JOBS: BEFORE AND DURING COVID 19

6 MAY 2020. WEDNESDAY

It has been 12 years now in this industry conquering my knowledge in department of Clinical Research Education, Corporate Soft Skill Trainer and Counseling. At the time of subject delivery and placement, I found many hindrances in topic absorption, self-acceptance, working attitude and their survival in corporate.

JOBS BEFORE COVID-19

India is suffering from the major Job crisis from many years. There are three major sectors in an economy i.e. Primary, Industry and Service sectors, from where Indian GDP (Gross Domestic Products) is being contributed.

1.      Primary Sector: Agriculture etc

2.      Industry Sector: Manufacturing & Non Manufacturing (construction, mining) etc

3.      Service Sector: Government Jobs, Logistics, Medicine, Legal, Research etc.

Growth of Developed countries progresses from agriculture to Industry to Service Sector. From an Independence specifically after (24 July) 1991, India has adopted New economic Policy i.e. LPG (Liberalization, Privatization and Globalization Model), where India has Jumped from Primary to Service Sector without strengthening Industry Sector.

See the Contribution of GDP in India from various sectors: from the year 1947 to 2019

1.      Primary Sector: at 1947 it’s 53% to at 2019 it’s 14%

2.      Industry Sector: at 1947 it’s 17% to at 2019 it’s 27%

3.      Service Sector: at 1947 it’s 30% to at 2019 it’s 59%

Let’s have detail idea about most neglected Sector i.e. Manufacturing Sector out of Industry Sector

The Manufacturing Sector has potential of 17% out of 27% GDP contribution (from above), means, 17% of GDP contribution comes from Manufacturing Industry (sub part of Industry Sector)

See the numbers of the Global Decline of Manufacturing from the year 1980 to year 2018

·        China: 39.9% to 29.4%

·        Germany: 32.5% to 20.8%

·        Japan: 27.2% to 20.7%

·        UK: 24.6% to 8.9%

·        India: 16.8% to 15.0%

·        USA: 18.9% to 11.2%

India has fairly neglected manufacturing sector in the last 40 years. It has been suggested that India’s unemployment woes can only be solved by boosting the manufacturing sector.

I have 61% (yes you are reading right number 61%) students from agriculture background, I used to discuss a lot with them about their Career Choices, almost all of them and their parents are looking for white collared Job for their kids and not agriculture.

Why not Agriculture: Agriculture which engages almost half the Indian workforce does not grow fast enough. Also, it is not remunerative enough to provide gainful employment. It is for this reason why more and more people have left agriculture and tried to join other sectors of the economy since 2004.

In 2008, 54% employment comes from agriculture, which is 43% by 2018.

Let’s talk about Service Sector. Service is fast growing sector and pays well but it places far greater demand on job seekers in terms of skills and education. The rural millions looking for a job find themselves inadequate in terms of delivering in the service sector. At year 2000 skill development was 2% and after 20 years it is increased by 4.4%. Obviously, number says lot more than anything. In these techno savvy Data Era, Growth of Professional Skills in youth is increased on 2.4% in 20 years.

Now about Industry Sector especially manufacturing sector. The Manufacturing sector has the highest potential to absorb the surplus labor in the economy. Research shows that the employment elasticity-“the ability to create new jobs with every additional increase in a sector’s growth: – of the manufacturing sector is the highest.

Unemployment Rate Level in India (Ref: Centre for Monitoring Indian Economy)

In year May 2016: 9.2% (very high)

In year Jul 2017: 3.4% (Low and good)

In year Jan 2020: 7.2% (It would definitely change after COVID 19 Lockdown.)

India was already struggling with unemployment due to reasons like neglecting manufacturing segment, lack of professional education and skills, old syllabus, lack of Innovation, wrong working attitude. 

JOBS DURING COVID 19

Among these, India witness first case of CORONA at 30 Jan 2020. It has adopted strategy of Contact Tracing, Quarantine and Treatment, also stopped mass gathering and strict implementation of Lockdown in 3 phases (till date i.e. 5 May 2020).

Janta Curfew: 22 Mar 2020

Lockdown Phase 1.0: 25 Mar to 14 Apr 2020 (21 days)

Lockdown Phase 2.0: 15 Apr to 3 May 2020 (19 days)

Lockdown Phase 3.0: 4 May to 17 May 2020 (14 days)

Total days: 54 days

During Lockdown all services and manufacturing stopped except Healthcare (no scheduled OPD), Finance and FMCG (Glossary and Vegetables, fruits).

Those at Barclays Research said in a 14 April note that the loss of output due to shuttered factories and closed offices works out to about $26 billion per week. This is far higher than the $16.6 billion it had estimated on 24 March, when the country-wide lockdown was first announced. The cost of the lockdown is larger than what Barclays had previously estimated, largely due to higher-than-expected output losses in the agriculture, utilities, construction and wholesale & retail sectors. As a result, they now expect the overall hit on the economy to be $234.4 billion (or 8.1% of GDP), nearly doubled earlier estimate of $120 billion. Most of the losses are expected to be incurred in the June quarter. The estimate could well be revised further, depending on when various lockdowns and restrictions are eased. The current estimate assumes easing of restrictions by early June. Despite request from Respected PM, all MNCs and Small companies have already started termination, salary cut, leaves without pay, payment per working hours to survive in this global pandemic.

At current scenario, Indian Government has no specific Job Protection Program than other developed countries like USA and Germany. Let’s understand these in details.

USA: USA has lunched PPP (Paycheck Protection Program)

Germany: Kurzarbeit Scheme

USA: Paycheck Protection Program

USA has launched relief package of 10% of their GDP, it was $2.2 trillion. Out of that $349 billion allocated to save jobs. It was launched by US dishing out $349 billion to businesses that employed up to 500 people. It involves loans of up to $10 million to each company for covering the payroll costs, upto a maximum annual salary of $100,000 per employee. The loan need not be repaid, unless the business have laid off workers or resorted to pay cuts between Feb 15 and April 26 – they have until June 30 to revert such changes. The funds were finished within 13 days, prompting the Congress to approve another round of $310 billion.

Germany: Kurzarbeit Model

It is a German program that translates literally to “short-time work”. Under the program, financially distressed employers can drastically reduce worker hours. The government will pay most of their lost wages. In this, companies can apply when 10% of their employees have reduced hours, down from the previous 30% threshold. Germany has also made these benefits available to temporary workers, and will increase compensation rates. These model is well practiced and successful in financial crisis at 2008. It has also been accepted by other European Countries.

Austria, has also adopted the German Kurzarbeit model by announcing a ￡38 billion package for companies to pay their staff only for the hours worked and not retrench them. It is also planning to lower taxes for the low and middle income people, while increasing the taxes on multinational companies.

In the UK, the government on April 20 launched a short time work program, the Coronavirus Job Retention Scheme. It pays up to 80% of wages for furloughed workers, up to ￡2500 ($3112) a month until the end of June 2020. The program is estimated to cost at least ￡42 billion, and received 67000 claims from employers in its first half hour online.

The Kurzarbeit model was successfully implemented by Germany after the 2008 global economic crisis – when the German economy contracted 5% in 2009. The unemployment rate by the end of that year was 7.6% lower than what it was in 2008.

The US, where the first tranche of the PPP saw 1.6 million loans being approved between April 3 and April 16, recorded a decrease in its weekly unemployment insurance claims by almost 15.5%.

Drawbacks of the PPP Scheme

• One pitfall of wage subsidies is they preserve jobs that might have been lost even without the coronavirus.
• The OECD (Organization for Economic Cooperation and Development) warned in a report that policy makers should aim to avoid subsidizing jobs that “are nonviable even in the long term”.
• The IMF (International Monetary Fund) recommended this month that any wage subsidies have “clear phase-out mechanisms”

As per latest article on The Economic Times, in India MSME (Micro Small Medium Enterprises – whose turnover is minimum 25 lakhs to max 10 crore for manufacturing and service sector) and non MSME sectors are in crises of paying April (2020) salaries to approximate 12 crore of people, the private sectors will be forced to resort to large scale retrenchments and layoffs, which will devastate livelihood.

On 29 Apr 2020, Senior Congress leader and former finance minister, P Chidambaram has proposed a “paycheck protection program” for India.

CONCLUSION

Indian Government strongly requires innovative exit plan keeping in mind psychological effects of lockdown, economic condition of country and restoration plan for manufacturing units.

Ref: as per request