Counting job losses and doles
INDIA’s population right now is about 138 crore people. Of this, a little over 100 crore are above the age of 15 years, which means they are of working age. Of course, not everyone works. A large number of younger people, between 15-20 years, go to schools or colleges. A majority of women have to toil so much at home that they cannot go out and get paid work. And, some older people are too sick to be able to hold out a proper job.
Even if one factors all this in, the number of Indians who are actively seeking work — or our Labour Force Participation Rate (LFPR) — is abysmally low. The weekly employment surveys of the CMIE (Centre for Monitoring Indian Economy) show that over the past year, only about 42-45 crore people have either worked or looked for work. Compare that to the 90-crore people who voted in 2019, just as a point of reference. Compare it also with China, where about 70 per cent of the working age population actively participates in the labour force.
How has the lockdown affected this? One can use the CMIE’s data to get a broad sense. In the third week of March, right before the lockdown came into effect, a little less than 43 crore people participated in the labour force, of which over 39 crore got work. About 3.6 crore people were looking for work, but didn’t get it. Technically, these are known as the unemployed, and this number, as a proportion of the LFPR, gives us the unemployment rate. There could be many others, who need jobs, but have lost all hope of getting any, so they don’t even look for work. Such people are not counted among the unemployed.
Three weeks into the lockdown, in the week ending April 12, the number of people participating in the labour force has dropped dramatically to less than 36 crore. Of these, only about 27 crore people got work. That means, about 8.5 crore people, who were actively looking for work in this period were unemployed. That is a massive unemployment rate of 24 per cent.
More importantly, about 7 crore people just dropped out of the labour force; they didn’t even try to look for work. So, about 39 crore people got work in the third week of March, and only 27 crore in the second week of April. So, the lockdown caused a dramatic drop of over 12 crore jobs. That means, nearly one in every three people who were working before the lockdown, lost their jobs.
Neither of these two numbers — the 7-crore drop in those participating in the labour force and the 12-crore drop in the number of employed, should surprise anyone. Forty per cent of Indian workers get paid daily, 90 per cent do not get paid leave, so a lockdown was bound to leave them without work and money. Since there is no chance of getting work right now, unless it is considered an essential service, many people have obviously stopped looking for work.
There’s one other reason why one in every six people have dropped out of the active labour force since the lockdown began. Anecdotal evidence gathered by journalists from migrant workers who have gone home tells us that many of them were asked to return by the village panch. They were told that the government — both at the Centre and in the states — will give them money in their accounts, free ration and LPG cylinders.
The Centre has promised 5 kg of free rice or wheat to 80-crore poor people, or nearly 60 per cent of India’s population. States like Kerala, Odisha and Delhi began distributing subsidised ration to people even before the central package was announced. If you follow the UP Government’s Twitter handle, you will see that it makes big claims everyday about distributing free foodgrain among ration-card holders. Reports from Bihar suggest that not only has the state government distributed Rs 2,000 crore among the poor, but also transferred Rs 1,000 each into the accounts of 6.67 lakh Bihari labourers who work outside the state.
A senior journalist, who is critical of all governments, showed me WhatsApp messages he received from labourers and manual workers he contacted: each one talks of getting cash from the Centre and their state government. Some fortunate households have got as much as Rs 5,000 because of disbursements under PM-Kisan, women’s Jan Dhan accounts, pension to widows and senior citizens.
That is hardly anything, you would say. But, it is worth remembering that most migrant workers make very little money. Construction workers get about Rs 400-600 a day, when they have work, but that is not more than 15-20 days at one go. That works out to Rs 8,000-12,000 per month in busy seasons. While they live on the construction site, they still have to spend money on food, some basic services and mobile phone bills. This leaves them with not more than Rs 5,000-8,000 to be sent home, back to their families.
Other migrant workers make even less. The government’s own survey shows that the median monthly earning for those working in the garment and textile sector is about Rs 5,500; those who work in food processing make just Rs 2,500 a month, street vendors earn about Rs 7,000, and those who run stalls in markets make about Rs 8,000. Along with that, about 13 per cent of India’s workers are unpaid helpers.
It is clear that their earning expectations are very low. If such workers get some amount of cash in their accounts, along with free foodgrain, kerosene and LPG, they have no real reason to look for work. This explains why the very high unemployment levels might not be as much of a setback to India’s poor as mainstream economics would make us believe. As British historian EP Thompson told us more than 50 years ago, the idea that workers want to work harder to earn more is a capitalist myth. For the poorest workers in India, shorn of ambition and aspirations, if government handouts keep them alive, they have no reason to look for work.
The author is a senior economic analyst
