hile we wait to get a clearer picture of the health coronavirus curve in India, we already have the first estimate of the job-destruction caused by the nation-wide lockdown. The numbers are staggering, worse than anything the world has ever known. More jobs were lost in India in the last two weeks than anything ever recorded in economic history. The number of “precariat” in India today may be almost as large as the population of Russia.
These are startling claims, even for the unprecedented times that we live in. So let me explain, step by step.
Let us first understand the data source, the unemployment tracker survey released by Centre for the Monitoring of Indian Economy (CMIE), the only data source of its kind that reports unemployment on a daily, monthly and quarterly basis. The CMIE interviews every day about 3,500 randomly selected persons in its consumer survey. Post-lockdown, like everything else, the survey too came to a halt. They managed to do only 2,289 interviews in the last week of March. But the data was not released as the sample was too small and the week was rather unusual. Repeat field survey was not possible, but the CMIE field staff managed to do 9,429 telephonic interviews to collect the data for the week ending on 5 April. The sample was smaller than usual but large enough and fairly representative in terms of rural/urban, class and so on. These results were not different from the figures they got from the still smaller sample in the previous week. So, after due verification, this Monday, the CMIE released its first set of data and analysis.
Also read: Unemployment in March highest since September 2016, CMIE data shows fallout of Covid-19
The calculation
Now let us look at the data itself. Hidden behind a technical description of the latest findings is a real bombshell. Mahesh Vyas, the CEO and Director of CMIE, reports: “An unemployment rate of 23.4 per cent during this week; an LPR [labour participation rate] of 36 per cent and an employment rate of 27.7 per cent.” Now, over 20 per cent joblessness is bad news for any country. The real eye-popping figure, however, is that just 27.7 per cent of the working-age population is employed.
Let me simplify this. India currently has a population of about 137 crore. Of this, about 103 crore are in the working-age, above 15 years. Let us take the broadest definition of employment to include any kind of paid work, formal or informal – salary, daily wage or self-employment of any kind. Using this definition, in February 2020, pre-coronavirus pandemic and national lockdown, about 40.4 crore Indians were employed, as per the CMIE report for the month. At that point, 3.4 crore were unemployed.
Compare these to the figures from last week. The CMIE estimates that only 27.7 per cent of the working-age population (103 crore) was employed in the week after lockdown began. That works out to 28.5 crore. So, within two weeks, the number of gainfully employed has come down from 40.4 crore to 28.5 crore, a drop of 11.9 crore. (To be doubly sure, I rang up Mahesh Vyas and confirmed with him that I was drawing correct inference from his data.)
Let that sink in: about 12 crore Indians have lost employment over the last two weeks. Let us assume that 8 crore of these are the main or the only earner of their family. So, one-third of the country’s 25 crore households (government data from 2011) could be facing a livelihood crisis.
Also read: No paid leaves, lack of access to healthcare — world’s workers hit by coronavirus pandemic
Greatest in history
Let me put that in perspective. Unemployment in the US has made headlines over the last two weeks because nearly 10 million (or 1 crore) Americans have filed for unemployment benefits, breaking all records by some distance. And here we are talking about 12 crore job losses in India during the same period. Compare this with the Great Depression in the US. At its height, around 1932-33, there were about 1.5 crore unemployed persons. You could add all the unemployed in Europe at that time and yet not cross 5 crore. Indian lockdown has clearly caused the biggest one-stroke job-destruction ever recorded in history.
Let there be no confusion: this is not some definitional trick. We are talking real loss of real employment. The CMIE uses quite an inclusive definition of employment. All those who have a regular job or a job they can go back to are considered “employed”, even if they are not working or earning right now due to lockdown. So, all those with regular salaried job or contractual jobs, including those who are currently not working from home, are considered employed in this estimate. Similarly, professionals and shopkeepers who may be sitting idle at home during the lockdown would still be counted as employed. So would the farmers and agricultural labour.
Sure, this is not a permanent loss of livelihood. But this is not just a three-week break or leave. Some of them may be able to recover their jobs within days of the lockdown ending. Some may take months. And if the economy goes into a recession, which the IMF chief has already declared, many of those who have lost their jobs would never get it back.
Let me also underline that this conclusion is not based on a quirk or a blip in data. True, CMIE survey has differed from the NSSO figures on unemployment and many purists prefer the NSSO. But any issues with CMIE survey are besides the point here, since we are comparing two points within the CMIE data series. Besides, this is the second round of post-lockdown survey returning similar figures. Still, in a telephonic survey with a smaller sample, we have to allow for higher error. Assuming this survey has under-estimated employment by 2 percentage points, we are still looking at around 10 crore jobs lost.
Also read: Global economy could shrink by almost 1% in 2020 due to COVID-19 pandemic: UN
Mind-boggling unemployment crisis
The findings are consistent with what one should have expected even otherwise. There are about 11 crore non-farm wage earners, 6 crore self-employed and 2.5 crore salaried workers with insecure jobs (according to CMIE). News reports and common sense tells us that an overwhelming majority of these three categories have lost jobs.
Finally, let us not forget the 3.4 crore persons who were unemployed even before lockdown. Add their numbers to the 12 crore who lost their jobs after lockdown and we are staring at a figure upwards of 15 crore. Besides, many persons who may not have reported themselves jobless in this survey may find themselves without a job after the lockdown if many enterprises refused to take them back. Many self-employed persons like street vendors may not be left with the capital to restart their businesses. Many farmers, including dairy and poultry farmers, may need to shed workers if they fail to get remunerative prices. In sum: we could be looking at 15-20 crore Indians who face or may soon face livelihood crisis.
We do not yet know the scale of health crisis and how India might cope with it. But we do know that the crisis of unemployment is already mind-boggling. The Narendra Modi government must come up fast with a New Deal-type one-time booster to save livelihoods and lives.
