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Employment contracts by 2.8% in Oct-Dec quarter: CMIE

Chitranjan Kumar     January 12, 2021

Employment in India contracted for the third straight quarter of the current fiscal, raising questions over the recent optimism around recovery in job markets on the back of economic revival. In October-December quarter, the count of the employed contracted by 2.8 per cent, compared to a drop of 23.9 per cent and 2.6 per cent recorded in June and September quarters, respectively, as per the private think-tank Centre for Monitoring Indian Economy (CMIE).  

According to Mahesh Vyas, CEO of CMIE, the government's prediction that the economy would recover in the second half of the current fiscal does not support such optimism in job market.  The government expects real GDP to "almost not shrink anymore" in the second half of the current fiscal year as against a contraction of 15.7 per cent in the first half compared to the previous year's first half.

"In the first quarter when the economy tanked by 23.9 per cent, employment contracted by 18.4 per cent both in year-on-year comparisons. In similar comparisons, in the second quarter, the economy contracted by 7.7 per cent and employment by 2.6 per cent. Now, we know that in the third quarter, employment shrank even more, by 2.8 per cent," Vyas said.

He further stated that it seems like "economic recovery has either stopped in the third quarter or it stopped showing up in recovery in employment". The count of the employed was very high in the initial recovery months of May and June (on month-on-month basis), but it slowed down in July, August and September and then has been constantly declining in each of the three months of the third quarter (Q3 FY21).  

Also Read: Unemployment rate rises to 6-month high of 9.1% in Dec: CMIE

Employment in December 2020 was 4.2 per cent lower as compared to the same period last year. By the end of December 2020, employment was 14.7 million short of what it was in 2019-20. "But, this decline is only half the story. The composition of this shortfall is as worrisome as the shortfall itself," CMIE said.

Urban India, which constituted 32 per cent of total employment in 2019-20, accounted for 34 per cent of the total loss of employment in financial year 2020-21 till December 2020. "Arguably, urban India provides better jobs and its greater share in the loss does not bode very well for the recovery process," it said.  

Women, who constituted just 11 per cent of total workforce, accounted for 52 per cent of the job losses, indicating that they continue to bear a disproportionately high proportion of the cost of economic shocks. "They suffered a disproportionately large loss of employment during demonetisation and now, they have borne a similarly disproportionately high share in job losses because of the lockdown," the CMIE report noted.

Also Read: India's unemployment rate improves to 6.51%, lowest since September 2018

Among others, job losses were concentrated among the younger workers, with all groups below the age of 40 suffering a fall in employment till December 2020 this year, while all groups above 40 years of age saw a small gain in employment.

Meanwhile, graduates and post-graduates had a 13 per cent share in total employment in 2019-20, while their share in the loss of jobs was 65 per cent. Of the 14.7 million jobs lost, 9.5 million were those of graduates and post-graduates.

Also Read: Unemployment rate falls to 7.48% in November; labour participation rate lowest since 2016: CMIE

Besides, salaried employees who accounted for 21 per cent total employment in 2019-20, accounted for 71 per cent of the total job losses.

As per CMIE, nearly fifteen million less people were employed in December 2020, nine months after the lockdown hit people's livelihood compared to those that were employed before the lockdown in 2019-20. Those who lost jobs were concentrated in urban regions, among women, among the relatively younger workers, the graduates and post graduates and the salaried employees, it said. Based on this, it is easy to assume that by December 2020, India's workforce had not only "declined quantitatively but also deteriorated qualitatively". Given this crater India has dug itself into on the employment front, the party rejoicing a quick V-shaped recovery is dancing on thin ice, CMIE said.

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