The pandemic is raging across borders, sparing no one from the threat of a deadly virus and the normalcy of countless lives has taken a hit. It has managed to quarantine the dreams of the global citizens and turn the job market into a desolate place. With countries turning inwards and imposing protectionist and isolationist policies, the unemployment rates stand at an all time high.
The US Federal Reserve has reported that the unemployment rate soared to a post-World War II high in the United States of America. India was not far behind as it registered the highest unemployment rate in decades. Jharkhand was the worst hit state with an unemployment rate of 59.2% in May. But as India inched toward ‘Unlock 1’, the unemployment have begun to diminish. Though the promise of normalcy seems like a distant dream the numbers have become reassuring.
Down to the Data:
- As of 15th March, ten days prior to the lockdown, the national unemployment rate according to CMIE (Centre for Monitoring Indian Economy) data stood at 6.74% and sky rocketed to a staggering 23.81% within a week.
- The job market was the worst hit in the first week of May registering an unemployment rate of 27.11%.
- As of 14th June, CMIE’s weekly unemployment data shows that the national unemployment rate stands at 11.63% with rural unemployment rate at 10.96% and the urban unemployment rate at 13.10%.
“I don’t think the economy or the employment space will make a ‘V-shape’ recovery. At max it will be a ‘U shape’ recovery and will take at least two years to be in a stable situation. And this only if we manage to control the covid-19 pandemic within six months,” said Praveen Jha, Professor at JNU, specializing in labour and development economics.
Labour economists believe that despite the opening of the economy, it will take time for the unemployment situation to reach the pre-covid era. Lower labor demand, increased supply and a consistent battle by business owners to re-open manufacturing units, could lead to a see-saw between urban and rural unemployment rates over the next few months.
Amid a crisis like this, many experts are suggesting that India should adopt an employment guarantee scheme like the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act, 2005) for the urban poor. MGNREGA is an Indian labour law and social security measure that aims to guarantee the ‘right to work’. It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. The World Bank pointed out that the Indian economy could shrink by 3.2% this fiscal year. A recent study by King’s College, London showed that this pandemic could push global poverty on emerging economies like India, Bangladesh and Indonesia.
A major cause for concern is the status of migrant workers who engage in seasonal employment. Since the start of the lockdown, most of the populace has gone back to their rural villages unemployed and the MGNREGA is in no condition to accommodate them.
How are Businesses coping with Corona?
Multiple companies in India laid off their employees in the months of May and June. Earth-moving and construction equipment manufacturer JCB India laid off 400 permanent employees to adjust the workforce in lieu of the dip in demand. The company admitted that the demand for their products dropped by 80 percent with respect to the same period last year. India has been one of JCB’s largest markets since 2007. JCB India currently employs about 5000 people, has a network of more than 60 dealers and 700 outlets spread across the country.
Other companies were quick to adopt to the situation. Companies like Infosys, TCS and Wipro allowed their employees to work from home. However, Infosys Chairman Nandan Nilekani and CEO Salil Parekh believe working from office helps build social capital. TCS, on the other hand, plans to allow 75 percent of its employees to work from home by 2025. The idea is almost identical to the strategy adopted by Facebook and its CEO Mark Zuckerberg.
However, this phenomenon is not restricted to India alone. Companies across the globe are laying off employees. Marriott hotels announced a series of layoffs as the hospitality industry took a severe hit due to the pandemic. Marriott temporarily laid off 3000 workers in Nashville alone. Marriott permanently laid off 107 employees in Atlanta and shut its floors. Courtyard by Marriott Miami Airport extended the layoffs and furloughs of 61 of the hotel’s 81 total employees. These are just instances in three states and the same trends prevailed in the rest of the states.
But all is not lost; A digital future is waiting to envelope our present work-spaces and the transition has slowly begun with giant tech companies leading the way. Employees are set to witness their workplaces become more remote, digital, healthier and safer. Many workers will venture into working remotely for their companies as it allows for flexibility and shortens commute time. This will lead to people relocating to cheaper, less dense locations. They need not adhere to the nine to five workday and in person interviews will become a thing of the past. IT companies took working from home to task and Google promised to give its employees $1000 allowance to help them set up their home offices. A lot is said about Google’s canteen food and to make sure employees do not miss the experience they are being offered virtual cooking classes. We might soon start to see workplaces undergoing digital renovation with companies resorting to using apps and robots that will be programmed to clean offices, schedule conferences, and perform relatively low-skilled tasks.The pandemic has opened doors to worsening mental health conditions, this led to companies like Starbucks and Volvo to invest in their employee assistance programs offering them wellness apps and even free access to therapists.
Safety is going to take a key space in their renovation to cater to a post-COVID world. Features like hand sanitisers, masks, disinfecting machines, virus-testing kits, social distancing in rooms and elevators and closed office plans will come into place. In all, a deadly pandemic has acted as a catalyst to digitising our offices and prioritising employee benefits more than ever.
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References:
- US unemployment rate soars to post – WWII record high: Federal Reserve, Business Standard
- Centre for Monitoring Indian Economy
- Urban unemployment falls sharply, rural job loss rate largely unchanged: CMIE, Livemint
- World Bank projects Indian economy to contract 3.2% in FY21, Livemint
- COVID-19 effect: JCB India lays off 400 employees amid pandemic, The New Indian Express
- Work from home: Here is a look at TCS and Infosys’ long term plan, BGR India
- Layoff Roundup: Marriott lets go nearly 3,000 workers in Nashville, Nashville Business Journal
- Marriott hotel in Atlanta makes permanent layoffs, closes floors, Atlanta Business Chronicle
- Virtual cooking classes, $1,000 allowances. Google’s WFH perks, CNN
- The future of work will be remote, digital, healthier and safer: Dan Schawbel, Workplace Intelligence, The Economic Times
Acknowledgements:
- Author: Moksha Tamma, Content Writer, Bay Crest Consulting
- Editor: Tarunn Bhende, Director, Bay Crest Consulting
