Demonetisation impact: 250 casual workers lost job every day during January-March; why govt needs to create more jobs

New Delhi: Of all the eight labour intensive sectors tracked in government’s latest employment survey, maximum job losses happened for casual workers and they happened in the manufacturing sector during the last quarter of 2016-17, at 22,000. This means on an average, close to 250 casual workers lost their jobs each day between January-March 2017 in the manufacturing sector. This was the first full quarter after demonetisation and jobs for two other categories of workers – regular employees and contract workers – within manufacturing actually increased during this three-month period. So while steepest job losses, which began in the December quarter, continued for daily wagers, a sharp increase in jobs was seen by the other two categories, at 66,000 and 48,000 jobs respectively. Overall, casual workers lost 53,000 jobs (across eight sectors tracked by the labour bureau) during the March quarter, which translates to almost 590 jobs a day, on an average.

Unlike daily wagers, contract workers found more jobs in the quarter. Data from the Fifth quarterly survey of the Labour Bureau showed that for contract workers, though jobs grew, the growth was slower: 26,000 new jobs in January-March versus 124,000 in the immediate previous quarter. Only regular employees seem to have benefitted in every way. Regular jobs rose by 197,000 in January-March, when job creation in the immediate previous quarter was just 139,000.

These data points clearly show two things: 1) Casual workers or daily wagers continued to bear the brunt of job losses post demonetisation and resulting cash crunch, even when regular and contractual employees benefitted 2) The scale of job losses slowed down considerably in the March quarter, it was at its peak in the previous December quarter.

Remember, demonetisation (which wiped out over 80 percent of the currency in circulation from the market) was announced on 8 November, 2016 and there was much anecdotal evidence subsequently to suggest widespread job losses for casual and contract workers as cash crunch and a push towards formalisation began hurting small businesses. Well, the survey found that for October-December 2016. 1.13 casual jobs were lost or about 1,255 jobs a day in the manufacturing sector alone. Which means the job loss rate had decline significantly by the March quarter in the manufacturing sector. Also, for all the sectors covered by the survey, casual workers lost 1.52 lakh jobs during the December quarter of last fiscal.

Representational image. Reuters.

Representational image. Reuters.

Overall, for the entire fiscal 2017, 2.6 lakh casual workers lost their jobs, while contract workers and regular employees saw job creation at 98,000 and 5.25 lakh respectively. So in all, 3.63 lakh new jobs were created in the 12 months of 2016-17 when roughly 8-9 lakh new workers join the workforce in India each month! This means only one in three new job seekers could have ideally bagged a job last fiscal. Also, casual workers probably saw maximum job stress during the demonetisation and its aftermath because they take wages in cash – which was in severe short supply for these months. The survey shows maximum jobs creation among all quarter of 2016-17 in the March quarter.

Of course, the Labour Bureau survey quoted above tracks only eight labour intensive sectors or about 15 percent of the total employment in India (as per the 6th employment census), so it may not be completely representative of the jobs scenario across the country. Besides, the Labour Bureau changed its methodology last year so that past survey results are not comparable. The eight sectors covered by this survey constitute around 81 percent of the total employment of units with 10 or more workers.

Meanwhile, the Centre for Monitoring Indian Economy (CMIE) has told the government that there was a “fall in employment of 1.5 million (15 lakh)” between two periods: September-December 2016 and January-April 2017. Another four lakh jobs were lost between May and August this year. So as per CMIE, in 12 months, 19 lakh jobs were wiped out.

In this written reply in Rajya Sabha, MoS Labour Santosh Kumar Gangwar quoted CMIE to say that the estimated number of persons employed during ‘Wave 10’ conducted during January-April 2017 was 405 million compared to 406.5 million during ‘Wave 9’ conducted during September-December 2016, implying a fall in employment of 1.5 million during this period. While cautioning that the government cannot authenticate methodologies and findings of CMIE, the minister went on to say that in ‘Wave 11’ conducted during May-August 2017, employment was estimated at 404.6 million, implying a fall of 0.4 million compared to Wave 10.

“Therefore, the total fall in employment between May-August 2017 and September-December 2016 works out to 1.9 million. Year-on-year comparisons can be made for two Waves. These show an increase in employment. Employment during Wave 10 of January-April 2017 at 405 million was 4.2 million higher than during Wave 7 of January-April 2016. And, employment during Wave 11 of May-August 2017 at 404.6 million was 1.5 million higher than it was in Wave 8 of May-August 2016.”

That India has an unemployment problem is undeniable. As this piece in New Indian Express says unemployment rate is at a 5-year high of 5 percent in FY16 and the a UN Labour report pegs 18 million to be jobless in 2018. This needs urgent government attention.


Updated Date: Jan 02, 2018 16:54 PM

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