Lockdown wipes out job gains since 2016

The biggest loss of jobs among salaried employees was of 'white-collar professional employees and other employees'.
Among these are engineers including software engineers, physicians, teachers, accountants, analysts and so on, who are professionally qualified and are employed in some private or government organisation.
All the gains made in their employment over the past four years were washed away during the lockdown, reveals Mahesh Vyas.

We have chronicled job losses during the lockdown since late March 2020. Weekly labour statistics released by CMIE provide three broad ratios: The labour participation rate, the unemployment rate and the employment rate.

These alerted us to the sharp deterioration in labour markets in the first week of April, ie, within a fortnight of the lockdown. Weekly data does not provide absolute values. These are provided in the monthly releases.

Monthly data releases provide absolute values of labour force, employment and unemployment, and their breakup into broad categories of age, gender, occupation, religion and caste besides the various associated ratios.

These told us about the loss of 121 million jobs in April; and the recovery of most of these by August, but along with the continued deteriorating condition of salaried jobs.

A breakup of this loss of salaried jobs is possible with the release of data from the 20th wave of CMIE's Consumer Pyramids Household Survey.

The most comprehensive data, this is released every four months, which is the duration of a wave.

The 20th wave was conducted entirely during the lockdown, from May through August 2020.

It does not include the worst month of job losses, April 2020, which was covered in the 19th wave (January through April 2020). Nevertheless, it is useful to illuminate the composition of the loss of salaried jobs.

The biggest loss of jobs among salaried employees was of 'white-collar professional employees and other employees'.

Among these are engineers including software engineers, physicians, teachers, accountants, analysts and so on, who are professionally qualified and are employed in some private or government organisation.

This does not include similarly qualified persons who run their own practice as these are classified as 'qualified self-employed professional entrepreneurs'.

Employment in the category of white-collar professional employees and other employees has been rising steadily since 2016 when the survey began tracking them.

An estimated 12.5 million white-collar professional employees were employed during the wave of January-April 2016.

A year ago, during the wave of May-August 2019, their employment peaked at 18.8 million.

It remained almost stable at 18.7 million in the next wave of September-December 2019 and then fell to 18.1 million during the wave of January-April 2020.

This wave contained a partial impact of the lockdown.

Employment of these professionally qualified white-collar workers fell steeply to 12.2 million during the wave of May-August 2020.

This is the lowest employment of these professionals since 2016. All the gains made in their employment over the past four years were washed away during the lockdown.

The lockdown did not impact white-collar clerical employees: Largely desk-work employees ranging from secretaries and office clerks to BPO/KPO workers, data-entry operators and such. Possibly, their work shifted to the WFH mode.

This category of workers has not been seeing any growth since 2016. In fact, it has slid quite sharply since 2018 from about 15 million to less than 12 million by 2020. It did not slide any further during the lockdown.

The lockdown has hit industrial workers. Compared to a year ago, employment among the white-collar professional employees was down by 6.6 million.

This was the biggest year-on-year loss among all salaried employees.

The next biggest loss was among industrial workers. By a similar y-o-y comparison, they lost five million employees: A 26 per cent fall.

The May-August wave period overlaps the April-June quarter. According to the Central Statistics Office, the industrial sector saw a 36 per cent y-o-y fall in real gross value added during the April-June 2020 quarter.

Evidently, although the fall in employment in industrial workers is very large, it is much smaller than the fall in output.

But comparing the two data has two problems.

First, the periods of the two do not match. This partly explains the much sharper fall in the GVA estimates as it includes the month of April when the impact of the lockdown was the most severe.

And, it does not include the months of July and August when the impact was much diluted.

The second problem in the comparison is that the CPHS employment data covers all kinds of industries independent of their size.

Quarterly GVA computations, on the other hand, rely essentially on information of larger organised companies. Implicitly, the fall in GVA reflects the fall in the larger units.

Computations made by CMIE from quarterly financial statements of listed companies (sample of over 1,300 industrial companies) show that the inflation adjusted gross value added of manufacturing companies declined by 41 per cent in the April-June 2020 quarter.

But, their real wage bill declined by only about 15 per cent. This indicates that employment loss in large industrial companies will have been much lesser than the 26 per cent fall in employment in overall industrial workers.

Therefore, the decline in employment of industrial workers is likely to be largely in the smaller industrial units.

This reflects the distress in the medium, small and micro industrial units in recent times.

An enterprise survey that covers large, medium, small and micro enterprises could have provided an excellent corroboration or counterfactual on this important issue at this time.

Mahesh Vyas is MD and CEO, CMIE P Ltd.

Feature Presentation: Rajesh Alva/Rediff.com