18.9 million Indians lost their salaried jobs between April to July this year, with 5 million of these jobs being lost in July alone. This data released by the Centre for Monitoring Indian Economy or CMIE comes at a time when the Indian economy is limping back to normalcy from a COVID-19 induced lockdown. Agricultural jobs, however, seem to be better off than jobs in business, salaried classes and daily wage earners; gaining 14.9 million jobs in the same period.
Overall, at the very start of the lockdown in April, the Indian economy lost 121.5 million jobs due to shock imposed by the lockdown, but the CMIE notes that this loss has narrowed to 11 million.
"What happened in April was that there was an immediate impact of a massive shock to the economy which led to 403 million who had employment get hit. And of those 403 million people, 121 million people lost their jobs", said CMIE's MD and CEO, Mahesh Vyas to BOOM's Govindraj Ethiraj.
Most of these shifts can be attributed to the structure of the Indian workforce, Vyas explained.
When the economy faces a shock, its the daily wage earners who are impacted first. This implies that occupations such as carpentry or mason, for example, would be first on the chopping block. Compared to this, salaried individuals' jobs are retained for a period even after their companies fall in trouble, thus creating a lag. Therefore, once the lockdown started lifting, the informal jobs started trickling in; farmers are carrying out agricultural work after witnessing good rains; but salaried jobs are being lost as they are being hit with this lag. Salaried jobs are hard to lose, but are also hard to retrieve, said Vyas.
"Companies are slowly shutting down, as they are slowly seeing the impact of the lockdown to be more severe than what they anticipated earlier. The lockdown has been more prolonged than what anyone imagined in the beginning", he said.
In April, at the onset of the lockdown, 17.7 million salaried jobs were lost. An additional 0.1 million were lost in May but 3.9 million jobs were gained in June. Another 5 million jobs were lost in July, bringing the net loss to salaried jobs in this period to 18.9 million, making this number 22% lower than their level in the last fiscal.
The agricultural sector fared much better. In March and April, the sector employed 117 million people. In May, this figure inched up to 118.5 million, only to shoot up to 130 million in June and settle at 126 million in July.
"If you don't get anything anywhere, you got back home to your villages and you have some mud to shovel around", Vyas states, while explaining this resilience in the agricultural sector. "Then you say you are employed on your farm over there," said Vyas.
But even those who have not lost their jobs, have lost a part of their purchasing power. "The wage increases will be low, or negligible, or there may be a pay cut", he says. Even if income from wages remain stable, there could be losses elsewhere, such as in valuation or sentiment.
But it is not too late for the government to lend a cushion, as Vyas reiterates a previous estimate of a payout of ₹10,000 to affected families for 2 months as a support measure.
CMIE's release can be found here.
Good days for large companies ahead?
A shift in Indian employment is over the horizon, according to Vyas.
"When you have a shock of this kind, and this is the third shock in four years, only the large companies are going to survive", he said.
Small and medium businesses will shut down, due to this, yielding space to larger companies; seeing their market share increase. A by-product of this phenomenon is that the large companies, with their increased market share, would not necessarily absorb the lost labour, and they would go in for automation as they are more capable of doing so.
For some companies, and some sectors, this is irreversible, as it becoming clearer that small companies will be unable to survive this.
The interview with Mahesh Vyas can be watched below.