Employment Index was down 10% year-on-year in September, compared to 14% in the previous month.

Job listings in hospitality, travel and tourism were lower by 58-71% compared to a year ago across the indices. Jobs in retail were down in the range of 5-50%.

For Mumbai, Delhi NCR and Bengaluru, job listings were lower by over 30% while Pune, Kolkata and Hyderabad fared better, according to both Monster and Naukri. Entry level job-seekers were the worst off while hiring at senior posts inched closer to normalcy, both indices showed.

Services, that was once the fastest growing segment in terms of employment, has taken a huge beating, led by sales and customer services, Chakraborty said. The silver lining, however, is that most of the job shedding is behind us, with fewer companies letting go of employees, she said.

Even at the best of times, there can be a disconnect between employment and growth, said Radhicka Kapoor, fellow at ICRIER. Response over the medium term will depend on how employment intensive sections recover, said Kapoor. Low-end services, such as tourism and retail, are contact intensive sectors. As such, the pace of recovery in the lower strata of services will depend on when a vaccine will be ready, she said.

Both Kapoor and Chakraborty said that the nature of jobs may also change if the uncertainty around the Covid-crisis persists.

“In a country like ours, there is likely to be a shift to self employed or informal work of lower quality, as most of the labour force can’t afford to be unemployed for long and without a fiscal stimulus,” said Kapoor.

Chakraborty expects companies, especially those that rely on customer contact to veer towards more digital strategies. “The volume of employment may change, along with profile of employment, with fewer but higher quality jobs offered,” Chakraborty said. “Permanent jobs will also diminish, with contract staffing and gig work rising.”

Rural Jobs: Holding Up On Government Support

Rural jobs have held up relatively better due to the expanded budgets under the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme.

But even there signs of stress in the job market has persisted with demand remaining high and supply diminishing.

According to data available on the official MGNREGA website, demand for work by households rose 88% in October over a year ago, compared to 71% in September. This year-on-year increase is sharper than in May and June, although it has reduced sequentially.

Moreover, supply has fallen short of demand. With 2.4 crore households seeking work and 1.7 crore finding it, over 75 lakh rural households were left with no work in October.

Considering that MGNREGA is meant to serve as a safety net, with hard physical labour and lower than regular wages, the rise in demand for such employment is an indicator of stress in the economy, said Kapoor. Even for those that have found employment under MGNREGA, their earnings would have collapsed, along with a drastic change in their nature of employment, she said.

The persistent 75-80% year-on-year growth in demand for MGNREGA jobs is a sign that low-wage jobs have not normalised yet, wrote Neelkanth Mishra, India strategist at Credit Suisse, in a note dated Oct. 29.