Skip to main content

India's fragile formal sector: 18.9 million white collar job loss 'difficult' to retrieve

By Balwant Singh Mehta, Arjun Kumar*

The novel coronavirus pandemic and recession has destroyed the jobs of millions of people across the world at staggering levels. Due to lockdown and social-distancing, many self-employed, casual workers and regular workers were unable to work, and many has to lose their jobs and source of livelihoods.
Understandably, this has aggravated the already grim employment situation due to worldwide economic slowdown, particularly in developing regions such as South Asia, for both white and blue collared jobs.
As per the latest report by International Labour Organization (ILO), nearly 400 million full-time jobs were estimated to be lost in the year 2020 by second quarter (April-June). South Asia, significantly accounted for 110 million of the total 235 million full-time jobs lost during the second quarter of 2020.
There were 21 million full-time job losses in first quarter and 110 million in the Q2 of 2020. Since the quarter one of 2020, it is estimated that job losses increased by over 400 per cent in both South Asia and Africa.
Another report also highlighted greatest reduction in working hours having occurred in Latin America (20 per cent)and South Asia (18 per cent) in the 2020 second quarter. The job lost was highest in informal sector, casual and temporary nature of jobs in services and industrial sectors, owing to severe lockdowns. South Asian region have highest share (75%) of informal workforce, especially in India, which constitutes 81% employment in informal sector.

Job losses during lockdown

The employment or livelihood of most of the people was affected during the lockdown and pandemic in India, especially those engaged in informal sector. Although there have not been any official estimates, however, several surveys conducted in India highlight about the miserly of people who have lost their jobs.
An important finding from several survey studies during the lockdown, mostly telephonic in nature,shows that on an average 6 out of 10 workers had lost their jobs or livelihood sources, 7 out of 10 casual labourers had lost their jobs, while 6 out of 10 self-employed respondents could not pursue their economic activities and 4 out of 10 regular workers had lost their jobs. Interestingly, these surveys findings also highlighted that over 8 out of 10respondents who worked as casual labour and self-employment in informal sector said “we would get back to work once the lockdown would be over”.

Various Estimates

As many as 41 lakh youths in the country lost jobs due to the COVID-19 pandemic while construction and farm sector workers account for the majority of job losses, according to a joints report by the International Labour Organization (ILO) and the Asian Development Bank (ADB).
While the Government has not released any data pertaining to job losses during the lockdown, it acknowledges the quantum of migrants, around 1.5 crores, who returned to their homes. Also, the estimates suggested by Government indicates that around 8-10 crores workers were affected due to lockdown, mostly in informal sector of non-agriculture nature.
Based upon the data analysis of the Periodic Labour Force Survey (PLFS) to understand the likely impact on informal workers in urban areas during and after the lockdown period, we estimated that about 93 million informal workers are involved in five sectors that are most affected, namely, manufacturing ; trade, hotel and restaurant; construction; transport, storage and communications; and finance, business and real estate. Out of total 93 million informal workers in these sectors, 50% are self-employed, 20% are casual workers on daily wages and 30% are salaried or contract employee without any social safety net.

Job losses as India unlocks

Similar to the independent surveys findings, the Centre for Monitoring Indian Economy (CMIE), an independent think tank estimates also revealed that 21 million people have rejoined their employment or jobs after the government have started to Unlock. The reversal of job loss – if not incomes – has been achieved and the employment rate is moving towards pre-lockdown levels. Almost two-thirds of the jobs added (14.4 million) were of self-employed (small traders) and wage labourers.
The CMIE reports also mentioned about 6.8 million daily wage earners lost their jobs since April, 2020, and 15 million people took to farming during this period either as self-employed or casual labour. This reveals that the loss of jobs in self-employment and casual labour category is a temporary or short-term phenomenon, which is not true in case of full-time salaried jobs.
The salaried people (includes both permanent and temporary) who have lost their jobs may not get back to employment in the near future. Particularly, the white-collar jobs, once lost, are far more difficult to retrieve.

Job losses of white-collar regular salaried

The CMIE report about 18.9 million salaried people lost their jobs, declined by a whopping 22 per cent during the lockdown. Salaried jobs were estimated at 86.1 million in 2019-20, which fell to 67.2 million by July 2020. Salaried jobs are preferred forms of employment for most people as these jobs offer better terms of employment and also better wages.
The biggest loss of jobs among salaried employees was of ‘white-collar professional employees’, which include 5.9 million workers between May-August, 2020. The white-collar workers include engineers, including software engineers, physicians, teachers, accountants, analysts and the type, who are professionally qualified and were employed in some private or government organization. The lockdown did not impact white-collar clerical employees.
Salaried jobs are threatened as we move towards the New Normal of Covid-19 protocols: Work from home, virtual economy, digitization, automation at work processes
These include largely desk work employees ranging from secretaries and office clerks to BPO/KPO workers and data-entry operators. They possibly shifted to the work-from-home mode, said CMIE. Since the lockdown was announced, several companies across sectors have taken to job cuts, along with salary reductions and leave without pay.
This exposed the fragility of India’s formal sector, which is always considered the ideal job in labour market, moreover, highlighting the support it requires for resilience. These ballooning numbers of job losses for formal white-collar workers, having higher value addition, are depicting a worrisome picture of Indian job market with rising unemployment and huge future uncertainty amidst the pandemic and recession.
There is considerable research that indicates that job losses can result in permanent economic damage if workers stay unemployed for too long. This is the key concern of policy makers and other stakeholders today.

Towards resilience for formal jobs

The Covid-19 pandemic and recession, undoubtedly, has put major strain on national economies and employment scenario. In India, apart from the agriculture sector which has positive growth rate, both manufacturing and services sector are under stress, having serious implications for informal and casual workers, small and medium enterprises as well as big businesses.
As India unlocks, there are recoveries recorded for casual workers and self-employed with obvious limitations of economic activities. The regular/salaried workers (permanent and temporary jobs) job losses and revised terms of job and salaries owing to the performance of businesses and enterprises, has revealed the fragile state of affairs and is a serious concern for the Indian economy.
Many countries across the world such as USA and UK, are providing various support to the businesses and salaried workers to protect the job losses, such as contribution to salaries, unemployment allowances, loans, etc., often surpassing the debt limits, during the ongoing pandemic and recession.
As we move towards the New Normal of Covid-19 protocols, work from home, virtual economy, digitization and automation at work processes, the white-collar jobs are threatened. In fact, the Coronavirus has, indeed, proved to be the disastrous for them, as we deal with the pandemic and economic crisis.
In India, the government has suggested the businesses to keep the jobs intact without any potential and significant support. As India unlocks in the economic recession, the formal jobs (both permanent and temporary) in government and private sector are facing various churns from layoffs, delay payment, reduced payments, and so on.
Clearly, the government needs to act now and focus on the regeneration of the economic activities as well as stimulating the aggregate demands giving due consideration to those who have lost their white-collar jobs and vulnerable businesses to minimize the losses. The road towards #AtmaNirbharBharat and New India should ensure resilience in the formal economy, immediate support, and harnessing our data and digital capabilities for significant impact in the lives of people. 
--- 
*Balwant Singh Mehta is Research Director at Impact and Policy Research Institute (IMPRI), New Delhi, and Senior Fellow at Institute for Human Development, Delhi; Arjun Kumar is Director, IMPRI, and China-India Visiting Scholar Fellow, Ashoka University

Comments

sanu said…
More news coming

TRENDING

What's behind public sector banks showing huge profits in 2nd quarter of 2022-23?

By Thomas Franco*  The quarter two results of the public sector banks (PSBs) appear to be noteworthy compared to a few years ago. All these banks showed good profits in the financial year 2021-22. Twelve PSBs made a net profit of Rs 25,685 crore in quarter 2 of FY23 and a total of Rs 40,991 crore in the first half of 2023. The combined profit of 12 banks in March 2022 was Rs 66,539 crore which was 110% more than 2021 – Rs. 31,816 crore. The Asset Quality Review of 2015 saw a surge in NPAs of PSBs jumping to Rs 8.96 lakh crore in March 2018 from Rs 2.17 lakh crore in March 2014. This was simply because the norms for NPAs were changed from 180 days to 90 days, and all restructuring of even genuine accounts was done away with. In 2018 NPA of SBI was 5.73% which has come down to 0.8% in Q2 of FY23. The NPA of Canara Bank has come down to 2.19% from 7.48% in Mar 2018. The same trend is seen in all public banks. Now SBI has seen a jump of 74% in its net profit, while Canara Bank’s profit is

Economist-editor's allegations on Narmada defamatory, baseless: Medha Patkar

Counterview Desk  In a reply directly addressed to well-known economist, journalist and columnist Swaminathan S Anklesaria Aiyar’s two articles in the Times of India (republished here and here ), calling them defamatory and wondering whether they were borne out of “ignorance or a conspiracy through political alliance”, Narmada Bachao Andolan leader Medha Pakar has said that the Narmada Sardar Saravar Project and the people's movement by adivasis, farmers, labourers, fish workers, potters and all the generations’ old communities from the river valley have suddenly come to be focused on, since the Gujarat elections are in the doorstep. She believes that while the “defamatory accusations with baseless conceptions such as ‘urban naxals’ are to be laughed at as the electoral strategic moves, one gets shocked to read the articles by a known old columnist like Swaminathan Ankalesaria Aiyar, published in a reputed daily like the Times of India." According to her, Aiyar’s two articl

Business back to normal? IIM-A survey says, sales expectations have sharply improved

By Our Representative  The Indian Institute of Management’s Business Inflation Expectations Survey (BIES), which polls a panel of business leaders to find out their perception of slack in economy, including their inflation expectations, year-ahead cost expectations and the factors influencing price changes, such as profit and sales levels, etc., has said that the cost perceptions data indicates signs of moderation in price pressures. Carried out for September, the survey says, the cost pressure of the reporting firms has shifted from “very significant increase (over 6%) to moderate increase (3.1% to 6%).” It adds, “The percentage of firms perceiving over 10% cost increase y-o-y has declined. Over 21% of the firms in September 2022 round of the survey perceive that costs have increased very significantly (over 10%) – down from 26% recorded in August 2022.” Claiming to be a unique survey, in that it goes straight to businesses -- the price setters -- rather than to consumers or household

GoI's productivity linked incentives to corporates 'without independent analysis'

Counterview Desk  Wondering how prudent is the Government of India's (GoI's) Productivity Linked Incentive (PLI) scheme, EAS Sarma, former secretary, GoI, in a representation to Nirmala Sitharaman, Union finance minister, has said it appears to be nothing more than subsidy to the private sector without any responsibility. Giving a specific example against the backdrop of announcement of 50% subsidy covering the project cost of the Vedanta Group's decision to set up a semiconductor fabrication plant in Gujarat, in collaboration with Foxconn, Sarma says, "The total cost of this project is reported to be Rs 1,54,000 crore. 50% of this works out to Rs 77,000 crore." Stating that this creates the impression that the entire subsidy allocation for the semiconductor manufacturing sector would be appropriated by this company, Sarma says, "The Gujarat government did not lag behind in liberally announcing similar incentives for the Vedanta-Foxconn project. It offered 7

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Hindutva groups threat to peace, freedom: US diaspora groups tell FBI, other govt depts

By Our Representative  The Islamophobic and neo-Nazi ideology of Hindutva is a clear and present danger to peace and freedoms in the United States, a coalition of civil rights organizations told key officials of the U.S. Attorney General’s Office, the US Department of Justice (DOJ), and the Federal Bureau of Investigation (FBI) at a recent event in Edison, New Jersey. At the event titled United Against Hate, activists from American Muslims for Democracy (AMD), Hindus for Human Rights (HfHR) and Indian American Muslim Council (IAMC) made detailed presentations on this ideology of Hindu supremacism that is committing mass persecution of India’s Muslims and Christians and is rearing its ugly head in New Jersey as well as across the US. Attending the event were David S Leonardis, Special Investigator from the New Jersey Department of Law & Public Safety; Michael E Campion, Chief of the Civil Rights Division for the US Attorney General's Office; and Jonathan R Norbut of the U.S. Dep

BJP poll gimmick? Bilkis Bano rape case 'pardon' vs Rajiv assassins' release

By Sandeep Pandey*  Supreme Court has released six convicts in the Rajiv Gandhi assassination case. This was bound to happen as earlier AG Perarivalan was released in the same case, setting a precedent. Even though four of them are Sri Lankans but a popular Tamil sentiment favoured the release of these convicts which is why Tamil political parties supported this and resolutions were passed by different governments in Tamil Nadu to his effect.  Rajiv Gandhi paid the price of sending Indian Peace Keeping Force to Sri Lanka where it got entangled with Liberation Tigers of Tamil Eelam and eventually the whole operation ended up is a fiasco.  However, most importantly Sonia and Priyanka Gandhi and probably Rahul too do not have any objections to the release of these convicts. In fact, Sonia Gandhi played an important role in getting the death sentence of the only lady among the convicts Nalini commuted to life term through the Tamil Nadu Governor. Priyanka visited Nalini in Vellore Jail and

Diminishing returns: Hydro projects contribute less than 10% of India's power generation

Counterview Desk  Pointing out that India’s hydro generation remains around 10% for the last six years, the advocacy group South Asia Network on Dams, Rivers and People (SANDRP) has said that power generation from hydropower projects continues to show diminishing returns, as has been the story close to three decades now. Yet, says SANDRP in a note, the Government of India continues to push large hydro by announcing a slew of additional subsidies for hydropower projects, more for political economy reason. In fact, attempts are being made to flog unviable hydropower projects with various kind of manipulations, illegalities and violations, it adds. Text : In last six years, from 2016-17 to 2021-22, India’s large hydropower projects (projects above 25 MW installed capacity) have contributed just around 10% of the total power generation, going as low as 9.68% in 2017-18. In fact, in three of these six years, large hydro contributed less than 10% and recovering only marginally in the rest,

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.