According to the early estimates of job data, it is being said that the effects of the novel Coronavirus may leave a devastating impact on the economy, sending the urban unemployment to 30.9% and the overall unemployment surging to 23.4%.
These figures are based on the weekly tracker survey of the Centre for Monitoring Indian Economy (CMIE) which have held steady for 14 days now. The latest data of the week which ended on the 5th of April was released on Monday evening. CMIE’s estimates tell us that unemployment in the country increased to 23% from 8.4% in mid-March.
Based on some rough calculation, almost 5 crore people might have lost their jobs in just 2 weeks od the lockdown said the ex-Chief Statistician of India, Proban Sen.
He added that, “Since some may have just been sent home for now, the actual scope of unemployment may be even higher and may show up a little later,”.
India is amongst the countries who does not have a reliable, official high-frequency data for jobs. While the CMIE’s job data has been a topic of a political slugfest in the past as the officials have, many time, questioned the methodology used in the survey.
Sen said that it does not matter now as what we are interested in is “capturing change”.
Associate Professor of Economics at the JNU (Jawaharlal Nehru University, Delhi, Himanshu says, “This (the unemployment number) is also somewhat expected,”.
Indian is not the only country where the drastic loss in jobs has gripped the economy due to the Coronavirus pandemic. Around 1 crore US workers have filed unemployment claims in the past 15 days.
Himanshu says, “What happens after the lockdown is removed is more important,” and adds that “My hunch is, even then, unemployment will remain high”.
Nearly 33% of the workforce is made of casual workers who may not have a good safety net placed for themselves at the time of this economic nosedive. Since there are people without incomes they will begin to control their consumption of services and commodities which may, in turn, leave a more lasting effect on the economy if it is left unaddressed said Himanshu.
He added, “There might be second and third-order impacts (on firms and governments). The government needs to step in and help the economy bounce back after the lockdown. People need income,”.
The job survey of CMIE is based on a panel which virtually means the observations are derived by following a sample of people (a panel) overtime at a regular frequency. The survey of last week had close to 9,000 participants (or observations), and since two weeks surveys seem to have indicated roughly the same level of unemployment (23%), the numbers can be called reliable, says Managing Director (MD) of CMIE, Mahesh Vyas. He also says that “It’s a huge spike. We didn’t expect it to be this high,”.