Salaried jobs recover

by Mahesh Vyas

Headline labour market metrics deteriorated in October 2022 with the labour participation rate falling from 39.3 per cent in September to 39 per cent and the unemployment rate rising from a low of 6.4 per cent to 7.8 per cent. The employment rate fell from 36.8 per cent to 36 per cent. Employment fell by 7.8 million. The poor performance of the labour markets in October took away a part of the sheen of the rising consumer sentiments in the month. Consumer sentiments grew by 4.6 per cent in October on top of the 7.1 per cent growth seen in September.

We see a silver lining in the labour markets data notwithstanding the overall deterioration in October. The recent trend in salaried jobs, which are the more well-paying jobs, provide some significant comforting prospects.

Salaried jobs declined from 86 million in September 2022 to 84.7 million in October. In spite of this sharp fall, salaried jobs in both, September and October, were higher than they were during any other month since the pandemic and the associated lockdowns that hit India in March 2020.

Data for September and October 2022 suggest that finally salaried jobs are back to their pre-pandemic levels after a rather long gap of 32 months. It can also be argued, however, that there is still a little recovery pending. The September and October 2022 estimates of salaried jobs are the highest since March 2020. But, arguably, March 2020 was also partly impacted by the lockdown. Salaried jobs were higher at 88.8 million in January 2020 and at 86.5 million in February 2020. While the current salaried jobs at 85-86 million have crossed the levels seen just before the lockdowns, they need to rise further to come closer to 90 million to be considered as fully recovered.

The impact of the 2020 lockdown was slower and less severe on salaried jobs compared to other forms of employment. Large proportions of daily wage labourers and business persons lost their livelihoods instantly upon the imposition of the lockdown. Over 68 per cent of the daily wage labourers and about 25 per cent of business persons of March 2020 were out of work in April 2020. The ratio for salaried employees left instantly jobless was much smaller. About 18 per cent of salaried employees lost jobs in the first month of the imposition of the lockdown. Elon Musk is a lot more lethal at Twitter than the draconian lockdown was to salaried employees in India.

By August 2020, i.e. in five months from the most restricitive lockdown of April that year, employment of daily wage labourers and of business persons was well above their March 2020 levels. The recovery in status was quick. Salaried jobs, on the other hand, had gotten a bit worse as the deficit compared to March 2020 was at 22 per cent. Salaried jobs were down to less than 65 million. Their share in total employment had dropped to less than 17 per cent.

Now, by October 2022, 20 million salaried jobs have clawed back and the share of salaried jobs in the total is back to 21.4 per cent close to where it was before the lockdowns. This is significant not just because of the recovery in number of jobs or the share of these jobs in total employment.

Salaried jobs are, by far, the most well-paying form of employment. In 2021-22, the average remuneration of a salaried employee was Rs.263,385 per annum. This is way ahead of wages in other forms of employment. For example, a business person made Rs.134,323 per annum and small traders and daily wage labourers made about Rs.117,053 per annum. Farmers made even lesser.

Over 8.5 million salaried jobs were added cumulatively during September and October 2022. Other forms of non-farm employment declined during these months.

What is also significant of the labour markets in the past two months is that the increase in salaried jobs is largely urban. This is not surprising but it is significant. It is not surprising because salaried jobs are mostly urban jobs. In 2021-22, nearly 63 per cent of all salaried jobs were in urban regions. Of the 80.8 million salaried jobs in the year, 50.7 million were in towns. The recent increase in urban salaried jobs is therefore not surprising.

Urban salaried jobs increased for a second consecutive month in October 2022. They had increased by 2.14 million in September 2022 and then by another 2.26 million in October. The cumulative increase in the last two months therefore is a substantial 4.4 million salaried jobs. This is the highest increase since the pandemic had its first impact on salaried jobs. This quantum of increase is what makes it significant. Also, it is significant because the average annual salary of an urban salaried employee is higher, at close to Rs.300,000.

This concentration of the increase in jobs in September and October 2022 in urban salaried jobs is what makes the message of the labour markets significant. The multiplier effect of the increase in the highest paying jobs on aggregate demand is the largest.

However, the pain of the significant loss of jobs a massive 11.8 million among daily wage labourers and small traders in the last two months needs attention as well. These are pre-dominantly in rural India. These jobs may come back soon. The problem is in the uncertainties of these jobs that dominate India’s labour markets.

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
8.3 +0.7
Consumer Sentiments Index
Base September-December 2015
81.9 -0.2
Consumer Expectations Index
Base September-December 2015
81.6 0.0
Current Economic Conditions Index
Base September-December 2015
82.3 -0.6
Quarterly CapEx Aggregates
(Rs.trillion) Dec 21 Mar 22 Jun 22 Sep 22
New projects 4.04 8.60 4.88 3.53
Completed projects 2.86 1.32 1.18 1.33
Stalled projects 0.08 0.43 0.53 0.06
Revived projects 1.98 0.33 0.29 0.09
Implementation stalled projects 0.66 0.09 0.29 0.26
Updated on: 08 Dec 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Dec 21 Mar 22 Jun 22 Sep 22
All listed Companies
 Income 23.4 20.8 40.1 25.1
 Expenses 21.3 19.8 41.4 27.1
 Net profit 35.4 31.3 21.1 -3.0
 PAT margin (%) 9.0 8.8 7.2 7.7
 Count of Cos. 4,756 4,671 4,683 4,494
Non-financial Companies
 Income 29.3 24.8 50.1 27.8
 Expenses 28.8 25.7 52.9 31.5
 Net profit 19.2 9.8 8.3 -22.6
 PAT margin (%) 7.5 7.6 5.7 5.5
 Net fixed assets 2.0 3.9
 Current assets 15.0 19.3
 Current liabilities 11.7 10.8
 Borrowings 3.6 11.8
 Reserves & surplus 11.3 7.6
 Count of Cos. 3,439 3,387 3,414 3,330
Numbers are net of P&E
Updated on: 08 Dec 2022 8:28PM
Annual Financials of All Companies
(% change) FY20 FY21 FY22
All Companies
 Income 0.6 -0.9 25.8
 Expenses 0.4 -3.2 24.7
 Net profit -3.8 75.0 61.6
 PAT margin (%) 2.0 4.3 7.9
 Assets 9.0 9.9 9.9
 Net worth 4.7 12.0 14.2
 RONW (%) 3.4 6.8 11.8
 Count of Cos. 33,421 32,202 9,171
Non-financial Companies
 Income -1.1 -1.9 31.7
 Expenses -0.9 -3.9 31.5
 Net profit -20.4 62.2 60.2
 PAT margin (%) 2.2 3.9 6.9
 Net fixed assets 11.3 2.2 2.3
 Net worth 2.1 10.5 14.8
 RONW (%) 4.6 7.5 13.3
 Debt / Equity (times) 1.2 1.0 0.7
 Interest cover (times) 1.9 2.4 4.3
 Net working capital cycle (days) 82 88 55
 Count of Cos. 26,380 25,257 6,870
Numbers are net of P&E
Updated on: 05 Dec 2022 10:11AM