India: Lockdown’s shadow on jobs scene to stay longer


New Delhi: The employment scenario, which was grim, turned grimmer due to the two-month lockdown, and experts say it may take longer to get back to the pre-Covid levels despite some month-on-month improvement.

With the easing of lockdown restrictions and resumption of economic activities, the unemployment rate improved in the first two weeks of June.

According to the Centre for Monitoring Indian Economy (CMIE) data, the national unemployment rate fell to 11.63 per cent as of June 14 from 17.5 per cent in the first week of the month. It has declined significantly compared with April and May, when complete lockdown was in force.

Speaking to IANS, Mahesh Vyas, CEO of CMIE, said, “As the lockdown is lifted, more and more people are coming to work. Most people who returned to work in May were daily wagers and hawkers. What happened in June would be known later.”

Rise in employment in the salaried class, which faced job losses amid the pandemic, would take longer, he said and added, job cuts in private entities might continue due to the lockdown impact.

Vyas said most companies didn’t anticipate that the lockdown would stretch more than two months and thus didn’t factor in the impact.

Former Chief Statistician Pronab Sen said sectors like aviation and hospitality, which were affected the most, would continue to be in bad shape and might take to further job cuts.

Without a demand-side stimulus from the government, the unemployment might hover around 11 per cent and slip further if businesses failed to survive, Sen said.

“Essentially, people have been desperate to restart. But if they find themselves unable to run businesses, they might shut down,” he said. Such closures might happen a quarter or two later, he added.

According to him, 2020-21 will not see any major improvement in terms of jobs, and therefore the government should focus on steps that could bear fruit in the next financial year.

N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy, said the unemployment scenario was bad even in the pre-Covid time. Any pickup would depend on the speed of economic revival.

With India’s GDP estimated to contract in FY21, the employment scene too would be impacted further, he felt. “It (GDP growth rate) has to come back to at least 6-6.5 per cent for any improvement in employment opportunities,” Bharnumurthy said.

The “only saviour” this year, according to him, will be the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The market-based employment would take a longer time to pick up, he added.

“The worst is over, but it will take a long time to repair the damage caused by the lockdown,” said Vyas of CMIE.