LOCKDOWNS AGAIN
Governments seem to be a lot more wary of imposing a draconian lockdown this time. These lockdowns will do less harm. But, they will hurt the recovery process, which is still incomplete.
Atragedy seems to be unfolding again. As Covid infections have risen and vaccines have run into shortages, governments have started implementing selective lockdowns and are talking of greater lockdowns. As a result, sections of labour have once again started getting anxious about the security of their livelihoods. Although science has delivered vaccines, the informally employed labour seems almost as vulnerable to loss of livelihood as it was a year ago. The difference, if any, is a much reduced fear of the virus and, therefore, a significant dropping of guard against it. But the fear of loss of livelihood is as real as before. If a sudden lockdown was a bad idea a year ago, the prolonged dithering on action combined with vaccine shortages, without any safety net for the vulnerable labour, isn’t a much better place to be in.
Frontline casualties of the uncertainties regarding a lockdown are migrant workers employed informally in the unorganised sectors, daily-wage labour and small traders. These could add up to well over 120 million and account for about 30 per cent of the total employed population. Unlike in the past, everyone is not perceived to be equally at risk of losing livelihood this time. But the fear has come back too soon and has started showing in the data. The first two weeks that ended in April 2021 show an increase in the unemployment rate to over 8 per cent and fall in the labour participation rate to 40 per cent.
Labours’ scars from the earlier lockdown have still not healed. As of March 2021, employment at 398 million was 5.4 million short of the 403.5 million employed in 2019-20. This is a grossly misleading summary number. It hides a much bigger casualty. And, an urbanrural understanding of the losses indicates that the worst is yet to come.
We compare employment in March 2021 to employment in 2019-20 to assess the impact of Covid-19 on employment about a year after the virus struck.
As people lost jobs and jobs became scarce in 2020-21, labour that lost jobs moved from one kind of occupation to another. Large numbers eventually migrated to agriculture, apparently, when all other possible occupations failed. As a result, employment in agriculture in March 2021 was nearly 9 million higher than it was in 2019-20. This implies an eight per cent increase in labour in agriculture. Agricultural output is estimated to have increased by 2-3 per cent in almost each of the four quarters of 2020-21. The 8 per cent increase in labour implies a sharp fall in labour productivity. We believe that this huge influx of labour into agriculture is largely disguised unemployment. It hides the greater employment challenge in March 2021 than the 5.4 million net jobs lost.
The biggest loss of employment in 2020-21 was among the salaried employees. As of March 2021, there were 76.2 million salaried employees. This was 9.8 million less than the 85.9 million salaried jobs observed in 2019-20.
Salaried jobs are mostly in urban India. Urban India accounted for 58 per cent of all salaried jobs in 2019-20. But it accounted for only 38 per cent of the 9.8 million salaried jobs lost. Over 6 million salaried jobs were lost in rural India. Most of these are likely to have migrated to farming. Rural India also saw nearly 3 million business persons being rendered unemployed. These could also have migrated to farming. Farming saw an increase of 9 million jobs in rural India. So, the churn in rural India seems to have been people losing salaried jobs and losing their business and these unemployed people moving into agriculture for unproductive employment.
The increase in agricultural jobs in March 2021 was essentially a migration of people who lost non-farm jobs in rural India into farming. This was not an urban to rural migration.
Lockdowns or fears of lockdowns in urban India could be engineering the urban to rural migration around now, in April. Reports of crowded railway platforms in Maharashtra and announcement of special North-bound trains indicate that migration because of fear of loss of livelihood has begun again. Reports suggest that migrants are moving out of Maharashtra, Gujarat and Delhi to Uttar Pradesh, Bihar and to other eastern states.
The return of reverse migration hit the retail and restaurants sectors in Delhi and Mumbai initially but is reportedly beginning to hit the logistics component of the supply chain as well. Sadly, partial lockdowns are also often accompanied by harassment. The fear is not only of loss of livelihood but also of basic freedoms during these times.
While most of the loss of salaried jobs in March 2021 was in rural India, urban India also saw a loss of 3.7 million salaried jobs in the month compared to the levels in 2020-21. The lockdown will hurt urban employment in April or beyond if the lockdowns continue. Hopes of salaried employees returning to office seem to have receded with the continued fall in salaried jobs and with the resurgence of the lockdown. The fall in salaried jobs also indicates that hopes of finding new decent jobs have faded.
Governments seem to be a lot more wary of imposing a draconian lockdown this time. Some lessons seem to have been learned. So, it may be fair to assume that these lockdowns will do less harm. But, they will hurt the recovery process, which is still incomplete. Labour participation in March 2021 was 40.2 per cent compared to 42.7 per cent in 2019-20; employment rate was 37.6 per cent compared to 39.4 per cent in 2019-20; and the unemployment rate was still high at 6.5 per cent although it was lower than the 7.6 per cent recorded in 2019-20.
While most of the loss of salaried jobs in March 2021 was in rural India, urban India also saw a loss of 3.7 million salaried jobs in the month compared to the levels in 2020-21. The lockdown will hurt urban employment in April or beyond