Job losses in white and blue collar workers

by Mahesh Vyas

We have chronicled job losses during the lockdown since late March 2020. Weekly labour statistics released by CMIE provide three broad ratios - the labour participation rate, the unemployment rate and the employment rate. These alerted us about the sharp deterioration in labour markets in the first week of April, i.e. within a fortnight of clamping of the lockdown. Weekly data does not provide absolute values. These are provided in the monthly releases.

Monthly data releases provide absolute values of labour force, employment and unemployment and its break-up into broad categories of age, gender, occupation, religion and caste besides the various associated ratios. These told us about the loss of 121 million jobs in April and the recovery of most of these by August , along with the continued deteriorating condition of salaried jobs.

A break-up of this loss of salaried jobs is possible with the release of data from the 20th wave of CMIE’s Consumer Pyramids Household Survey. Data from a wave of the Consumer Pyramids Household Survey is the most comprehensive. This is released every four months, which is the duration of a wave.

The 20th wave was conducted entirely during the lockdown, from May through August 2020. It does not include the worst month of job losses, April 2020, which was covered in the 19th wave that spanned January through April 2020. Nevertheless, data from the 20th wave is useful to illuminate the composition of the loss of salaried jobs.

The biggest loss of jobs among salaried employees was of ’White-collar professional employees and other employees’. These include engineers including software engineers, physicians, teachers, accountants, analysts and the type, who are professionally qualified and are employed in some private or government organisation. This does not include the similarly professionally qualified persons who run their own practice as these are classified as ’Qualified self-employed professional entrepreneurs’.

Employment in the category of white collar professional employees and other employees has been rising steadily since 2016 when the survey began tracking them. An estimated 12.5 million white-collar professional employees were employed during the wave of January-April 2016. A year ago, during the wave of May-August 2019, their employment peaked at 18.8 million. It remained almost stable at 18.7 million in the next wave of September-December 2019 and then fell to 18.1 million during the wave of January-April 2020. This wave contained a partial impact of the Covid-19 induced lockdown.

Employment of these professionally qualified white collar workers fell steeply to 12.2 million during the wave of May-August 2020. This is the lowest employment of these professionals since 2016. All the gains made in their employment over the past -four years were washed away during the lockdown.

The lockdown did not impact white collar clerical employees. These include largely, desk-work employees ranging from secretaries and office clerks to BPO/KPO workers, data-entry operators and the types. Possibly, their work shifted to the Work-from-Home mode. This category of workers has not been seeing any growth since 2016. In fact, it has slid quite sharply since 2018 from about 15 million to less than 12 million by 2020. Interestingly, it did not slide any further during the lockdown.

The lockdown has hit industrial workers. Compared to a year ago, employment among the white collar professional employees was down by 6.6 million. This was the biggest year-on-year loss among all salaried employees. The next biggest loss was among industrial workers. By a similar y-o-y comparison, they lost 5 million employees. This translates into a 26 per cent fall in employment among industrial workers over a year.

The May-August wave period overlaps the April-June quarter. According to the Central Statistics Office the industrial sector saw a 36 per cent year-on-year fall in real gross value added during the April-June 2020 quarter. Evidently, although the fall in employment in industrial workers is very large, it is much smaller than the fall in output.

But comparing the two data has two problems. First, the periods of the two do not match. This partly explains the much sharper fall in the GVA estimates as it includes the month of April when the impact of the lockdown was the most severe. And, it does not include the months of July and August when the impact was much diluted.

The second problem in the comparison is that the CPHS employment data covers all kinds of industries independent of their size. Quarterly GVA computations on the other hand, rely essentially on information of larger organised companies. Implicitly, the fall in GVA reflects the fall in the larger units. Computations made by CMIE from quarterly financial statements of listed companies (sample of over 1,300 industrial companies) show that the inflation adjusted gross value added of manufacturing companies declined by 41 per cent in the April-June 2020 quarter. But, their real wage bill declined by only about 15 per cent. This indicates that employment loss in large industrial companies will have been much lesser than the 26 per cent fall in employment in overall industrial workers.

Therefore, the decline in employment of industrial workers is likely to be largely in the smaller industrial units. This reflects the distress in the medium, small and micro industrial units in recent times. An enterprise survey that covers large, medium, small and micro enterprises could have provided an excellent corroboration or counterfactual on this important issue at this time.

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
6.8 +1.3
Consumer Sentiments Index
Base September-December 2015
50.0 0.0
Consumer Expectations Index
Base September-December 2015
51.9 0.0
Current Economic Conditions Index
Base September-December 2015
47.1 0.0
Quarterly CapEx Aggregates
(Rs.trillion) Dec 19 Mar 20 Jun 20 Sep 20
New projects 5.55 3.95 0.71 0.68
Completed projects 1.66 1.75 0.24 0.64
Stalled projects 0.61 0.77 0.11 0.08
Revived projects 0.83 0.42 0.68 0.34
Implementation stalled projects 0.13 9.78 0.09 0.03
Updated on: 21 Oct 2020 8:28PM
Quarterly Financials of Listed Companies
(% change) Dec 19 Mar 20 Jun 20 Sep 20
All listed Companies
 Income -1.7 -4.9 -27.9 4.1
 Expenses -2.2 -1.8 -28.3 1.2
 Net profit -10.8 -47.3 -38.4 9.0
 PAT margin (%) 5.1 2.4 5.5 17.5
 Count of Cos. 4,435 4,264 4,155 138
Non-financial Companies
 Income -5.5 -8.9 -38.0 3.6
 Expenses -6.4 -4.9 -38.2 -0.5
 Net profit -13.9 -48.2 -57.2 10.8
 PAT margin (%) 5.7 3.4 4.4 18.1
 Net fixed assets 13.3 31.9
 Current assets 3.0 4.2
 Current liabilities 4.9 -1.2
 Borrowings 14.7 14.8
 Reserves & surplus 2.1 18.6
 Count of Cos. 3,311 3,216 3,134 101
Numbers are net of P&E
Updated on: 21 Oct 2020 8:28PM
Annual Financials of All Companies
(% change) FY18 FY19 FY20
All Companies
 Income 8.4 13.3 0.6
 Expenses 9.9 13.5 1.2
 Net profit -40.4 22.3 -19.0
 PAT margin (%) 2.0 2.4 4.4
 Assets 10.9 9.3 9.4
 Net worth 7.5 8.6 5.0
 RONW (%) 3.5 4.3 6.1
 Count of Cos. 27,922 27,039 4,480
Non-financial Companies
 Income 8.6 13.8 -2.8
 Expenses 8.8 14.0 -1.6
 Net profit -9.0 23.5 -28.4
 PAT margin (%) 2.7 3.2 4.7
 Net fixed assets 7.2 5.4 13.8
 Net worth 6.1 8.5 1.9
 RONW (%) 5.7 6.9 7.6
 Debt / Equity (times) 1.0 0.9 0.7
 Interest cover (times) 2.1 2.4 2.9
 Net working capital cycle (days) 77 70 56
 Count of Cos. 22,629 21,863 3,354
Numbers are net of P&E
Updated on: 20 Oct 2020 9:02AM