Unemployment nearly doubled in quarter immediately after lockdown was announced: study

The unemployment rate in rural India nearly doubled immediately after the coronavirus-induced lockdown was announced — from 6.8% in the pre-pandemic quarter of January-March 2020 to 12.1% in April-June 2020, the first quarter after a national lockdown was announced that March — according to Oxfam India’s report, ‘The India Discrimination Report’, released on Thursday.

In urban areas, the report noted, the rate of unemployment in the same period went up from 9% to 20.8%. The government’s Periodic Labour Force Survey (PLFS) defines unemployment as people who are seeking or are available for work.

As per this definition, a segment of the regular/salaried workers and self-employed people who reported no work during the reference week were considered employed. Many of them had no work and no earnings, but since they were not seeking or available for work, they were considered as employed, the report noted.

“However, when one broadens the definition and considers persons reporting no work during the reference week as unemployed, along with persons seeking/available for work, the increase in unemployment rate becomes alarming,” the report stated. “In rural areas, the overall rate of unemployment [in such a scenario] goes up from 10.5 per cent to 22.2 per cent. The increase in urban areas is more alarming, with a rise from 15 per cent to 50.3 per cent.”

The study also found that the increase in unemployment rate has been higher for people from Scheduled Castes (SC), Scheduled Tribes (ST) and Muslim community than those from the General category, according to both indices.

In terms of the distribution of workers across various forms of employment, the biggest hit during the pandemic period was on casual employment, which was relatively severe in urban areas due to closure of non-agricultural activities, according to the study. Correspondingly, self-employment went up, suggesting that people took up such work as a part of their survival strategy.

In contrast, the report notes, the share of regular employment remained stable, or showed a marginal decline.

Against the significant rise in self-employment for people from SC/ ST and General category, the increase was very little for Muslims. This, the report noted, could possibly be due to “lower acceptability to deal directly with consumers at the household level’’, which saw them pushed from casual employment to unpaid family labour or the unemployed category.

While the rate of overall unemployment for Muslims increased from approximately 9% in the quarter before pandemic to 17% in the first quarter after the lockdown was announced, it went up from 7% to% in the same period for those from the General category.

Taking the broader definition of unemployment, the report stated that the sharpest rise in the rate of unemployment in these two quarters was for Muslims in rural areas — from 14% to 31%. According to the study, the respective increase in rate for SC/ST and General category population was 11% to 22%, and from 10% to 20%.

“In rural areas, caste and religious identities become important, particularly in periods of crisis,” the report noted. “People are likely to increase their dealings within their social circles. Due to the social and economic vulnerability of the SC/ST and Muslim populations, the protection they can give or seek from their group would be relatively poor. One would, therefore, expect the impact of discrimination is much more in the rural than the urban labour market.”

It stated, “While the overall impact of the pandemic has been severe in urban areas due to a series of national and state lockdowns, which directly affected urban business, social discrimination has been less, as people’s professional identities tend to blur their caste or religious identities, as opposed to rural areas.”

According to the Oxfam study, regular/salaried workers who did not report work during the two successive quarters went up from 5.9% to 29.7%. The increase in urban areas was more alarming — from 6.9% to 39.4%. For Muslims, this increase was from 11.8% in January-March 2020 to 40.9% in April-June that year.

Oxfam’s analysis also found that there was an increase of women in regular employment during the April-June 2020 quarter even amid a decline for employment of men.

The report explained: “In urban areas, a large segment of women regular workers are engaged as domestic help and in unskilled jobs. Many among them provided daily support services at a relatively low cost, which the upper and middle class found convenient to maintain with either a full or partial payment.”

Average earnings for workers in all social groups and employment categories came down significantly in the April-June 2020 quarter, the study found. In rural areas, monthly earnings during the first quarter after Covid-19 were 9% below the average for 2019- 20. The deficit, however, was markedly higher at 21% in urban areas.

In rural areas, people from Muslim community recorded the maximum decline — 13% — and it was close to the average for the rest.

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