Unlock 1.0: India Creates Millions Of New Jobs; Coronavirus Cases Can Reach 800,000 In A Month

As India’s costly lockdown was lifted, India’s labour market showed surprising strength in the second week of June, restoring many jobs that were lost to the economic upheaval caused by the nationwide lockdown, and offering some hope that the worst may be over.

Although, now, India is projected to see its coronavirus outbreak nearly triple over the next month to more than 800,000 cases as the Centre tells citizens to learn to live with the virus.

Read to find out more…

National Unemployment Rate Has Improved Due to Unlock 1.0?

The nationwide lockdown began on March 25 and ended on June 14. The week that ended on June 14 witnessed a sharp fall in the national unemployment rate 11.63% from 17.51% in the previous week, bringing the job loss rate closer to the levels prevailing before the lockdown, a survey by the Centre for Monitoring Indian Economy (CMIE) found.

The development comes as offices, shops and self-employment avenues reopened after the government lifted nearly all lockdown curbs after more than 2 months. The ongoing summer crop planting season and the rural job guarantee plan also provided employment opportunities to people in the villages.

Meanwhile, the rural job loss rate saw a sharper drop than the overall unemployment figures, CMIE said, declining to 10.96% in the week to 14 June from 17.71% in the previous week. That compares with the job loss rate of 8.29% in rural India and 8.41% nationally in the week to 22 March, 3 days before the lockdown was implemented.

The urban unemployment rate at 13.1% is higher than both the rural and overall job loss rate, CMIE said.

What Do The Experts Have to Say?

However, economists and job market experts examining the space warned that the improvement is largely because of a growth in casual work and self-employment activities, and should not be interpreted as growth in formal sector jobs. Industrial activity has started picking up, but wage employment and a recovery in formal sector jobs will take a much longer time, they argued.

Muralidharan Thyagarajan, chairman of TMI Group, a staffing company said, “The lockdown had wiped out the self-employment space, and when the unlocking has picked up, this category of people are going back to earn their livelihood, which is showing in this survey findings.” 

Thyagarajan said, “If we analyze the available data points and the ground-level interactions with people and corporates, we can say non-wage work is coming back. At least 75% of people in the labour market are in non-wage work, earning a livelihood through self-employment, including agricultural work and casual jobs.” He added, “The decent formal sector jobs will take over a year to recover from the COVID-19 pain.”

According to Santosh Mehrotra, a professor at Jawaharlal Nehru University (JNU) there are mainly 3reasons behind the sharp improvement. He said, “The sowing season is on, which must be absorbing people; second, the unlocking has resumed livelihood activities that were thrown out of gear due to the lockdown; and third, demand for work under the national rural employment guarantee scheme has gone up.” Mehrotra, chairperson of the Centre for Informal Sector and Labour Studies at JNU, also said,“But these are not formal jobs. We were talking about a four decade-high unemployment rate before covid lockdown, and if the job loss rate stays at 10-12%, think of the overall impact on people. It is a crisis for any labour-market.”

Experts argue that the lack of decent jobs has the potential to push more people to poverty.

Aroop Mitra, a professor of economics at the Institute of Economic Growth, in New Delhi questioned, “Those who were earlier in wage employment have gone back to villages and are now either in casual work or agri-work. Drivers with monthly wages or office support staff who have gone back due to job loss and wage loss will increasingly get into informality. Technically, they will be called employed but are they decently employed.” 

A Massive Spike of COVID-19 Cases Expected in July!

The forecast from a team of data scientists at the University of Michigan would put India just below Brazil, the world’s second worst-hit country right now, and on track to surpass the Latin American country given its massive population of 1.3 billion people and the ongoing relaxation of virus containment measures.

Bhramar Mukherjee, a professor of biostatistics at the University of Michigan who is part of the team that’s modeling India’s epidemic said, “You cannot see the peak, it’s been pushed further in time.”

After removing longer term projections from the team’s website because they were causing people to panic he said,  “I wish I could be more positive but I think it’s going to be really hard over the next couple of months.”

India has tried a nationwide lockdown to curb the spread of COVID-19 virus in its early stage of outbreak. While the measures slowed transmission somewhat, they didn’t flatten India’s infection curve as they have in other, developed nations.

The lockdown left millions jobless as Indian economy experienced a first full-year economic contraction in over 4 decades.

But as day laborers put out of work by the lockdown continue to migrate from India’s megacities to their villages in other states, infections have begun to multiply in poorer, more rural parts of the country that have even less health-care infrastructure.

The costly lockdowns are difficult to continue and the surge of new cases each day is too overwhelming to implement the kind of test-and-trace strategy used in South Korea and Germany. India must now focus on limiting casualties while hoping people practice social distancing on their own.

Ramanan Laxminarayan, director of the New Delhi and Washington D.C.-based Center for Disease Dynamics, Economics and Policy said, “India can’t afford to have any more lockdowns and, therefore, the strategy is to open up and deal with the virus — I think the slogan is live with the corona.” He also said, “You basically have to live with it until the vaccine arrives or there is herd immunity.”

Both those milestones are far off. Herd immunity occurs when at least 60% of a population develops antibodies naturally after infection.

While other countries used lockdowns to bring the rate of daily new cases down to low enough levels to break large chains of transmission, India’s population density and multi-generation households pose a different set of challenges.

Until herd immunity catches up, India can expect a ‘cascade of peaks’ as outbreaks sweep around the country, Mukherjee said. In experiencing a lockdown that wrought economic suffering without flattening the infection curve, “India had the worst of both worlds,” she said.

Though there are about 100 vaccines in development globally, it could be years before there’s viable and widely-available immunization.