Salaried job losses

by Mahesh Vyas

Salaried jobs have taken the biggest sustained hit in the current Covid-19 induced lockdown.

Salaried jobs were estimated at 86.1 million in 2019-20. This fell to 68.4 million in April 2020. By July 2020, their count had fallen further to 67.2 million.

Salaried jobs are preferred forms of employment for most people. These jobs offer better terms of employment and also better wages. Households with salaried jobs are better placed to build savings and plan a sustained improvement in their standard of living. Such households are also better placed to borrow and service their borrowing because of the steady nature of their earnings.

In India, salaried jobs have stagnated in recent times. In 2017-18 they grew by 1.6 per cent then in 2018-19 they grew by a meagre 0.1 per cent before contracting by 1.8 per cent in 2019-20. As a result, salaried jobs in 2019-20, at 86.1 million were lower than their level of 86.3 million in 2016-17. This is before the lockdown hit salaried jobs.

While informal jobs have returned and even increased after being hit by the lockdown, formal jobs have not. Non-salaried forms of employment have increased from 317.6 million in 2019-20 to 325.6 million in July 2020. This implies a growth of nearly 8 million jobs or an increase of 2.5 per cent in informal employment. However, salaried jobs have declined by 18.9 million by the same comparison. Or, declined by a whopping 22 per cent during the lockdown.

In terms of percent change between 2019-20 and July 2020, the fall in salaried jobs is almost uniform across rural and urban regions. The fall was 21.8 per cent in rural India and 22.2 per cent in urban India.

But, urban India has more salaried jobs than rural India. Of the 86 million salaried jobs in India in 2019-20, 58 per cent were in urban India and 42 per cent in rural India. As a result, the impact of the fall in salaried jobs is far greater in urban India than in rural India.

Salaried jobs in urban India are likely to be the better paying jobs, they offer better terms of engagement and also, are jobs that yield higher productivity compared to salaried jobs in rural India. Loss of these urban salaried jobs is therefore likely to have a particularly debilitating impact on the economy besides causing immediate hardship to middle class households.

Financial statements of listed companies for the quarter ended June 2020 provide a few insights into salaried jobs. Listed companies provide among the better salaried jobs.

Financial statements for the quarter ended June 2020 of 1,560 companies were available in CMIE’s Prowess database as of the last weekend. This is about a third of all companies that usually provide such data every quarter. Usually, such data becomes available for all companies within 45 days of the end of the quarter, which would have been by August 15 for the June 2020 quarter. But, because of the Covid-19 crisis, companies have been allowed time till September 15 to publish their financial statements.

The wage bill of these 1,560 listed companies recorded a 2.9 per cent increase in the June 2020 quarter compared to the same quarter a year ago. This is the lowest growth in wages recorded by listed companies in the past 18 years.

What is revealing in this data is the stark differences between industries. A caveat before we discuss these is that these are still preliminary results and a better picture will emerge only after a month. Nevertheless, these results indicate a pattern which is worth noting even with these preliminary data.

Banks saw a 16.6 per cent increase in their wage bill and securities broking companies saw a 13.5 per cent increase in theirs but manufacturing companies saw a 7 per cent fall in their wage bill. The services sector was a mixed bag.

Within manufacturing, textiles has seen the biggest hit. Its wage bill fell by 29 per cent. Textiles is a labour-intensive industry and this sharp fall in the wage bill implies a very sharp fall in employment in the industry. The same holds true for leather, another labour-intensive industry. This recorded a 22.5 per cent fall in its wage bill in the June 2020 quarter. Automobile ancillaries reported a 21 per cent decline in its wage bill and the automobiles’ wage bill was down by 18.6 per cent. These again, are labour intensive.

In the services sectors the wage bill of tourism industry was down 30 per cent, hotels and restaurants down by 20.5 per cent, road transport down by 27.6 per cent, education by 28 per cent. Wage bill of the real estate sector was down by 21 per cent. The wage bill of the telecom sector increased by 10.7 per cent.

These are large inter-industry variations. Although the net result shows up as a marginal increase in the wage bill implying a very small loss of jobs, the data indicate big job losses in many industries in the first quarter of 2020-21. CPHS estimates show a loss of 17 million salaried jobs in the quarter. We also know that this got worse in July.

Unemployment Rate (30-DAY MVG. AVG.)
Per cent
8.0 +1.3
Consumer Sentiments Index
Base September-December 2015
68.4 +0.8
Consumer Expectations Index
Base September-December 2015
67.6 +0.9
Current Economic Conditions Index
Base September-December 2015
69.7 +0.7
Quarterly CapEx Aggregates
(Rs.trillion) Jun 21 Sep 21 Dec 21 Mar 22
New projects 2.94 3.26 3.53 5.91
Completed projects 0.71 1.28 2.76 1.15
Stalled projects 0.33 0.28 0.06 0.30
Revived projects 1.14 0.39 2.07 0.28
Implementation stalled projects 0.64 0.26 0.65 0.07
Updated on: 25 Jun 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Jun 21 Sep 21 Dec 21 Mar 22
All listed Companies
 Income 42.3 27.5 23.4 21.6
 Expenses 41.8 26.7 21.3 20.5
 Net profit 140.6 55.3 35.4 32.8
 PAT margin (%) 8.9 9.6 9.0 9.1
 Count of Cos. 4,564 4,690 4,733 4,508
Non-financial Companies
 Income 61.1 35.7 29.1 25.9
 Expenses 62.4 36.0 28.8 26.6
 Net profit 195.2 59.5 19.0 12.9
 PAT margin (%) 8.4 8.8 7.5 7.9
 Net fixed assets 4.9 2.2
 Current assets 10.8 15.3
 Current liabilities 0.8 11.7
 Borrowings 12.1 3.7
 Reserves & surplus 12.4 11.5
 Count of Cos. 3,336 3,387 3,428 3,280
Numbers are net of P&E
Updated on: 25 Jun 2022 8:28PM
Annual Financials of All Companies
(% change) FY20 FY21 FY22
All Companies
 Income 0.6 -1.1 13.6
 Expenses 0.4 -3.4 10.5
 Net profit -4.4 72.2 58.0
 PAT margin (%) 2.0 4.5 10.9
 Assets 9.0 9.7 9.3
 Net worth 4.8 11.7 9.9
 RONW (%) 3.4 6.9 13.5
 Count of Cos. 32,455 29,998 539
Non-financial Companies
 Income -1.2 -2.3 26.3
 Expenses -1.0 -4.4 25.6
 Net profit -20.8 63.5 42.2
 PAT margin (%) 2.2 4.2 13.8
 Net fixed assets 11.2 2.0 -1.9
 Net worth 2.2 10.7 11.2
 RONW (%) 4.7 8.0 22.6
 Debt / Equity (times) 1.2 1.0 0.3
 Interest cover (times) 1.9 2.5 10.3
 Net working capital cycle (days) 81 85 16
 Count of Cos. 25,743 23,675 386
Numbers are net of P&E
Updated on: 20 Jun 2022 11:46AM