Lockdowns and social distancing have been the highlight of the year 2020 so far. For almost three months now, the world has virtually been on a standstill. This isn’t the first time the world will have an outbreak from the coronavirus. And with no cure available, countries had only one option; total and complete lockdown of their borders. Expectedly, this brought about a halt to economic activities. Schools, religious centers, parks, and most of all, businesses were all shut, bringing about a massive downturn in economic activities. One major component of the economy that has contributed to its dwindling state is the situation of the national unemployment rate.
Although the first case of coronavirus in India was recorded on the 30th of January, India didn’t go into lockdown until the 24th of March. Since then, the economy of India, which was in no good shape before the pandemic, has taken a huge hit from the COVID-19 impact. India has lost millions of dollars due to the near inexistence of economic activity.
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As the pandemic lockdown was announced in March, millions of migrant workers lost their jobs in the city and started to move back to their villages. It is estimated that around 120 million people have become unemployed since the beginning of the lockdown. The unemployment rate in May was at a staggering 24 percent. As of today, (10th June, 2020) it stands at 20.8 percent. This shows the economy is bouncing back slowly as unlock 1.0 has been initiated.
This massive unemployment report 2020 is not unconnected to the shut down of the economy. The lockdown and social distancing policy implication on businesses means they are unable to function. Only a handful of businesses run operations and this is only through the use of digital technology. As a result, corporate layoffs have increased sharply, leading to an increase in job losses. Organizations that didn’t layoff their workers had to implement a salary cut. Data shows that one in four Indians belonging to the workingage is unemployed.
Economic reforms aimed at bringing back the economy from the brink of total collapse due to the effects of the pandemic induce worry that the situation with unemployment may slow down the process of economic revival in the country. It is, therefore, imperative that the economic reforms look at ways to reduce the increasing incidences of employee layoff and job cuts. This is a crucial step to revive the economy as an increase in workforce participation rate will determine how quickly the economy will bounce back post COVID.
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- One in four Indians in the working-age is unemployed as corporate layoffs continue – making the crisis worse and delaying economic recovery by Prerna Sindwani||May 26, 2020
- India: the millions of working poor exposed by pandemic by Amy Kazmin and Jyotsna Signh||April 30, 2020
- India’s unemployment rate continues to hover above 24 percent by Yogima Seth Sharma||May 26, 2020