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Silver Lining in India’s Job Market as Lockdown Eases

By: Jayant Krishna

Despite the lockdown being the biggest job-destroyer in India’s economic history, the nation now needs to prove that this loss of livelihood was only a transient phenomenon.

A recent CMIE survey indicates an all-time high unemployment rate, soaring to >23% now vis-à-vis 8.7% prior to the lockdown. Labour-force participation rate too has fallen. Some experts forecast the doomsday to continue longer as the shell-shocked Indian economy is unlikely to recover in near future. Forecasts vary with economists divided over the recovery following a V, U or L shaped curve.

IMF paints this crisis as the worst since the Great Depression. It is the first contraction of Indian economy since the reforms of 1991. Overall job losses are estimated between 25 and 100 million, but the consolation is that many of these would revive once the industry bounces back.

The Silver Lining

There is a silver lining amidst the clouds of uncertainty since this crisis is not attributable to structural or systemic imbalances. Domestic private consumption itself accounts for 60% of our GDP wherein the latent demand would revive soon post-lockdown except in aviation, tourism, hospitality, organised retail and entertainment. Since construction was already underperforming, its revival remains a distant cry on the horizon.

A good rabi harvest and a normal monsoon forecast augur well for agriculture that contributes 16% to GDP. IT/ITeS has not been affected much as NASSCOM finds that 96% professionals transitioned to work-from-home. Services sector accounting for 60% of GDP has suffered to a lesser extent. Slippage in FMCG, telecom, pharmaceuticals and utilities has been marginal which would recover soon.

With 13 crore workers pre-lockdown, MNREGA has taken a big hit but would bounce back since more people now in rural areas would seek such work. In addition, India would attract some investments and create jobs, emanating from worldwide anti-China sentiments.

Healthcare & Pharma Boom

As India’s public expenditure on healthcare increases from 1.3% to 3% of GDP within couple of years, it would provide a thrust to job opportunities for doctors, micro-biologists, nurses and paramedics. Surge in healthcare would also result in heightened demand for pharmaceuticals, bio-technology and medical equipment.

Flexi Hiring for Work from Home

Market leader TCS has announced that 75% of its employees could work from home which would become the norm in the $180-billion Indian IT/ITeS industry employing 4 million people. This would stimulate employment, particularly for women seeking job-flexibility who had opted out of the labour market. Part-time and flexi-hiring would increase, translating into cost optimisation due to wage rationalisation and real estate savings. To a lesser degree, this trend may percolate to services segments like BFSI.

Sectoral Job Surge

E-commerce would surely create more jobs as business shifts from conventional retail to home delivery. Online education holds promise with e-learning as the new normal. Media streaming, work-from-home solutions and project management tools for virtual teams would create more jobs. Opportunities for contractual employees across delivery fulfilment and disaster management have already shown an upward trend. More sanitization and cleaning jobs would get created in an outsourced mode. Some gig economy jobs, especially food delivery services would grow.

Return of Migrant Labour

A recessionary construction industry would not recover seamlessly as migrant labourers are unlikely to return soon. As manufacturing operations resume, initially it may have to depend on regular workers on rolls. Large industries and SMEs must reconcile to a phase-lag between resumption of manufacturing and return of migrant labour.

Government’s Ingenuity

Economy’s well-calibrated bounce-back and re-creation of lost jobs would depend on government’s ingenuity in easing out district-level curbs within a risk management framework. Seamless supply chain logistics spanning red, orange and green districts is crucial. Re-opening of stand-alone shops may bring relief but if large marketplaces remain shut indefinitely, it will negate the rationale behind reopening of economy.

Sector-wise re-start priority must be based on protection of the vulnerable blue-collared workers, as also advocated by CII. Government and industry need to work in partnership to revive the jobs lost in last 40 days. Despite the lockdown being the biggest job-destroyer in India’s economic history, the nation now needs to prove that this loss of livelihood was only a transient phenomenon.

Source: Economic Times

Jayant Krishna is Senior Fellow, Center for Strategic and International Studies (CSIS)Jayant Krishna, is Senior Fellow, Centre for Strategic & International Studies (CSIS), and Executive Director, Public Policy, Wadhwani Foundation.