A paper by Ashwini Deshpande investigates the effect of the COVID-19 lockdown on employment and finds that women and Dalits, especially those in rural areas, are the worst affected.
According to the ‘Stringency Index’, developed by the Blavatnik School of Government at the University of Oxford, India’s lockdown - induced by COVID-19 - had already reached the highest possible level of stringency by the 22nd of March. According to The Economist, the Indian economy has suffered “even more than most” as a consequence of this lockdown.
India’s growth rate has been faltering over the last six years, decelerating each year since 2016, to reach 3.1% in the first quarter of 2020 (January to March), just before the Covid-19 pandemic hit India.
In view of the above a paper by Ashwini Deshpande investigates the effect of this lockdown on employment and finds that the adverse effects of employment are worst felt by women and Dalits, especially in rural areas. Here are key takeaways excerpted and summarized from the paper.
Based on data from the Centre for Monitoring Indian Economy (CMIE)’s Consumer Pyramids Household Survey (CPHS) database, a sample of more than 37,000 individuals was compared pre- and post-lockdown (April 2020).
- Individuals were 12.8 percentage points less likely to be employed post-lockdown. This meant a 33% reduction in the likelihood of being employed.
- Individuals who were employed in the pre-lockdown period were 53% more likely to be employed in the post-lockdown, compared to those who weren’t employed earlier.
- The data clearly indicates that the post-lockdown fall in employment is not a seasonal feature that happened to coincide with the lockdown.
- The average number of employed persons during March 2019-20 were 403,770,566. In April 2020, this number came down to 28,22,03,804, a roughly 30% drop. Overall, employment in April 2020 was 70% of the employment in the preceding year.
- In the pre-lockdown period, 31% of individuals were employed, 4% were unemployed and 47% were out of the labour force (OLF).
- In the post-lockdown period, the employed declined to 22% and the unemployed percentage rose to 15%. There was no change in the OLF category in the first month of the lockdown.
Rural Vs Urban Areas
- The drop has been higher in urban areas (33%) compared to rural (29%), i.e. employment figures for April 2020 are 67% and 71% of the average employment during the preceding year (March 2019 to March 2020), for urban and rural areas, respectively. This is expected because sectors that shut down completely included manufacturing and services, which are mostly urban based.
- What is surprising is why the gap between urban and rural job losses is not larger, given that the CMIE sample is disproportionately urban.
- An important point to note is these figures represent the rural-urban division (more or less) before and during the great exodus of internal migrants in the form of reverse migration from cities back to their villages. In April 2020, as the uncertainty over the persistence of the lockdown increased, with no clarity about when economic activity would resume, migrants started their long journey back home under extremely hazardous and precarious conditions, often walking hundreds of kilometers; several never made it back and died on the way.
- The data for April 2020 has to be understood in the context of the flux, as it reflects the rural/urban status of workers based on where they were working at the time of the survey. A later survey would better capture the new rural-urban distribution of workers reflecting reverse migration.
- Globally, it is estimated that in the Covid-19 pandemic, women are likely to be more vulnerable to losing their jobs compared to men. A research note from Citibank estimates that there are 220 million women in sectors that are potentially vulnerable to job cuts. It has been estimated that of the 44 million workers in vulnerable sectors globally, 31 million women face potential job cuts, compared to 13 million men.
- There are reports from ongoing research for the US which indicates that 1.4 million people became unemployed in March, but women have been hit harder than men, with a 0.9% increase in unemployment, compared to 0.7% for men.
- In India, between 2004-5 and 2017-18, while gaps between men and women in educational attainment have narrowed considerably, gaps in labour force participation have widened. Female labour force participation rate (FLFPR), stubbornly and persistently low in India over decades, has declined precipitously over the last 15 years.
- The results show that men were 58 percentage points more likely to be employed in the pre-lockdown phase compared to women. And women heads of household were 56 percentage points less likely to be employed than male heads of household.
- The corresponding numbers for the average employment during March 2019-20 were 36,05,21,240 and 4,32,49,326 for men and women, respectively, revealing the large pre-existing gender gaps in employment status.
- In April 2020, these numbers had declined to 25,60,29,085 for men and 2,61,74,719 for women. In other words, the fall in employment for men was 10,44,92,155, whereas for women it was 1,70,74,607. Contrary to the reported global trends, in absolute numbers more men lost jobs in the first month of the lockdown in India.
- In the post-lockdown phase, drop in male employment is greater than female by 17.6 percentage points.
- However, the gendered dimension of the losses have to be assessed in the context of pre-existing gaps. One way to do this would be to take the ratio of April 2020 employment (absolute numbers) to the average employment in the preceding year (between March 2019 and March 2020).
- This ratio is 0.61 for women and 0.71 for men, which means that the fall in employment for women (relative to their pre-lockdown level) was greater. Female employment in April 2020 was at 61% of the pre-lockdown yearly average, whereas for men, it was 71%.
- Women who were employed in the pre-lockdown phase were 23.5 percentage points less likely to be employed in the post-lockdown phase compared to men.
- Male heads of household were 11.3 percentage points more likely to be employed in the post-lockdown phase, compared to female heads of household who were employed in the pre-lockdown phase. Gender + Rural Vs Urban Areas
- Rural women’s employment suffered the largest fall, as it stood at 57% of the previous year’s average. This ratio was 73% for rural men, 69% for urban women and 67% for urban men. The decline in Female Labour Force Participation Rates (FLFPRs) since 2004-5 has been driven by a decline in LFPRs of rural women. The pandemic-induced suspension of economic activity reveals a similar pattern.
- The caste differences are not as sharp as the gender differences, but the lockdown affected employment of the disadvantaged caste groups relatively more adversely compared to the higher ranked group of castes.
- The ratio of April 2020 employment to the previous year’s average is 0.77 for UCs, 0.71 for OBCs and intermediate castes, 0.64 for SCs and 0.78 for STs. This indicates that the lowest ranked, stigmatised and marginalised Dalits suffered the largest fall in employment.
- The lockdown affected the employment status of OBCs, SCs and STs more adversely than it did for upper castes. Employment for these three groups declined by 6 (OBCs), 12.3 (SCs) and 9.4 (STs) percentage points more in the post-lockdown period compared to upper castes. Caste + Rural Vs Urban Areas
- Caste divisions within the urban population reveal the following ratios: 0.64 for urban UCs; 0.69 for urban OBCs + intermediate castes; 0.67 for urban SCs and 0.78 for urban STs. Thus, the biggest relative decline in employment has been for urban UCs.
- The corresponding rural ratios are 0.88 for rural UCs, 0.72 for rural OBCs + intermediate castes, 0.64 for rural SCs and 0.78 for rural STs respectively. Thus, in rural India, upper castes have suffered the least from the fall in employment. The largest relative fall is seen in rural SCs, which is also driving the overall pattern for SCs.
Note on Women and Dalits
While women and Dalits have suffered disproportionately more job losses, risky, hazardous and stigmatized jobs are exclusively their preserve. All frontline health workers (ASHA, or Accredited Social Health Activists) are women; manual scavengers are exclusively Dalit. Thus, for several women and Dalits, the choice seems to be between unemployment and jobs that put them at risk of disease and infection and make them targets of vicious stigma.
The lockdown did not have a differential effect on main religious groups. About the Data
- This paper uses data from the Centre for Monitoring Indian Economy (CMIE)’s Consumer Pyramids Household Survey (CPHS) database, which is a private data provider, collecting weekly data at the national level since January 2016.
- It is a longitudinal data set covering 174,405 households (roughly 10,900 households per week, and 43,600 per month).
- Each household is followed three times per year.
- Since data from the National Sample Survey are only available for 2017-18, the CMIE CPHS data are currently the only national-level source for assessing changes in employment in real time, especially if we want to assess the immediate effect of the lockdown imposed in the last week of March, 2020.
- Most commentaries on the impact of the lockdown on jobs in India are either based on small localised surveys or on extrapolations combining older national data with smaller surveys. While these provide valuable insights which broadly confirm the results of this paper, the attempt here is to go further to examine the national picture.
- Since the CMIE tracks the same individuals over time, it allows us to compare the post-lockdown employment status of households to their pre-lockdown status and precisely estimate the causal effects of the lockdown.
- To the best of the author’s knowledge, this is the first exercise to empirically examine the first effects of the lockdown on total employment as well as gender and caste differentiated labour market outcomes in India.
- As the author was writing this paper, the first set of figures released by the CMIE for May 2020 (not yet available to researchers) revealed that in the month of May 2020, with a gradual re-opening of the economy, 21 million jobs got added to the low base of April 2020. This is a hopeful sign. However, despite this the April unemployment rate remained at a high rate of 23.5%. Next Steps - This indicates that the unemployment challenge is massive. To sustain this momentum in the coming months, we need to see strong policies to provide employment and boost demand, in the absence of which job losses might mount, worsening the employment crisis. The results of this paper indicate that in addition to overall unemployment, pre-existing inequalities along gender and caste lines are likely to get reinforced, unless the specific contours of disadvantage are recognised and addressed.
- This needs to be done through evidence-based proactive policies that actively work towards reversing the widening of gaps. A failure to recognise differential effects will exacerbate the existing challenges, with serious negative consequences for the economic and social health of the economy. You can read the paper here: https://drive.google.com/file/d/1LxZJUpxcDn5tYk5tq9oSneqDlX6Q3eR9/view
Ashwini Deshpande is professor of economics at Ashoka University.
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