Second Covid wave hurting economy, devouring jobs & livelihoods

Lakshmana Venkat Kuchi *

The severity of the second wave is well and truly upon all of us, whether in villages, small towns or metropolises–deaths and cases mounting, forcing lockdowns to varying degrees by most States.

This time around, the Central Government has realized the deadly effect on the economy, and decided to safeguard both–lives and livelihood, but the magnitude of the crisis has overwhelmed the country, our health care systems, and more importantly the economy.

Many States, including Maharashtra, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, Karnataka, have initiated severe restrictions on movement of men and materials, bringing the economy also to a near halt, though some economic activities are going on. Essential services are allowed during these restrictions necessitated to contain the spread of Coronavirus, which has now mutated into a relatively more dangerous form.

Numbers from the agencies that monitor jobs and livelihood are scary, as unemployment has shown an upward spike. According to some estimates some 73.5 lakhs became jobless in April alone, and the month also saw a fall in the employment rate and labour force participation rate, and a sharp increase in the number of people who are unemployed, yet not actively looking for employment.

The trend that was witnessed in January continued through February, March, and April.

If we take data emanating from the country’s premier private-sector economy monitoring company, Centre Monitoring Indian Economy (CMIE), there is a sharp fall in the number of employees, both salaried and non-salaried. It fell from 39.81 crore in March to 39.08 crore in April. In January the number of people employed stood at 40.07 crore.

The job losses coincided with the explosion in the number of Covid cases, which led to curbs on businesses and the movement of men and material. Now this, indicating closure of economic activity across the country has resulted in the loss of jobs, as the companies and trading bodies had no work themselves.

If we compare this period with the last year, then there was a National lockdown, severe, that kept on getting extended. And it was so harsh, that industries and establishments shut for nearly three months, after which the economy was opened gradually. There were initial hiccups in cold starting the industry, but slowly India was limping back to normalcy and was looking even optimistic of reaching higher growth targets.

And then came the second wave, almost silently, creeping in from Maharashtra that went out of control for a while, and then spread across to other States as well. Now, almost all States, regardless of political affiliation, are in different stages of lockdown mode, though not one State describes it as a lockdown. The preferred word is restriction, but the overall effect is the same.

Already, from many States, migrant labourers have begun homeward march as they fear the situation to continue for more weeks or months. At least, in villages and small towns, they come from they don’t have to pay rent and fend for themselves.

The Governments–Centre, and States–are more mindful of the migrant labourers after their experience last year, and Governments are trying their best to motivate the workers to remain at their workplaces–a plea that is falling on deaf ears. It is not that the workers want to go back, but quite simply they are sure no one will look after them. The trust factor has come down quite a bit.

But the labourer knows he is right and is steadily going about his return journeys. Luckily for them, the bus and train services are present unlike in the lockdown of last year when thousands of people were forced to march to their villages on foot.

The Indian migrant army was crisscrossing India on foot, and a few lost their lives also, as they were unable to go any further. So, this time, the labourer has been smarter and has made concrete plans to move out, without waiting for the warning signal. And one can see the first impact on the labour market, as work began to shrink and more labourers stopped making their daily earning.

The fall in the number of employed shows that it included regular salaried workers, casual workers, and the self-employed. The situation has once again become critical. Borrowing data from the CMIE, when one sees the employment rate drop from 37.56 in March to 36.79 in April–showing an increasing number of unemployed and also showed people were unemployed and also not actively looking for work.

This in other words meant, infections have spread to rural areas, and also due to the closure of companies, factories, and business establishments, the number of jobs has further reduced.

Look at the sectors that are hit--retail, hospitality, tourism, and travel industries, all major providers of employment. And the informal sector, where workers in household jobs, office support systems, etc. Many of the jobs have gone, and significantly so in April.

Drawing once again from CMIE, we can see that National unemployment rate in April climbed to 7.97% as against 6.5% in March and 6.89% in February, and urban unemployment increased to 9.78% as against 7.27% in March. Demand has come down, reverse migration too has picked up but as transport is available, the migrants are not as visible as last year when the lockdown spared none and everything was shut, including public transport within the city and within the country.

If the next two or three months the situation improves, after vaccination becomes more widespread, and the economy picks up, we as a country must manage our health systems and fight against the pandemic unitedly. As far as the salaried jobs are concerned the situation is not as bad as it was last year, as the managements have already cut down the strength to such lows that anything more is not possible.

A further slashing of jobs might adversely affect the operations of the companies themselves–which in other words, their revenues. But overall, April 2021 turned out to be worse than expectations the CMIE said citing figures. This is almost entirely due to the localized ‘lockdowns’ in different States.

These restrictions may have contributed to the lower number of people seeking jobs. But also equally true is that the economy could not give adequate jobs to those searching for employment. Adding to the ‘restrictions’ as a reason for the fall in employment is the ill-performing economy as it simply could not cope with the steadily increasing number of job seekers.

What will be a source of concern, for the people and the Government is that the job losses were bigger in comparison to urban areas.