Since the countrywide lockdown began on 25th March 2020, a massive number of workers have lost their jobs. This includes workers of large scale industries and services, and workers in small manufacturing companies, shops, and in numerous small scale services. Wages have not been paid to a large number of workers for April and May and even for the period of March during which they had worked. The small minority of workers in large scale industries and services who have been paid wages for April saw significant cuts. Salary increases have been frozen in most big companies for 2020-21. Most workers are likely to see a fall in the income over the previous year.
The government has given no estimate of the level of unemployment following the lockdown and closure of business activities across the country. The last officially announced unemployment rate was 6.1 per cent for July 2017-June 2018, as per the last periodic labour force survey (PLFS), released in June 2019. That rate then was the highest of the past 45 years.
Surveys conducted by private organisations confirm that unemployment has risen to extremely high levels during the lockdown. Thus, according to the Centre for Monitoring Indian Economy (CMIE) unemployment has soared to 23.5 percent during April and May 2020 from 7.2 percent in January 2020.
Nearly 11.4 crore workers lost their job by the end of April, as per the CMIE data. Within the first two weeks of the lockdown itself 5 crore workers were without any job.
The survey by the Azim Premji University indicated that about two-thirds of workers lost their jobs during the lockdown. This survey, carried out in the states of Andhra Pradesh, Bihar, Delhi, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Telangana, and West Bengal revealed that 80% of workers in urban areas lost their source of livelihood during the lockdown. Sixty percent of the workers in rural areas of the states in which the survey was carried out reported that they had become jobless.
Loss of employment was the worst for the self-employed in urban areas, with 84 per cent of them losing employment, compared with 76 per cent salaried workers and 81 per cent casual workers. Workers without formal employment contracts, casual labourers, those who work in small companies, and the self-employed, have been the most affected. Employment in fact has been rolling steeply downhill. The comment by a worker from one of the big retail chains, “I have no work, no savings and no money,” is frequently heard from workers around the country.
Crores of migrant workers, dependent on daily wages, bore the brunt of the crisis. Unable to afford rent or food in cities and with public transport shut down, they were forced to return to their home states by any means, including walking for hundreds of kilometres.
Even though the lockdown was lifted in large parts of the country in June, the unemployment rate was still over 17 per cent in the week ending 7 June, according to the weekly data released by the CMIE.
The sectors which have yet to reopen – hotel, restaurant, organized retail and malls, cinema and entertainment, international airlines – are seeing the largest proportion of job losses. Hospitality & tourism, aviation and retail trade sectors together could lose as many as 5.25 crore jobs. (See Box 1 for details)
The coronavirus crisis has crippled the export sector completely. In March, India’s goods’ exports shrunk by a record 34.6%, as countries sealed their borders to combat the virus. The Federation of Indian Export Organisation has predicted that over 1.5 crore people working in the export sector in India could lose their jobs. The sectors that are heavily dependent on exports are apparel, gems, jewellery, handicrafts and engineering among others. The apparel exports sector alone estimates 25-30 lakh job losses.
Fall in income and wages is forcing people to heavily curtail non-essential expenditure. This has drastically reduced demand for textiles, consumer durables, automobiles, real estate, etc. Textile, automobile and real estate sectors together may see loss of over 2 crore jobs. (See Box 2 for details)
The IT sector, the largest employer of skilled people with 45-50 lakh workers in IT, ITES and BPO segments, is also seeing big job cuts. 1.5 lakh employees in India’s IT industry are expected to lose their jobs over the next three-to-six months. The majority of these layoffs will happen in small IT firms and BPOs. The layoffs have already begun.
A lot of workers of start-ups have also been retrenched. The demand for gig-economy workers has sharply fallen leaving them without any source of income. Many major media groups, including the Times of India, Indian Express, have laid-off workers or asked them to proceed on mandatory leave without pay. (See Box 3 for details)
Most large capitalist companies are using the crisis to throw out workers, and ‘rightsize’ the organization. They are outsourcing jobs and increasing the workload on the remaining workers. A survey carried out by the CII with heads of companies revealed that half of them are planning reduction in their workforce; one third of them are thinking of reducing workforce by 15-30 percent.
The companies which made large profits last year are justifying big cuts or freezes in salaries citing the slowdown in the economy due to the pandemic. The central government was the first one to announce the withdrawal of the DA increase already decided for 2020-21. After that many state governments announced cuts in salaries for their employees and deferment of payments. The central government’s decision about the DA will deprive central government employees and pensioners of income of Rs. 37,530 crore in 2020-21 itself; state government’s employees and pensioners will lose Rs. 82,566 crore.
Biggest of the capitalists and their enterprises have announced salary cuts and freezes. One of the country’s largest and most profitable private sector companies, Reliance Industries announced pay cuts from 10 to 50 percent. Tata Consultancy Services, the biggest IT Company of the country, announced, along with all the major IT companies, that there will be no salary increase this year. As bonus and incentives form a large part of the total salary of IT workers, they will actually see a fall in their yearly income due to cuts in them. Indian IT sector employs 45-50 lakh workers.
The immediate steep rise in unemployment is the result of the lockdown imposed in the context of the Covid-19 pandemic. Capitalists, whether monopoly corporations or medium to small capitalists, are not taking responsibility for ensuring security of livelihood of their workers at any time.
The already existing unemployment and the precarious condition of the livelihood of millions which the lockdown has exacerbated, has its source in the capitalist system and the state that defends this system.
Without the labour of crores of workers in different sectors of the economy, the economy and society would come to a grinding halt. It is the labour of workers acting on nature that produces wealth. However, the capitalist system does not ensure fulfilment of needs of the workers. This is because in this system the means of production are in the hands of the capitalists. Those who own and control the means of production set the orientation of the economy. The orientation of the economy in India today is to fulfil the insatiable greed of capitalist monopolies for maximum profits.
The orientation of the economy needs to be changed from fulfilling capitalist greed for maximum profits to fulfilling human needs. For this, the working class needs to take over the principal means of production from the hands of the capitalist class and place it under social control. Then workers will no more be considered as a “cost” of production, to be “cut down” to increase private profits of the capitalist owner. Instead, the aim of production will be to fulfil the ever growing needs of the workers and peasants.
Capitalism cannot and has never provided socially useful jobs to everyone in the society. The crisis of livelihood can only be solved by replacing it with a system where human labour is ensured of its security of life and dignity. This is what workers and toilers of the country have to fight for.
Job Losses in Hospitality, Aviation, Retail Trade
Hospitality and tourism industry: around 3.8 crore workers, which is 70% of the total workforce could lose their jobs. (Federation of Hotel & Restaurant Associations of India estimate)
Aviation sector: 20 lakh jobs at risk (International Air Transport Association estimate). Some domestic airlines, such as SpiceJet and GoAir, have asked workers to go on leave without pay and laid-offs of expat pilots as well. Many of them such as IndiGo have announced large pay cuts for their senior and top managers.
Retail trade: 1.25 crore workers could lose their jobs. This is 25 percent of total workers in this sector. With malls and their stores closed, workers in stores dealing in non-essential goods are without any work.
Job Losses in Textile, Automobile, Real Estate
Textile sector: 1 crore possible losses. (Cloth Manufacturers Association of India estimates)
The Automobile industry: about 10 lakh semi-skilled workers and people involved in the sales and dealer network are in danger of losing their jobs.
The Auto component industry: This sector employs about 50 lakh people. About 10 to 20 lakh workers in this sector could lose their jobs because of fall in demand.
Real estate sector: After agriculture it is the largest source of jobs. Demand in the real sector demand affects about 250 related industries. The sector is also a large employer of migrant workers from all over the country. The slowdown during the last two years has already led to the loss of about a lakh of direct and indirect jobs. Further expected drop in demand by 15-20 percent this year will have a huge cascading effect on construction and industrial jobs.
Job losses in IT and Media industries
More than 75% of the sector’s income is from exports to large markets like North America and Europe. The spread of coronavirus in these two markets has created ripple effects in the Indian IT industry. Hundreds of workers are being asked to go on unpaid leaves till July, or, even worse, being fired. The threat is very high for those on the bench — who are not handling any projects currently.
Cognizant Technology Solutions: “They gave me two options — either take a severance pay equal to my three-month salary and leave, or wait for one month on the bench for new projects. The catch is that if we do not get any new projects in that one month, I will have to leave without a compensation. 700 other employees were asked to resign in a similar fashion, all between May 31 and June 2. The actual number could be much higher.” (Statement by an IT worker)
Hexaware Technologies: No pay to its benched employees for the months of May, June, and July. Those who continue to be on the bench after July would be terminated. (Verbal communication by the company)
Fareportal: laid off more than 300 employees by asking them to resign, giving only a two-hour notice (ITeS-BPO firm serving travel industry).
Lay offs of workers: Uber – 500 to 700; Ola – over 1400; Zomato – 520; Swiggy – 1100; ShareChat (video sharing social networking service) – 101; WeWork (commercial real estate for shared offices) – 100; CureFit (Fitness chain) -1000; Meesho (social commerce start-up) – 200; Bounce (scooter rental start-up) – 100; Acko (insurance start-up) – 50.
Media: Times Life a Sunday supplement produced by the Times of India – three out of its eight employees to leave on April 14. Some employees of print editions of the Times of India have also been asked to leave. The Times of India has also instituted pay cuts across the board.
The Indian Express asked its employees to take a “temporary salary cut”.
News website The Quint sent 45 employees on indefinite leave without pay.