The state of employment in India is declining at a rapid pace, all thanks to the havoc wreaked by COVID-19. The prolonged period of lockdown combined with a slump in the global economy has decimated the livelihoods of the thousands of salaried people in the country. Most of them are now looking at an uncertain future with no light at the end of their tunnel.
According to the recently released July report from the Centre for Monitoring India Economy, a whopping 17.7 million who held salaried jobs were pushed into unemployment in the month of April with an additional 0.1 million jobs being lost in May.
For a brief period, things did start looking up as the CMIE recorded 3.9 million jobs being gained in June. However, the situation turned back in July once again as the five million jobs were reportedly lost in Jul,y demolishing that small glimmer of hope quickly.
The Lockdown: The Begining Of The Worst
Now, If one has to pinpoint the exact moment from where things started heading south in terms of unemployment then it is undoubtedly the beginning of the lockdown.
The Indian government initiated Lockdown 1.0 on 25 March 2020. Match that with the data from CMIE and you’d find the unemployment rate in India shot up to 23.8% in 29th March from just 8.4% in 22nd March. Since then the numbers have kept climbing only higher and by July, the net losses in jobs swelled to 18.9 million for salaried people.
It is extremely alarming as CMIE has rightly put that salaried jobs are not easily lost but once someone does end up losing his or her job, it becomes far more difficult for them to retrieve it.
The COVID-19 infected over 2.7 million people in the country, which is definitely a severe hit to economic activity. Earlier, the CMIE had estimated that close to 121.5 million jobs in total were lost due to COVID-19 lockdown in April. However, in May, this loss narrowed down to 100.3 million and then in July it further narrowed to 29.9 million. As of July, 11 million people lost their jobs.
This clearly shows while the net job cuts are getting reduced within every passing month, it shows no significant drop to signal a healthy recovery.
Corporate Filings Q2 2020: Reduction In Employee Costs
Apart from CMIE’s report, the data aggregated from the Q2 2020 corporate filings from over 40 leading BSE 100 companies shows that there has been a sharp reduction in the employee costs in the services sector and non-essential manufacturing. This definitely hints at wide-scale salary cuts even though it is not concretely pointing towards layoffs or net job losses.
EPF Subscribers: Increased Withdrawals
A sharp increase in withdrawal has also been observed by the Employees’ Provident Fund Organisation (EPFO) subscribers. According to the data collected by the Indian government, around 11.27 lakh claims were filed via UMANG app online from April to July 2020.
Now, if compared with the data from the pre-COVID-19 period of December 2019-March 2020, one could find a whopping 180% increase.
This is again something that is limited to the formal sector employees only and shows how the COVID-19 has forced salaried employees to dive into their EPFs to survive the brunt of the situation.
Government sources have added that the substantial increase in withdrawals has likely been sparked by three major factors – salary cuts, pandemic-related job losses and medical expenses.
State Of Recovery In Near Future?
While some analysts believe that salary cuts will be rolled back and new job roles will be opened once the growth recovery starts towards the second half of this financial year, there is still plenty that’s uncertain.
Quess Corp which is a staffing firm has said that the worst might just be over as they are currently engaged with their clientele for various hiring requirements in the coming months. Nonetheless, they too have acknowledged that some sectors might still struggle with job creation for the rest of the remaining year. We will keep you updated on all future developments. Until then, stay tuned.
Unemployment is high