Jobs for youngsters dwindle

by Mahesh Vyas

Covid-19 is known to be a highly contagious disease. It is also known to be particularly dire for the elderly who may have comorbidities. The virus is also known to be equally dangerous for very small children. Grown up youngsters are less likely to be infected by the disease such as to lead to a fatal outcome. Most youngsters remain asymptomatic through the infection and the event is often no different from a common flu.

But the lockdown, which is a consequence of the highly contagious nature of this disease, is particularly harmful to youngsters. While youngsters who are ready to start working may escape the overwhelmingly debilitating effects of the disease, they are suffering an equally crippling experience on their career and their future.

The disease and its companion, the lockdown, together have hobbled, if not paralysed, the entire age-spectrum from being gainfully employed.

It is conventional to count employment only for people of 15 years or more. The upper bound has been shifting progressively higher over time. We believe that in a modern society, a lower bound is sensible. Children are expected to be in school. But, there should be no upper bound on employment. We therefore measure all labour statistics for people of 15 years or more with no upper bound.

In India, people in the age bracket 15-19 years account for less than 1.5 per cent of all employed persons. This low proportion is a good sign because these youngsters should be in school or college.

The next five years, 20-24 account for a substantial 8.5 per cent of all persons employed. This ratio has been falling. It was 9.1 per cent in 2017-18 before it fell to 8.6 per cent in 2018-19 and then 8.5 per cent in 2019-20. This could also be a healthy sign of greater enrollment for higher education.

Then, all 5-year age brackets, from 25 years and above, contain between 11 and 15 per cent of the employed labour force. There is a slightly higher concentration among people in their forties. Their share in the employed is 14-15 per cent. The rest account for 11-12 per cent.

A somewhat worrisome finding from CMIE’s Consumer Pyramids Household Survey is that the share of people in their late 20s and in their 30s is also declining in the total employed labour force. This fall was particularly sharp in 2019-20. Their collective share fell from a little over 36 per cent in 2017-18 and 2018-19 to 34 per cent in 2019-20.

The past few years have been very difficult on the economy and therefore on labour. The adverse impact of the slowdown seems to have been disproportionately high on youngsters.

The lockdown has had a similar impact. Initially, in April, the lockdown led to job losses in every age bracket. Then, in May, when there was a small but significant improvement, almost all age-brackets reduced their losses, except those in the 25-29 year age bracket. Turnaround in labour markets was almost dramatic in June and this showed in an across-the-board improvement in jobs.

Recovery in July was smaller and it was discriminating. Although overall job losses declined in July, they increased among people from 25 through 34 years of age and for those in their early 50s. It is difficult to generalise these two groups. Those in their early 50s lost 1.5 million jobs on a base of about 48 million jobs. Those between 25 and 34 years lost 0.98 million jobs on a base of 88 million jobs.

It is possible to generalise the impact of the lockdown if we study the cumulative impact of the lockdown till July 2020.

The age group 20-24 years that accounts for less than 9 per cent of total employment, accounted for 35 per cent of the job losses till July 2020. Those in the age bracket 25-29 years account for 11 per cent of all jobs but they account for 46 per cent of all job losses.

Cumulatively, between April and July 2020, 11 million jobs were lost compared to the average employment in 2019-20. But, job losses in the workforce of age less than 40 years were much higher at 19. 6 million. This was partly offset by job gains of 8. 9 million among those of 40 years or more.

As we saw above, the slowing down of the economy has been punishing on the younger population. Now we see that it has been particularly harsh on them during the lockdown.

Three factors seem to be working against younger workers.

First, a slowing economy generates lower demand for labour. Enterprises are expanding lesser than earlier and therefore are generating lesser demand for additional labour. Additional demand for labour is usually met by youngsters who join the labour force. But, with the slowdown, the demand for this young new labour force has shrunk. As a result, slowly, the age profile of the workforce is shifting towards the relatively older workers.

Second, the younger workforce in an enterprise is less experienced and therefore is more easily dispensable. In the initial years, enterprises invest into fresh labour to make them useful. In difficult times, they are less willing to make such an investment. As a result, the axe falls more quickly on youngsters.

Third, during the lockdown, enterprises cannot hire and train new recruits easily. This is a new constraint. But, this is a very serious constraint since it is now quite prolonged.

An ageing workforce in a young population is weird. It has implications on future generations.

References
1. https://economicoutlook.cmie.com/kommon/bin/sr.php?kall=wshreport&tabcode=001041005005000000&repnum=115075&frequency=M&colno=1