We (India) as a country are currently under lockdown for 21 days because of Covid 19 contagion. As informed by the Prime Minister in his address yesterday exactly at 8 pm that there will be a nation wide lockdown subsequently from 0000 hours (midnight) and observed for 21 days or till 14th April. However, essential commodities will be made available. Seems like a movie but it is actually happening. Recently I was reading news on how the virus is making Sensex fall and rise dramatically. Looking further I came across news on how it will impact the nation’s economy. Definitely then, it’s obvious that Covid 19 will have impact on job sectors in India. The article discusses all relevant details of primarily affected sectors of the economy.
(Covid 19 and its impact on Job sectors in India)
India is one of the emerging economies of the world. It is currently valued at 2.94 trillion dollars and ranks 5th in terms of GDP (nominal). India in terms of demographic strength is far ahead of the west and other nations. It has about 62 percent people in the 15-59 age group. But, current economic data and NBFC (Non Banking Finance Company) crisis with NPAs (Non Performing Assets) mounting are taking a toll on the Indian economy.
The real GDP of India is somewhere around 5 to 4.7 percent. India has already been suffering of Unemployment crisis at a 45 year low of about 6.1 percent (Periodic labour force survey of the NSSO). Compounding it with Covid 19 lockdown of 21 (+5 days including Janta curfew) days, a glaring uncertainty as to how economic activity will take its course upon its aftermath. More importantly will it bring any structural, cultural or psychological changes in how we work and generally interact in the working place is something to think about.
What will be the impact on Job sectors in India ?
ILO, International Labour Organisation, had said that if the governments do not act fast to shield workers from the impact of the global pandemic then the crisis could aggravate economic slowdown effectively destroying over 25 million jobs all over. Since most jobs are created in the developing world you can imagine us and other developing nations facing the brunt of it. The 2008 global economic meltdown had cost 22 million jobs worldwide.
ILO Director-General Guy Ryder said “this is no longer only a global health crisis, it is also a major labour market and economic crisis that is having a huge impact on people.”
We are still at a very early stage to comment on the impact of it on jobs and labour market. But, the following are bearing the brunt of the pandemic :
- Travel and Tourism Industry
- Manufacturing sector
- Hospitality sector
- Airlines industry
- Pharmaceutical and Fertilizer sector (import depended)
- Contractual labour in our country
- Unorganised sector
- Poultry sector (Meat Industry)
- Retail sector (Because of shops being shut during lockdown)
Travel and Tourism industry
Some of these industries are going for salary cuts or asking employees to go for take leave without pay. The government has put a notice regarding full salary to be credited to employees amid the coronavirus crisis. When talking about the travel and tourism industry which forms 8-9 percent of India’s GDP and generated 26 million jobs in 2018. GOI cancelling visas and going into a lockdown can only have a worse impact on tourism. It is important to note that even after some days, the ban on flights has lifted. The hysteria it has caused all around the world and domestically, will likely impact the travel and tourism industry for a long time.
Manufacturing, Pharmaceutical and Fertilizer Industry
When talking about Manufacturing sector, the export and import industries in India are likely to take a hit during this time of crisis. There is already a need to push the export sector of Indian economy to make it robust. Pandemic at this stage will see the MSME sector, automobile and Import dependent sector likely suffering from it. Lancet reports that India imports about 70 percent API (Active Pharmaceuticals Ingredients) from china for its medicines. And since India is a bulk generic drug manufacturer its effects will likely be seen in India as well as other nations like Africa and others. Likewise, we are also dependent on Non Urea or DAP in fertilizers for import from China. More importantly, this can have some impact on Farmers and Agriculture produce (but its too soon to say that).
Airlines and Hospitality Industry
It has been coming in the news that Airlines crew and pilots are themselves taking cuts in their salary. This is bound to happen. If you have been reading the news you would know airlines are not a very booming business, atleast in India. It is mired in red tapism (regulation), very low fares and competition which eats away their profits. Subsequently, airline fares are comparable to Railway fares. Moving further to Hospitality industry, Hotelviate, a consultancy firm, estimated that the hospitality industry will suffer a considerable loss in FY19 Q4 2019 and weaker in Q1 FY20. It estimates around 620 crore loss to the industry with hotels making up for 135 crores and rest by other accommodation industries.
If we talk about Contractual Labour, Many experts in the industry have stated that there has been an increase in contractual labour force in the country, recently. Azim Premji University’s 2019 State of Working in India report says that “contract workers are employed in almost every aspect of the production operation now and they form 70-80% of all workers in Maruti Suzuki’s plants in Gurgaon and Manesar”. Amid Lockdown in the country it’s likely that there will be substantial lay off in contractual labour workforce both during and later on.
While the prime minister had addressed for Janta curfew and later with nationwide lockdown there were huge crowd gatherings on railway stations and bus terminals. As migrant labour is daily wage earner in the metropolitan who is now struggling to reach his/her hometowns. Many are from Western UP and Bihar working in Mumbai, Delhi, Punjab, Haryana and other states. They are confronted by police and public authorities found lingering on roads trying to find shelter or a way to reach their hometown.
The problem is there are no adequate arrangements for these daily wage earners. They sleep in makeshift places (under bridges, railway stations etc) in proximity to small factories/karkhanas where they are employed. Such labour are not covered under any law. They work on a daily wage basis with 100 to 500 rupees a day in metro cities. Amid lockdown left with no choice (since railways and buses stopped) they have started walking some 500 plus kms towards their home. Remember, Manjhi (the mountain man, movie) where in one scene the protagonist walks from Bihar to Delhi. Except now many migrant labour are actually taking this recourse. The government should do something about it.
Poultry sector is worst hit due to fake news circulation in social media linking Covid 19 with the chicken and meat sector of the livestock industry. It is said that it is currently taking more than a billion dollars per day loss amid the scare.
It is not hard to imagine that the retail sector is bound to register loss amid the lockdown. This pertains to all the non essential items which are marketed. You can think of clothes, jewellery, shoes, etc. Also there will be disruption in supply chain management which raises concern over retail business.
Pie Graph showing employment break between those employed in organised sector vs those in unorganised sector in India
HR experts have suggested that a lockdown of roughly 30 days will result in laying off of workers in good numbers. What is problematic is that this is only the cream of the cake. If you look at NSSO numbers published way back in 2009-10, it says that total employment was 46.5 crore. Now out of this 46.5 crore only 2.8 crore was organised sector and rest was unorganised sector (see figure above). If the HR experts of the organised sector predict a considerable loss in jobs in the formal sector, then one can only imagine what will happen to the unorganised sector. Niti Aayog had released a report called strategy for India at 75 in which it stated that the informal sector/unorganised sector accounted for 85 percent of workforce in India. However, no exact or certain estimate has yet been determined because there is conflicting data over it.
One good thing that has helped private sector sentiment is that many conglomerates have ruled out any job layoffs and salary cuts. Top companies like Tata, Bajaj and Paytm have responded positively with respect to employee’s well being. Many others are coming up and allaying fears of the employees. Salaries are credited and other supports are being offered by the companies. Infact Reliance stated that its employees who are earning below 30,000 a month will be credited twice a month.
But before I conclude, I would like to talk about one last thing,
The online business sector seems to be rocketing these days. There is a rise in stock investments in OTT (over the top media) platforms and e-commerce markets. For those who aren’t familiar with the term OTT, they are online content platforms like VOOT, Netflix, Hotstar etc. Since people are at home there is bound to be a rise in consumption of these services. In other words there would be much Netflix and chill happening in India. The same can be said about online teaching and education services who are going to benefit from it.
Other than the digital world FMCG and chemical industry are also likely to benefit from it. Since people are panic buying, stocking and hoarding items of daily consumption.
There is light at the end of the tunnel. If not soon but now, the timing of lockdown should not have been delayed any further. Covid 19 can have a devastating impact on our lives. Hence, all directives by the government should be taken seriously. Like our prime minister said Jaan hain toh Jahan hain (if you have a life you have the world). The Jobs are a relevant concern but lets hope there is minimal damage and better recovery of our nation collectively.