Covid-19 pandemic accentuates the job crisis as Indian economy begins to reopen

Lakshmana Venkat Kuchi *

We are facing a severe crisis of jobs.

But before I get into the issue of job losses in India, pre and post Covid scenario, it must be mentioned that India has been witnessing jobless growth (or less jobs even when economy is growing) for the past many years. And India has been unable to generate jobs at a pace that India needed to absorb the youth entering the workforce.

But it will be wrong lay the blame on the Modi government for the loss of jobs and livelihoods, which began to get worsen after the nearly two month long national lockdown. It is obvious that a complete halt to economic activity has adversely affected the job scenario, with even the organised sector declaring downsizing citing the pandemic. The unorganised sector has been hit worse during the lockdown and it is only slowly limping back.

So, an estimate of the extent of jobs and livelihood losses would be difficult to make at this stage even as the central government is trying its best to kick start the cold economy so that it revives. But, yes, it will take time.

Jobs were being lost even before Covid as the economy was facing a slowdown in growth and the organised sector in different spheres was ‘right-sizing’ their workforce. But the job losses gained significant momentum post Covid, leading to strong criticism of the central government and its handling of the economy.

Here it must be mentioned that Covid has only accentuated job losses, for which the government cannot be held accountable. What can be debated is whether the efforts of the government in reviving the economy are sufficient and whether it needs to do much more.

If we come to the job losses, the result of a combination of factors, India has been the theatre for jobless growth, that is economic growth with no matching growth in jobs, for the past several years, long before the Modi government came to power in the year 2014.

If the rate of growth in jobs in relation to the growth in GDP is taken into consideration, the growth in jobs continued to fall despite the country being the fastest growing large economy in the world. According to a study, a declining trend was noticed in the employment growth in relation to GDP growth over the years from 0.44 percent in the five years (1999-2000) to 0.1 percent in the five years (2009-2010), and this trend continued as the economy continued to post higher economic growth, of even double digits.

This job less growth had worried and continue to worry economists, as the army of the unemployed continues to rise. Last year, India recorded the highest unemployment levels in nearly four decades, giving a handle to the opposition to attack the government with.

The reasons for the jobless growth, are also technological advancement, which enable large companies to be run with fewer workers. Huge investments are coming in, but they are not creating jobs to the extent that the unemployed could be absorbed. Another related problem is that the educated unemployed are not employable for a host of jobs as they lack the necessary skills that the new technologies need.

Which explain initiatives such as skill India initiative, that aims to prepare the country’s youthful workforce skilled enough for employment and or livelihood, via self-employment activities. Even though the Modi government cannot be blamed entirely for the unemployment crisis gripping the nation, it surely becomes its responsibility to try and create more jobs fix it as its main goal.

Labour intensive activities must get priority as also encouragement to the Micro, Small and Medium Enterprises, which is the second biggest employer after agriculture in the private sector. Years of jobless growth has now begun to bite the country at a time when the pandemic is adding to the job losses. Millions have lost jobs in the formal sector since the lockdown began. Clearly, the job market has now collapsed, with thousands losing salaried jobs, in the formal and informal sector.

In a report, the Mumbai-based think tank, Centre for Monitoring India Economy (CMIE), noted that “salaried jobs do not seem to grow in tandem with economic growth, or even with an increase in entrepreneurship. But they are suffering the most during the current economic meltdown.” CMIE MD and CEO, Mahesh Vyas, is of the opinion that despite India’s rapid growth till 2019, salaried jobs grew at a snail’s pace.

While entrepreneurship did rise in India, it did not create salaried job, indicating that it was all self-employment, and in fact, it is farming that is employing more people in India today than any sector.

“There are many more farmers than salaried jobs. Farmers and daily wage labourers together comprise two thirds of Indian working population,” the CMIE chief notes, indicating the extent to which agriculture was engaging the labour force.

Especially during the pandemic, following the lockdown and through the different stages of unlocking, it is agriculture that has shown growth of three percent even as all the other sectors registered negative growth taking India’s GDP growth to its lowest – minus 23.9 percent for the first quarter of current financial year ending March 2021.

At a time when the country needs to add at least 10 lakh jobs every year to absorb the new workforce rolling out of colleges and institutions, the country is witnessing job losses, adding that much more pressure on the shrinking jobs market.

Clearly, the government has its task cut out.

MSMEs that can generate employment ought to be given more priority and help to enable them survive. Help should be given to them in the form of grants or assistance so that they can generate jobs, which is of utmost importance and urgency. This assistance can be granted based on their efficiency and past record of accomplishment, in terms of filings of taxes for the previous years.

This is important to have some way to weed out the inefficient MSMEs, as they are likely to die even if assistance is given. But clearly employment generating MSMEs must get the immediate attention of the government, so focus should be on labour intensive units.

In the organised manufacturing sector that is witnessing rapid automation, it is necessary to help it find skilled workers. In this connection, the skill India programme must be monitored for implementation and quality controls, in steady conversation with the industry.