India Employer Forum

Human Capital

Impact of the COVID-19 Pandemic on India’s Unemployment

  • By: India Employer Forum
  • Date: 12 June 2020

Share This:

Over two months of nationwide lockdown to curb the spread of the coronavirus, businesses are beginning to open up in a staggered manner yet India’s unemployment rate at 19.7 percent as of 11 June 2020 looks intimidating. Urban India unemployment rate is at 20.4 percent while rural India stands at 19.4 percent (CMIE data). A glimmer of hope as slow depreciation is seeing in the unemployment rate when compared to 24% high just last month.

Government Efforts to Revive the Economy

With the hope of reviving the economy from the setback caused by the pandemic, India slowly eases lockdown restrictions. A major Rs 20 Lakh crore stimulus package was announced to bring business back on track. Labor reforms have also been announced, the most notable being those relating to new labor codes.

The Initial Economic Impact of the Lockdown

When the first 21 days lockdown was announced the unemployment rate in India shot up because millions of workers lost their jobs in the city. They started to make their journey back to their respective villages on foot, due to the restriction of government transport. Since the coronavirus pandemic began, world economies have been on a downward spiral. India was not spared either. The implication on businesses was a partial or complete shut down of operations. India has lost at least 4.5 billion dollars for every day during the period of the lockdown.

Related Reads

Challenges with Labor Laws During the Crisis

Even the Indian labor laws can do little to guarantee employment protection in this dire period. To put this in context, the labor laws couldn’t stop five major companies: Uber India and South Asia, Ola, Zomato, Swiggy and Cure.fit from cutting the jobs of over 4400 employees in total in April-May period. According to CMIE data, 27 million youth in the age group of 20-30 years lost their jobs in April alone.

Impact on the Tourism Sector

Furthermore, the tourism sector and its value chain is expected to suffer losses estimated to be between 38 to 50 million lakh crore due to job losses, according to the Federation of Associations in Indian Tourism & Hospitality. All of these have set India several paces backward on its ease of doing business coefficient.

The Role of Labor Reforms in Economic Recovery

With the country’s leaders looking at measures to revive the crumbling economy, experts predict that a successful economic recovery might largely hinge on labor reforms in India. Seeing that almost every sector of the economy has been hit by the pandemic, policy makers must look to make labor law changes that not only increase labor participation rate but also protect the interest of employees.

State-Level Labor Reforms and Their Impact

While some states have pandered towards the suspension of labor laws, the Indian government has made it clear this needs deeper assessment before making such changes. States such as Uttar Pradesh, Gujarat, Goa, and Madhya Pradesh have put up new labor reforms aimed at making desirable changes and attracting investment and reviving the economy. It is estimated that nearly 90 percent of workers do not benefit from the existing labor laws. With the new worker protection laws, it will incentivize the growth of new businesses, which will translate to an improvement in the unemployment rate of India.

References

  • Labor reforms give India a chance to compete with a favorable destination like Vietnam by Janay Jain|| May 14, 2020
  • Coronavirus live updates by Express Web Desk||May 30, 2020
  • Coronavirus lockdown and a tale of labor reforms sans laborers by Prabhash K. Duita||May 15, 2020

Related Articles

IEF Editorial Team

UGC Reforms for Higher Education: A Initiative focusing…

The evolving demands of the modern workforce necessitate strategic reforms from UGC in the higher education system to develop talent capable of addressing complex business challenges. This need is reinforced...

IEF Editorial Team

Unemployability In India: Trends and Factors

India has long had a large and diverse workforce, but significantly, a large proportion of its population is unemployed. Unemployability refers to the inability of an individual to secure employment...

IEF Editorial Team

The Evolving Workforce: The Growing Importance of Fungible…

"The only constant in life is change." – Heraclitus As industries and markets continue to evolve at an accelerated pace, the skill sets required of employees are similarly shifting. For...

IEF Editorial Team

Skill, Retain, Repeat: A Modern Talent Retention Strategy…

In an era where competition for top talent is fierce, organizations are struggling with the challenge of retaining skilled employees. With 65% of hiring managers reporting difficulty in finding qualified...

Post an Article

    Subscribe Now



    I've read and accept the Privacy Policy.