According to Mumbai-based think-tank, Centre for Monitoring Indian Economy (CMIE), more than 122 million Indians — mainly daily wage labourers and small traders — lost their jobs in April 2020 due to nationwide lockdown to curb COVID-19. The rate of unemployment may begin to fall post lockdown, however, it will, at best, be half of what it is now by the end of this year, claims Santosh Mehrotra, Professor of Economics in Centre for Informal Sector and Labour Studies at Jawaharlal Nehru University.
“The unemployment will only begin to fall after the lockdown is almost entirely lifted. If we have 24 per cent unemployment today (the latest according to CMIE), at best, it might halve in about one year. But that is still 50 per cent higher than that prevailing in mid-2018, when the economy was already slowing,” says Mehrotra.
The job crisis is obviously already here, it’s not ‘about to happen’ in some distant future, said the professor. “In fact, the crisis was already here before the pandemic, with a 45-year high in open unemployment. Youth unemployment had tripled from 6 to 18 per cent between 2012 and 2018,” he said.
Post lockdown, the youth will be one of the worst victims of unemployment. Women were already not getting enough jobs, despite the sharp improvement in their education level during 2012 and 2018. Now, it will be far worse for them, he explained.
As the nationwide lockdown began on March 24, millions of labourers who had migrated to cities for jobs began returning to their respective villages. In absence of any conveyance offered by the government in the initial days, they walked miles, sometimes without food or water. This mass exodus has given rise to ‘reverse migration’ in India. It is a trend that India hadn’t experienced before and, Mehrotra claims, these labourers are unlikely to return to cities immediately after the lockdown is over.
“The migrant labourers will be in no hurry to return for several reasons. Firstly, jobs in cities will resume very slowly. Moreover, there are already a large number of unemployed individuals in urban areas who will be looking for work, so there is no point in returning soon. Secondly, they know that they will be safer away from the congestion of the city, and the unhygienic conditions in which they live in slums.
More importantly, they have experienced the indignity and humiliation of having to travel back to their homes in inhuman conditions, especially if they had to walk back... when they used to go home earlier, they would take back gifts; this time, they have barely made it back with their lives intact. So, they may not be very keen to return,” he said.
This reverse migration, however, is likely to put rural India under tremendous strain. It is likely to increase overpopulation in villages, cause sharp fall in wages of rural areas and increase the dependence on agriculture greatly.
“There has already been an increase in the number of workers in agriculture of over 5 million by April end, 2020, as reported by CMIE in a matter of two months. This is the first time in 15 years that this trend has been noticed,” says Mehrotra.
The professor pointed out that until 2004-2005, the absolute number of workers in agriculture had been increasing since independence. After 2005, however, for the first time in India’s history, the absolute number of workers in agriculture fell by 37 million, until 2012, that is at just over five million per annum. This was because non-agriculture job growth was 7.5 million per annum. That growth rate fell to 2.9 million during 2012-2018, as job growth in industry and services fell sharply, and open unemployment by 2018 was 6.1 per cent.
“While real wages had risen in rural areas between 2004-5 and 2011-12, in recent years, real wages had stagnated or fallen in rural India (as in urban India), all the way until 2018. With open unemployment reaching 24 per cent in April 2020, which is a tripling from the 2018 rate, the real wages in rural India will further decline, with far more workers than needed. The result will be that while poverty has fallen sharply after 2004-5 to 2012, it will increase sharply in rural India,” he adds.
The impact of reverse migration will be felt in cities as well, pointed out the professor. To begin with, construction work will be harder to resume. Since economic activity will take a year at least to get back to the same level, and there will be limited work opportunities, the reverse migration will allow wage rates to fall slightly, but not much because there are fewer workers available to take the jobs available, predicts Mehrotra.
In a recently published book that Mehrotra has authored, titled, Reviving Jobs: An Agenda for Growth, he has penned down several recommendations for the central as well as state governments for generating employment at the macro-level and meso-level; and for particularly impacted social groups as well as sectors that require specific attention from a job-creation perspective.
According to his recommendation, India really needs (but does not have since 1991), a Manufacturing Strategy that is cross-sectoral. Apart from that the book also claims that mass entrepreneurship and rural industrialization are plausible ways to generate employment. Mehrotra suggested that, “actions should be taken to build the workforce for India’s emerging clean energy sector, and an urban employment guarantee is necessary to strengthen infrastructure in towns, just as MGNREGA strengthened infrastructure in rural India."
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