Covid Impact, Part II - To Jobs & Income

It is one week since India proclaimed a lockdown on 24th March 2020. Tens of thousands of people started moving back to their hometowns. Those fortunate ones that could afford to work from home (wfh) settled back in their homes, while those that could not wfh stare at loss of income(s).

Worse off are crores of low-income migrant workers across the nation, with a gloom future due to loss of job, income & livelihood - they are still walking 100s of kilometers back to their homes, also facing a lethal threat of contracting the viral infection. This blog aggregates data from several news sources to present a snapshot of where the nation is heading in terms of jobs & income!

India's Workforce - The big picture

With a population of 137 crores, India's workforce stands close to 50 crores. Of this, 20 crore people work in farms/agri related primary sector and 26 crore people work in non-farm sector. And at any point in time, about 3-4 crore people are unemployed as they are in between jobs.

About 83% of non-farm employment is provided by the informal sector, amounting to 21.7 crore people. Sources estimate that about two-thirds of these jobs are at risk due to the impact of lockdown due to covid-2 pandemic. This translates to:

• 2.8 crore job losses in Manufacturing sector
• 4.9 crore job losses in Non-Manufacturing sector (construction, mining, electricity, water & gas)
• 5.9 crore job losses in services sector

This totals to a massive 13.6 crore job losses across the nation. That's 50% of the entire non-farm workforce in the country!!

A sneak preview at key job sectors

Textiles is the third largest employment sector after agriculture and construction, employing 1.8 crore people. At Tirupur, a key textiles cluster in Tamil Nadu, which has 1500 export units, the lives of 6 Lac employees have come to a grinding halt. These employees were earning an average income of Rs.450 per day prior to the lockdown, their fate now depends on the deadly virus.

Agra, a key footwear cluster, which has 250 mechanized factories and 5000+ cottage industries employs 4 Lac employees, is also frozen due to the lockdown. This cluster churns out half a million pairs of footwear per day and has orders up to Rs.450 cr cancelled.

On the services side, aviation, tourism and hospitality are the worst affected as about 2 crore jobs are at immediate risk. Events and entertainments industry too, is reeling under the same stress as aviation sector where all marriages, conferences, exhibitions and large scale gatherings stand cancelled for at least 6 months. This sector employs about 1 crore people.

Retail is the lifeline of consumption, which employs 3.7 crore people. Although shops that sell essential goods are open, all distribution channels are severely impacted due to sealing off of state level boundaries. Basic consumption is the first sector expected to revive once the lockdown is relaxed, but people may not spend much given the loss of income & job situation.

Summary

A one month lockdown could result in an average income loss of Rs.1.4 Tn for these 13.6 crore people - that amounts to 1% of India's Rs.140 Tn GDP. The longer the lockdown, deeper the impact, nevertheless loss of income is secondary to loss of life!!

Corporates and wealthy individuals have already started contributing to support the livelihood of masses during the temporary lockdown period. Once easy contagion of the virus is arrested or a vaccine emerges, the situation will turn around for crores of our labor force..