COVID & Budget 2022: Why Govt Must Take Note of ‘Invisible Unemployment’

Not only is there greater unemployment in the last few years, but there is a loss in the quality of opportunities.

In December 2021, India's unemployment rate hit a four-month high.

(Photo: Erum Gour/ The Quint)

A few months back, going for a haircut after months of lockdown and hesitation felt like an extravagant luxury. The salon was busy but many familiar faces among the staff were missing.

“They have all gone home,” said Mohit my hairdresser.

“But now the situation has improved,” I said. “And everyone is getting vaccinated.”

“The owner is not paying salaries,” he said. “We have been told to manage on our tips from clients as the income generated isn’t enough to pay salaries. Rent and electricity bills have to be paid to keep the salon open. There isn’t enough left.”

He went on to tell me that all his savings had been exhausted over the last year. Many of his colleagues couldn’t last through prolonged lockdown followed by the low footfall. Schools were not open and the fees felt like an unnecessary expense. Families returned to the basic assurance of a roof over their heads and some manual labour in the village.

People Are Slipping Out of the Workforce

For Mohit, going home was not an option. Travelling to a remote village in the northeastern state of Arunachal Pradesh was a long and expensive journey. Besides, there was nothing to do there. The old and infirm stayed there, the young and ambitious were long gone.

For Mohit, coming to work was a slender ray of hope that things would improve some day. Also, there was no other option.

Similar stories of disruption, of losing jobs and working under duress are emerging across cities and urban areas.

As the work-from-home lifestyle sets in, chauffeurs, cab and auto drivers are finding their jobs gone or incomes drastically reduced. Those working in the tourism, hospitality and education sectors are among the worst hit. Many young men working for home delivery platforms are those who lost jobs at offices and factories. Airlines, event managers, exhibition organisers, etc, are among the many sectors that have seen the heaviest business losses. Women, in particular, are not able to find alternate work easily and are slipping out of the workforce.

Rural & Retail Sectors Can't Absorb All

The disturbing trends of this anecdotal information have been confirmed by the latest data from the Centre for Monitoring Indian Economy (CMIE). The unemployment report released in early January this year shows a continuing decline in job opportunities and a significant loss of jobs in the services, hospitality and education sectors.

In December 2021, India's unemployment rate hit a four-month high. The unemployment rate rose to 7.9% in December from 7% in November, its highest since 8.3% in August.

The sector that seems to have been hit the worst is the organised services sector. In 2019-20, salaried employed people accounted for 21.2 per cent of all employed persons. In December 2021, they accounted for only 19 per cent. In December 2021, employment was 406 million, which was 2.9 million less than 2019-2020. The biggest loss of jobs of salaried employees was 9.5 million, along with 1 million loss among entrepreneurs. The manufacturing sector lost 9.8 million jobs. The tourism, hospitality, education and services sector lost jobs, while there was a gain in the rural and retail sectors.

There has been an increase in employment in the rural, agriculture, retail and construction sectors. But these have not been sufficient to absorb the current and new entrants into India’s employment market. About 10 million young people are added to the workforce every year, but there are not enough jobs to absorb them.

The Quality of Employment

This data suggests a deeper problem. Not only is there greater unemployment as seen never before in the last few years but there is a loss in the quality of employment opportunities. Those who are working are accepting jobs that are not commensurate with their education and skills. Many of those still employed are working with reduced incomes. This is huge, invisible ‘underemployment’, where people are not realising their full productive potential.

The ad hoc nature and quality of work are disrupting career paths and the future development of workers. It is a worrying reversal of the aspirations of a youthful India and their faith in education and progress, and it is forcing a return to an unskilled economy.

The human factor in this economic downturn is bound to have a serious social impact. The incidence of petty crime has risen. Even cities such as Mumbai and Chennai, which are considered safe, are reporting crimes. It is a sign of the desperation of our times.

On the other side of the line, immense wealth is being created. The total number of Indian billionaires has grown from 102 to 142 in the last year according to an Oxfam report released ahead of the World Economic Forum in Davos. The luxury car and housing segments have shown the fastest revival. Stock markets are doing well with successful IPOs. Some of the most successful startups in the world have been from India, with 42 entering the unicorn club last year. Many of them are in the fintech and health tech sectors.

Economists have argued that if the job market has to grow, jobs will have to be created either by governments or by large private enterprises. The emphasis must be on increased productivity of goods or services.

The services sector, which is the bedrock of India’s GDP, has taken the biggest hit and needs to be revived. India has incubated a large number of startups. Can we use this technology dividend imaginatively to create employment? Can our youth be skilled to participate and broaden business opportunities?

Budget Must Focus on Livelihood Schemes

The government must ensure that funds allocated for social sector schemes for alleviating the distress of the COVID-19 pandemic on both the urban and rural poor are implemented effectively. The Central Government’s Budget for the Financial Year 21-22 proclaimed that the National Livelihood Mission has the sharpest hike of 48% in the FY 21-22 budget vis-à-vis last year. The livelihood programme had ₹13,677 crore for FY 21-22, as against ₹9,210 crore in FY 20-21. The scheme is designed to help the rural poor increase their household income by means other than agriculture.

A social audit and quick review of the expenditure and impact would help understand whether those affected have been able to access the funds in an appropriate manner.

In a few days, the Finance Minister will present her Budget for the third year of the pandemic. It remains to be seen whether this will be based on an honest and transparent analysis of ground realities and whether course correction is done where required.

State governments have been at the forefront of the crises management of the pandemic in terms of healthcare, vaccination and livelihood schemes. They must be guided and supported to take these forward in a meaningful manner. Sharing of best practices and flexibility in expenditure to deal with inequalities in India would make a difference.

There is a need for leadership here and a sense of direction to enable the increasing number of youth sliding fast into hopeless desperation to find not only quality jobs but also to enhance their career development. The human cost of the epidemic needs to be measured not just in the number of deaths and hospitalisations but also in the loss of livelihoods and its impact on the youth.

(Neelam Kapur is a former civil servant and former Principal Director-General, Press Information Bureau. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)