There has been a dramatic rise in the employment rate but salaried jobs lost during the lockdown haven't come back, said Mahesh Vyas, MD & CEO of Centre For Monitoring Indian Economy (CMIE) in an interview to DataBaaz. Vyas said that the state of salaried jobs have deteriorated in the last two months. According to the data released by CMIE, India's unemployment rate in May rose to 23.48 per cent, but is marginally lower from 23.52 per cent in April.
17.7 million salaried jobs that were lost by the end of April due to the lockdown rose to 17.8 million in May—an additional 0.1 million jobs were lost.
But still, the employment graph is on the rise according to the CMIE report. The unemployment graph which stood at 23.5% in April and May, dropped to 11.6% by June 14.
Out of the 122 million jobs that were lost in April as India went in lockdown, 22 million of those jobs have come back, out of which 14.4 million were of small traders and wage labourers. "What's heartening though that these people are getting their jobs back," said Mahesh Vyas.
"The worst is over, the worst is over. Now we are in a situation where more vulnerable people are back to work but the salaried employees are still stuck." stated Mahesh Vyas.
But the rise in employment rate is no reason to celebrate. According to Mahesh Vyas, the rise in the employment rate reflects the predominance of informal employment in India, and low and falling wage rates.
India's current employment rate of 40% (for the population over age 14) is still lower as compared to the global average employment rate was 57.4% in 2019, according to the World Bank's database.
The unemployment rate on May 17 was 27% for the urban population and 23% of the rural population according to CMIE. It has improved significantly, with the current unemployment rate in Urban India standing at 13.1%, and in rural India, it stands at 11% on June 14.
The recovery in labour markets has been better in rural India than in urban India. In rural India, labour participation has recovered to 95.4 per cent of its pre-lockdown-week (March 22) level and the unemployment rate is 32.2 per cent higher than it was then. In contrast, in urban India, labour participation has recovered lesser, at 93.2 per cent and the unemployment rate is 51.3 per cent higher than it was in the pre-lockdown-week.
This is because the government is spending more on MNREGA. People have started working in the agriculture or farm sector, which is disguised unemployment but they're working. Also its Kharif sowing season," he said.
As a part of the government's economic stimulus package to battle COVID-19, there has been an additional Rs 40,000 crore increase in allocation for MGNREGA for jobs. "Though reports point to this not being adequate, if you compare reports to what it was 3 months ago, I think MNREGA spending is happening," added Mahesh Vyas.
Does this mean the loss of income has been capped?
Mahesh Vyas has a gloomier outlook, he said, "There's a sense of despondency on when it comes to thinking about the future or the economy as a whole. People say their income is lower than what it was a year ago."
"The story on the income front ties up with the fact that the sort of employment coming back is of the lowest quality. So a daily wage labourer is probably is willing to go back to work at a lower wage range. So I think on the income side the stress is worse," he said.
Salaried jobs are being lost, and the cut-off is at the age of 40, and specifically, people less than 30 years of age.
Mahesh Vyas said that's where the real problem is. He said, "The young cohort that came to look for jobs in 2019, lost their jobs in early 2020. These job seekers will compete with job seekers who will come into the labour market in 2020, and also the job seekers who come to the market in September 2021. The youngsters who were supposed to get jobs, engineer the growth rate and do savings are kind of lost."
Highlights
-If you take away the restriction placed on a daily wage labourer to go to work, it is likely that he will go back to work.
-The rise in the employment rate reflects the predominance of informal employment in India, and low and falling wage rates.
-Three sets of job seekers will be looking for a job when the market marks back in September 2021.
Catch the full interview on YouTube or watch the video here.