After minor job losses in February and March, India’s second wave of Covid pandemic has taken a heavy toll on employment and crashed the labour market, crippling businesses.
The number of employed people fell to 375.45 million in May from 390.79 million in April, according to the Centre for Monitoring Indian Economy (CMIE).
At least 15.33 million Indians lost their jobs in May, a situation that may adversely affect consumer spending and economic revival. Unemployment rate touched 14.5% in the week ended May 16, 2021 and rose further to 14.7% in the following week.
Fresh data also showed that the number of people unemployed but actively looking for jobs rose by 17 million to 50.72 million, reflecting the willingness to work but scarcity of opportunities.
This is the worst-ever loss of jobs in India since liberalisation. The 2007-2009 financial crisis had a relatively smaller impact, with about 5 million jobs lost. Jobs were lost across sectors such as travel/tourism and hospitality, which rely on people movement to sustain business, as well as startups and financial services.
The impact of the pandemic on salaried jobs is, however, relatively less, and largely limited to urban India. But people with businesses, small traders and daily wagers faced the brunt of the economic disruption caused by the pandemic.
Economists said the job losses will push more people into poverty, erode savings due to income loss and prolong the demand revival.
“The situation was looking up between December and March, but the second wave has done more damage now. What we are not realizing is that the job loss is squeezing private demand. If the consumer does not have income or reduced income, he or she won’t spend,” said Arup Mitra, a professor of economics at the Institute of Economic Growth in New Delhi.
