Slowdown means 1.6 million fewer jobs

The economic slowdown has adversely impacted employment generation in the country as nearly 1.6 million less jobs are projected to be created in the financial year (FY) 2020 compared to 8.97 million fresh jobs in FY2019, a report said.

According to the SBI research reportEcowrap, the economic slowdown in FY20, that saw the growth rate shrinking to 5% is now having a visible impact on the creation of new jobs.

The Employees Provident Fund Organization (EPFO) data shows that in FY19, India had created 8.97 million new payrolls but in FY 20 the number is expected to fall by 15.8 million. The EPFO data captures low paid jobs with a salary cap of INR 15000 per month (around USD 210). The government and private jobs are not included in these numbers as they have covered in the National Pension Scheme (NPS) data.

“Interestingly, even in the NPS category, Central and state governments are supposed to create close to 39,000 jobs less in FY20 as per current trends. Hence, the number of new payroll created in FY20 could be at least 1.6 million lower than in FY19,” the report said.

The report also found a dip in remittances by labourers to select states like Assam, Bihar, Rajasthan, Odisha and Uttar Pradesh in the last one year.

The report indicated that the delay in resolution of cases under Insolvency and Bankruptcy Code (IBC) may have led to the cutting down of contractual jobs by companies.

Migrants form the backbone of the economy making a significant contribution in sectors like hospitality, construction, mining, brick-making and small industries.

The report’s estimates showed that wage growth has witnessed significant moderation on yearly as well as a sequential basis. “This moderation in wages also implies important lessons that can be deciphered from the policy the setting,” the report said. The report also cautioned policymakers that such slower productivity growth encourages overborrowing by corporations and households, only to deleverage later. “In turn, it represents a big risk to economies and fiscal systems. A similar logic applies to the social and political impact of low productivity growth,” it said.