Covid and unemployment: How India can learn from the world

India lost 122 million or 12.2 crore jobs in April 2020 as a very hard coronavirus-induced lockdown was imposed across the country. Out of this, 21 million jobs came back in May. In June, over 70 million jobs came back as lockdown was gradually lifted. 

Still, around 31 million jobs are yet to be back. And the jobs which have come back are mostly lower quality ones. 

Most of the jobs that came back (44 million out of 70 in June) are those of small traders and daily wage earners. They account for around one third of all jobs in India – as lockdown was eased/lifted, these essentially self-employed people slowly got back to their trade. However, it may be pointed out that they accounted for 75% of job losses in April but only 64% of jobs restored in May and June. 

Jobs rose the most in agriculture. In May, farm sector added 1.4 million jobs and in June a massive 11.8 million – partly it is because of record kharif sowing in June, but most probably this is also reflective of huge spike in disguised unemployment. 

Work under MNREGA has surged both in May and June – both farming ang MNREGA work have accommodated small traders and other wage labourers, who lost their jobs elsewhere. 

Out of 18.2 million job losses in April among business persons, 15.8 million jobs have come back. 

Recovery of jobs has been slowest among the salaried section. 17.7 million lost their jobs under this category in April, in May it increased marginally to 17.8 million. In June, there was a recovery of just 3.9 million salaried jobs. It is a matter of deep concern as the salaried segment accounts for 21.3% of all jobs in India. 

Though there is no comprehensive data but most of the salaried employees have been forced to take salary cuts. This includes first salary cuts in the Tata group in 152 years and DA freeze for central government employees perhaps for the first time. 

For more details on weekly jobless numbers, state-wise break up, click here

How does the global picture look?

USA: In April, the USA lost a record 20.5 million jobs and the unemployment rate hit a high of 14.7% (in February 2020, it was at a historic low of 3.5%). At that point, economists had been anticipating unemployment rate to hit 20% but in May, the US economy surprised by adding 2.5 million jobs (unemployment rate at 13.3%). In June, the US economy again added a record 4.8 million jobs (unemployment rate at 11.1%). This is the largest single-month gain in the US non-farm payroll. 

China: It is difficult to estimate how many jobs China has lost as Chinese data is opaque at best. A recent CNN story, quoting several experts, estimated that around 80 million (8 crore) people may have lost jobs in China by May. However, it is important to remember that going by export and industrial production data, China is also witnessing the fastest recovery among the major economies. 

But most amazing is perhaps Europe. Despite massive number of Covid-19-related casualties and long lockdowns leading to a steep contraction in the EU economy, there has been insignificant job loss (unemployment rate in the UK is around 4% in May and around 5.8% in Germany). This is primarily because all the major European countries (and this time the UK too) deployed their state-funded payroll-protection schemes (like Germany’s famous Kurzarbeit, whereby the government pays 2/3 of an individual’s salary), helping distressed companies to survive without cutting jobs.

(Writer is a public policy analyst and a student of economic history.)