Employment increases by 8.5 million

by Mahesh Vyas

Labour market data from CMIE’s Consumer Pyramids Household Survey show a dramatic all-round improvement in September 2021. Jobs increased by 8.5 million during the month. The unemployment rate declined from 8.3 per cent in August to 6.9 per cent in September. The labour participation rate increased from 40.5 per cent to 40.7 per cent and most importantly, the employment rate inched up from 37.2 per cent to 37.9 per cent.

Employment in September 2021 is estimated at 406.2 million. This is the highest in 20 months or since the Covid-19 shock in March 2020. It is, however, still lower than the pre-Covid employment of 408.9 million in 2019-20. It is also slightly lower than the September 2019 employment level of 406.7 million.

The best part of the increase in employment in September 2021 is the increase in salaried jobs. These increased by 6.9 million from 77.1 million in August to 84.1 million in September. Of all the major occupation groups, salaried jobs saw the biggest increase. This big jump in September brings salaried jobs the closest to their average in 2019-20, which was 86.7 million. Employment among daily wage workers and small traders also increased by a substantial 5.5 million, from 128.4 million in August to 134 million in September. With this, employment as daily wage labourers or small traders has crossed the pre-pandemic level of 130.5 million in 2019-20.

September 2021 saw a fall in employment as entrepreneurs. Their estimated count fell from 76 million in August to 74.4 million in September. At this level they are substantially short of their count of 77.9 million in 2019-20. Between 2016-17 and 2019-20, the count of business persons was increasing steadily. It grew from 53.7 million in 2016-17 to 77.9 million in 2019-20. It also recovered well from the lockdown shock to touch a record 84.9 million in August 2020. But then, employment as business persons started to fall. It fell below 80 million in December 2021 and since then it has not been able to regain that level so far.

The number of farmers fell from 116 million in August to 113.6 million in September 2021. This fall could imply a combination of two factors. First, some salaried jobs which were lost earlier have been revived and some of the labour that migrated to the farms has come back to these salaried jobs. Second, economic activity is likely to have revived to absorb additional people in the form of daily wage labourers.

This is likely to have happened as we see a big increase in employment in the construction industry in October. Employment in this industry shot up by 5.5 million in September. Some of this could be a migration of farmers back to construction sites. Employment in manufacturing industries increased by 2.9 million. Most of this, about 2.5 million, was in food industries. This lends credence to our conjecture that some farmers have repaired with their erstwhile salaried jobs, possibly in food processing industries.

Within agriculture we see a fall in employment in crop cultivation but an increase in poultry farming and in horticulture.

The service sector surprises with no increase in employment in September. The sector shed over a million jobs in the month. Retail trade that saw a big increase in jobs in August witnessed a fall of 4.3 million jobs in September. Employment has reverted to 60 million from the record 64.4 million jobs in August. Even at 60 million, retail trade provides jobs to more people today than it employed on an average in 2019-20. Retail trade jobs have regained their pre-pandemic levels but they have fallen off the growth trajectory of the past. Some of the momentum was lost before the pandemic hit the economy. But, after the recovery from the pandemic the industry’s absorption of additional labour has been erratic or volatile from month-to-month. At about 60 million, retail trade is one of the largest employers in India. It is second to only the construction industry that employs a little more than the retail trade industry.

India is now at the cusp of the festive season and expectations are that the coming months could boost employment in general and in retail trade in particular. Given the large size of the retail trade industry an increase in employment in this can be expected to have a significant impact on overall employment.

News reports of a big demand for labour in the IT industry is not borne out by data of recent months. Employment in the industry declined from 3.3 million in 2017-18 to 2.3 million in 2018-19 and then to 1.8 million in 2019-20. Employment had inched up to 2 million in May-June 2021 but was down again to around 1.8 million by September 2021.

News of the gradual opening up of the educational sector also does not show much effect on employment in the sector. Education employs a significant 10 million. But, this is still much lower than the nearly 15 million it employed in 2019-20. The education sector could deliver the largest increase in employment once the sector opens up. The recent increase in vaccination and drop in infections are reasons to remain optimistic on this count. The same factors could also help employment in some others sectors to improve. But, beyond these low hanging fruits any further increase in employment would need investments into creation of new capacities.