Fifteen million workers lost jobs in May, reversing gains

The number of people employed fell to 375.45 million in May from 390.79 million in April.
The number of people employed fell to 375.45 million in May from 390.79 million in April.


The stretched job market may hit consumer spending and economic revival, say economists

At least 15.33 million Indians lost their jobs in May, erasing gains achieved since July 2020, a situation that may adversely affect consumer spending and economic revival.

The number of people employed fell to 375.45 million in May from 390.79 million in April, according to the Centre for Monitoring Indian Economy (CMIE). In April and May, the number of people employed in salaried and non-salaried jobs fell by almost 23 million as the second wave of the pandemic infected millions of Indians, and states imposed lockdowns to stem the spread of the virus.

Fresh data also showed that the number of people unemployed but actively looking for jobs rose by 17 million to 50.72 million, reflecting the willingness to work but scarcity of opportunities.

The impact of the pandemic on salaried jobs is, however, relatively less, and largely limited to urban India. But people with businesses, small traders and daily wagers faced the brunt of the economic disruption caused by the pandemic.

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While 127 million were employed in small trades and daily wage work in April, the number slumped to 110 million in the month of May. At least 9 million more people got engaged in farming activities in May, taking the total number of people employed in farming to 123.7 million. In contrast, 1.22 million salaried jobs were lost in urban India in May while rural India gained a little over 1.4 million salaried jobs.

Economists said the job losses will push more people into poverty, erode savings due to income loss and prolong the demand revival.

“The job market was stretched since last year’s national lockdown. The situation was looking up between December and March, but the second wave has done more damage now. What we are not realizing is that the job loss is squeezing private demand. People losing jobs will impact revival. If the consumer does not have income or reduced income, he or she won’t spend," said Arup Mitra, a professor of economics at the Institute of Economic Growth in New Delhi.

“Non-farm opportunities have shrunk in rural India, and there is a surplus workforce there. People are getting engaged in farming activities, meaningful or not, is a separate debate. It also means more people are doing the same work, which means lower productivity and less income. This is why you should take the improvement in rural joblessness with a pinch of salt. The numbers don’t show the real picture of rural India. The pandemic’s impact on rural pockets is also severe this time," said Mitra, adding that the total number of people employed in rural India has declined.

Rural unemployment in May was 10.63% as against 7.13% in April, and the total number of people employed in (262.84 million) in rural India in May is down by almost 6 million from the previous month.

“You have to look at the mass job-loss from two angles— one, how small traders and daily wagers have got hit massively in May due to state-wide lockdowns and second, why this offers a compelling case for the government to support people with direct benefit transfer," said K.R. Shyam Sundar, a labour economist.

“The system needs to accept the hardships and offer solutions than live in denial. The fear of a third wave is also denting business sentiment and creating more apprehension. The confidence of people and businesses will return, depending on how quickly we vaccinate citizens," he said, adding that the job market will continue to witness pain for the next 4-6 months.

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