People under 30 have been badly hit by job losses due to COVID-19, eroding one of India’s key economic advantages.
After six months of working the graveyard shift at a call centre in the city of Pune, a three-hour drive from India’s financial capital Mumbai, Rohit Mhatre* had had enough. The 23-year-old resigned in March, hoping to land another job that would allow him to have a social life.
His timing could not have been worse.
Weeks later, India went into a strict, nationwide lockdown to stop the spread of the coronavirus outbreak. The few jobs open to those with little experience and straight out of college dried up. Mhatre’s father’s stall selling breakfast to city commuters also had to close. Suddenly, the family was left with no income.
“There’s just no jobs out there. It’s difficult to know what to do,” he told Al Jazeera by phone, from his ancestral village in Maharashtra, where he and his family have relocated to avoid the city’s expensive living costs. “Many of my friends are in the same boat. We spend all day scrolling through online job sites”.
Mhatre’s predicament highlights one of India’s biggest economic problems: young people who have invested in higher education are finding it increasingly hard to find work, potentially affecting their future prospects and potentially those of future generations. The pandemic is making this issue all the more acute.
Globally, young workers tend to occupy low-skilled, entry-level positions. Firms have invested relatively little on training them. As a result, employers often find it relatively easy to sacrifice these jobs when times are tough.
Young people are also overrepresented in sectors like retail, hospitality and tourism, which have been badly hit by policies enforcing social distancing, according to the Atlantic Council think-tank.
In May, the International Labour Organization (ILO) warned that COVID-19’s economic fallout could “leave many young people behind”, permanently excluding them from the job market. The virus’s legacy could be with us “for decades”, it said.
The ILO also says the world’s “youth are being disproportionately affected by the pandemic”. In its latest report, it estimates that more than one in six young people – roughly 17 percent – have lost their jobs since it began.
In India, the proportion of young workers affected by the crisis appears to be even higher.
About 41 percent of people aged between 15-29 were out of work in May, according to data compiled by the Centre for Monitoring the Indian Economy (CMIE). That is up from 17.3 percent in 2018-19.
An estimated 27 million people between the ages of 20 and 30 lost their jobs in April, the CMIE says.
“The long-term impact of the pandemic will be very severe and take a long time to fix,” Mahesh Vyas, the chief executive officer of the CMIE told Al Jazeera. “Young people will not be able to save for the future and that affects the next generation too”.
India’s shrinking jobs market means it will be increasingly tough for the 1.3 million Indians joining the workforce each month, as per World Bank estimates.
Crucially, the pandemic has also jeopardised India’s ability to capitalise on a unique opportunity; it has the world’s largest youth population.
Until 2040, the proportion of working-age people in India is expected to outweigh the number of their dependents (children and older people), a phenomenon that economists refer to as a “demographic dividend”. But with the pandemic causing enormous economic damage, analysts warn that India is likely to miss out on this benefit.
“The economy was already slowing down severely, and now the lockdown has made everything worse,” says the CMIE’s Vyas. “If the young generation is not given jobs, then the demographic dividend will become a demographic demon.”
Stuck in dead-end jobs, choices curtailed
Even before the pandemic, India was one of the hardest places to be a young job seeker. Though the country’s working-age population is growing, the proportion of young workers active in the labour market is falling, according to the Reserve Bank of India.
Analysts say that the labour surplus created by the pandemic will now worsen their already bleak employment prospects.
“Young people will be more willing to accept less pay and poor working conditions, just because they’re so desperate to make a living,” Sabina Dewan, executive director of and senior fellow at the New Delhi-based Centre for Policy Research, told Al Jazeera. By accepting whatever job they can get and not necessarily one that suits their education or skills, their potential goes unused, she added. “This sets us back hugely in terms of realising any portion of the demographic dividend,” said Dewan.
Mhatre, who spent three years studying for a Bachelor of Commerce degree, is already lowering his expectations. While still on the lookout for a “respectable” marketing or IT job, he admits he would take anything right now if it meant earning a bit of cash. “Before I was focused on getting experience and building up my CV, but now we need any income to survive.”
He says many of his former colleagues at the call centre had civil engineering or Masters in Business Administration degrees. Mhatre is thankful he did not splash out more money on another degree.
“If everyone ends up competing for the same kinds of job, what’s the use in studying more?” he said.
At 12.7 percent, the unemployment rate for Indian graduates was more than double the overall figure of 6 percent in 2018, a symptom of India’s failure to create enough high-quality, non-farming jobs. Developing economies typically raise living standards by increasing employment in manufacturing and construction. But a lack of investment in these sectors has meant this process has stalled in India since 2012, according to a report by Azim Premji University.
Analysts also worry that many young people could end up earning little more than their parents’ generation, despite spending more time and money on school. Research from the US shows that the more time spent unemployed or in low-paid work, the greater the hit to future earning potential.
This also rings true for India and its current crisis, says the JustJobs Network’s Dewan. “We already have an economy that doesn’t provide for a lot of economic mobility for young people,” she said, referring to the outsized role that gender, caste and religion can play in securing certain jobs. “I fear now young people are going to be set back even more; locked into jobs that offer them no upward progression.”
Fixing existing problems
With cases of COVID-19 still on the rise, the length and severity of the current crisis are hard to predict. While some are hopeful of a rebounding economy once the virus is controlled, others warn that progress on the jobs front will be limited if the structural issues driving the economic slowdown that preceded the outbreak are ignored.
“We’ve been more or less stuck at around 405 million jobs since 2016,” says the CMIE’s Vyas. “Four policy shocks in four years”, including the elimination of a large proportion of currency notes in 2016 and a crisis in the non-banking finance sector, have hindered job creation and pummelled the economy’s animal spirits, he added. “Companies have had no room to invest in new capacity. If there’s no investment, then there’s no new jobs and this problem continues.”
Business sentiment fell to a 10-year low in June 2019, according to a survey by research firm IHS Markit. The government has tried to revive private sector confidence through measures like corporate tax cuts and increasing liquidity in the banking sector, but critics say it needs to do more, like delivering on much-needed economic reforms.
During the pandemic, several state governments suspended some labour regulations in a bid to revive industrial activity. But that is precisely the opposite of what authorities should be doing, says JustJobs Network’s Dewan. “The idea that this would help businesses to succeed, when they weren’t before is strange,” she said. “We need to move away from encouraging low-paid, low productivity work and focus on ways to improve jobs and the economy as a whole.”
While New Delhi has not announced specific measures for out-of-work youth, it has injected $5.3bn into its rural employment scheme as part of a COVID-19 stimulus package. It hopes this will provide incomes for the millions of jobless workers who left Indian cities and are for now, reluctant to leave their villages. By allocating funds towards loans for micro, small and medium-sized enterprises – the backbone of the economy – the government also expects to create jobs.
Those staring at an uncertain future hope it will not be too long before life gets back on track. Time is passing more slowly in the village and Mhatre says he is desperate to be back in Pune, “roaming around” with friends and hanging out in his favourite eating spots. “This lockdown has been like a jail,” he said. “We feel stuck and totally powerless.”
Source: Aljazeera News