The pain around joblessness in urban India has just begun
- Contract workers in hospitality and retail businesses have been hit by a drop in discretionary spending
- Over 30% urban India’s weekly unemployment figure since 29 March, says CMIE
There are no jobs in key sectors in urban India, from restaurants and hotels to retail and automobiles, and this is just the beginning. Most contract workers in these industries have no income and the few who do are also likely to lose their source of livelihood as many small businesses, linked to discretionary consumption, shut shop. Discretionary consumption in travel, for instance, may not revive before October 2020. The bump up in unemployment following the national lockdown is reflected in data reported by Mint on Tuesday.
Urban India’s weekly unemployment is trending at more than 30% since 29 March, up from about 9% in the first week of March, according to the Centre for Monitoring Indian Economy.
Staffing firm Adecco Group India had forecast job cuts in the automotive industry to total 1 million in the dealer ecosystem, front-line roles and among the semi-skilled. Some 600,000 ground and support roles on contract in the aviation industry are at risk while the media and entertainment industry, dominated by temporary workers, could shed about 30% of its workforce in the short term.
“Very few will buy cars this year. Entertainment and organized retail will also be impacted. It is possible that people will visit malls after the lockdown but these may not get the footfall that they used to earlier,” said Rituparna Chakraborty, co-founder at staffing company TeamLease.
The situation is not likely to get better anytime soon. This is reflected in jobs site Naukri.com’s JobSpeak index, a monthly index that records hiring activity based on newly added job listings on the portal. Compared to March 2019, hiring activity in March 2020 fell 26% in Delhi, 24% in Chennai and 18% in Hyderabad.
But there is a spurt in the demand for pickers, packers and delivery boys in urban India. Grocery companies are struggling to meet home delivery demands and are willing to pay ₹500 or more a day for these jobs. However, many job seekers are, for now, willing to work for a fraction of that pay. Some of them worked in small restaurants and with the closure of eateries, they have no income, said a restaurant owner who did not want to be identified. The food services industry in India staffed 7.3 million in 2018-19. Of this, the unorganized sector employed 3.6 million.
“Even if I can’t pay my employees, I can help them withdraw money from their provident fund accounts, which is now permitted. However, the informal sector does not have that facility,” said Anurag Katriar, president of industry body National Restaurant Association of India (NRAI) and chief executive officer of deGustibus Hospitality. “While the organized sector deals with banks and investors, the informal sector borrows from moneylenders who are more ruthless.” Informal sector restaurants are, therefore, more likely to shut down and sack workers.
Labour market experts see high urban unemployment rates continuing. New social distancing norms will impact jobs, too. “I expect the industry to adopt a 1:3 formula—in a shop floor, for every three workers who normally work, one worker may be recalled after the factory starts in order to maintain social distancing,” said K.R. Shyam Sundar, labour economist and professor of human resources management, XLRI, Jamshedpur. “To that extent, the remaining two workers would either have to be paid wages or given a layoff compensation. Permanent workers would join back at work; informal workers (those on contract and daily wagers) may remain unemployed.”
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First Published:8 Apr 2020, 12:29 AM IST
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