5 Million Salaried Employees Jobless in July-August

–Kakali Das |

The Centre for Monitoring Indian Economy (CMIE) has put out a fresh report about Jobs and it said, “Nearly five million salaried people lost their jobs in July, taking the total up to 18.9 million”. That’s almost 1.9 crore salaried people who have lost their jobs since the lockdown began. If Companies are laying off and salaried jobs are lost, it will be a while before these organisations decide to hire again. If at all there is a recovery in overall employment rate, the recovery was driven by the informal and not the formal sector, according to the CMIE. It was the daily wage labourers and the traders, hawkers who were able to recover their jobs but not the salaried people. What’s concerning about the salaried jobs is that it supports the entire livelihood, brings in PF (Provident Fund), health insurance and several other benefits. If we consider an average of three or four people dependent on each of these jobs belonging to at least 6.4 crore people who have been affected, it’s unnerving. The report from the Asian Development Bank states, “6.1 million young people between the ages of 15-24 may lose their jobs starting now in the year 2020 if the virus takes roughly, till September, to be contained”. The unemployment rate, according to the Labour Organisation in India,is expected to rise as much as 32.5% – which means 1 in every 3 people in their working age will be without a job in the country.The Quint sent 45 staffers on indefinite leave without pay, Times of India (TOI) laid off 3 employees from Sunday Magazine. Accenture is on the verge of laying off 25000 employees in the days to come. On the contrary to this, Naukri.com and LinkedIn have put out a report saying things are picking up, slowly, but it’s evident. I have, in fact, witnessed a number of emails from senior, experienced people to many of my friends who own small scale Start-ups asking for jobs in the last couple of months.

On asked whether things would go worse before they get better, Prof. Jayati Ghosh, Economist said, “The way things are going, this is just the tip of the ice-berg. I suspect that the extent of job losses is even greater than that captured by the CMIE data. If there’s no change in government economic policy, if there’s not a dramatic attempt to create more demand and therefore more job opportunities, it’s going to get extremely worse. We will not then be able to blame only the pandemic but the government policy response for that”.

There’s a phenomenon known as “Multiplier Effect”, which basically means that a given change in a particular input, such as government spending, would cause a larger change in the output.In the laymen words – if you get some money, you will spend more, whichthen would make the shopkeeper buy more, the producer produce more and thus, he/she will employ more. If you lose money, you lose your job, wages and you spend less. In the beginning people will draw on their savings to manage somehow, but they will still spend less. So it’s a terrible knock-on effect.

“The Indian government has not stepped in to restore the economy the way other governments in the world have. Pretty much across G20, we have the lowest stimulus package. What the governments elsewhere have done is that they have given compensation to those who have lost incomes during the pandemic, so that they could maintain some minimal spending. In terms of work programmes, they have done much more. Our government could immediately focus on the small and micro sectors, because that lack of demand is feeding upwards into the formal sector and that is why the middle class is losing its jobs and salaried employment is going down”, Prof. Ghosh said.

There are 30,000 crores in EPFO (Employees Provident Fund) that has been withdrawn in the last four months. One breaks his EPFO when he has his back to the wall. What we saw on the streets a month agowas because the migrant workers had no other options, and the middle class, largely unaffected, was watching the entire episode while quietly withdrawing their EPFO and burning through their savings. But this burning of savings isn’t going to last after a certain period. And as the Bengaluru Police said during the recent riots that there were unemployed youth sitting at home frustrated. When the unemployed youths, increasingly, are going to be subjected to all the hate politics that we are already witnessing, it’s terrifying to even imagine the outcome of it in the coming year. The senior citizens, too, are burning through their meagre hard earned savings. Because of increasingly low rates of interest by PSU banks and other financial institutions they are already earning less than before.  Besides, the inflation of household goods and essentials is skyrocketing. The central government is extremely oblivious to such increasing hardships of people.

“There will be very large scale default across the board. What we should have is a standstill; everything else is on hold, so why not keep the debts on hold for now! Banks shouldn’t demand an interest payment for a period. It can be done and it has been done in other countries. But the government here has just pushed it on and added to the burden”, Prof. Ghosh said.

“There are two positive things that have happened, one is that the sectors which are dependent on the digital commerce which facilitated services like education and learning, delivering the consumer goods, essential healthcare or financial transactions have actually done well even in this lockdown. So in that bit there’s a lot happening in the formal sector. Secondly, the equipment and infrastructure which are enabling work-from-home (freelancing) like, high speed internet connection or the laptops etc., there are a lot happening in that sector as well. But as people have stopped their discretionary spending whether it is travel, tourism, dining out, entertainment, buying residences or commercial properties, all of these have come to a halt”, Aditya Narayan Mishra, Director, and CEO, CIEL HR Services.

We are in an uncharted territory; we have never had to go through this before. Things are going to get tough; those of us who are in a better place, reach out to those who are in need of help. That’s the best we can do, try and get through this.