Employment in the non-financial service sector fell 8 percent in the pandemic-hit 2020-21 after a steady rise for four years, while jobs in real estate and construction contracted by 11.8 percent, continuing the decline since 2016-17, according to Ashoka University’s Centre for Economic Data and Analysis.
In a report published earlier this month, CEDA analysed employment data by CMIE across sectors. The biggest finding was that employment in manufacturing had fallen 46 percent between 2016-17 and 2020-21. Just in 2020-21, it fell 31.7 percent.
The spotlight on these numbers overshadowed another finding: Construction and real estate sector registered the same drop in employment in four years before the pandemic as it did during the COVID-19 period; and that jobs had increased in the non-financial service sector from 2016-17 to 2019-20, before the pandemic, the nationwide lockdown, and the resultant economic slowdown hit these sectors hard.
In CEDA’s report, non-financial services sector include hospitality, tourism, essential services, aviation, but exclude government and defence administration and financial services.
As the data shows, employment in non-financial services increased 16 percent between 2016-17 and 2019-20 before falling by 8 percent because of the pandemic.
Employment in real estate and construction fell 11.8 percent in the four years preceding 2020-21, and fell by the same percentage points in 2020-21.
Pandemic hit Construction Sector hard
“The slowdown in overall employment had started way before Covid. On top of that the pandemic happened. The reason that real estate and construction got immediately impacted was because these were activities which stopped when the first lockdown happened. Some of it picked up later but now again we are in the second wave,” said Professor Ashwini Deshpande, who heads CEDA. She said that the construction sector had taken a particularly bad hit because of Covid-19.
It is widely acknowledged that touch services like hospitality and tourism have been among the worst hit by the pandemic, which was borne out by the data.
“Social distancing is a big part of COVID management. Establishments like hotels, restaurants and malls have suffered. There was some glimmer of hope late in calendar year 2020, but that has now dissipated,” Deshpande said.
She said that even before the second wave hit, the marginal pick-up in employment seen across sectors from September 2020 was not consistent and started declining again by December.
The lockdown in April-June 2020 meant that millions of migrants went back to their villages and were mostly absorbed into the rural agricultural workforce. This is borne out by the data that agriculture sector employment, almost at similar levels from 2016-17 to 2019-20, rose 4 percent, the only sector to show growth.
As the second wave delays the expected economic recovery in 2021-22, Deshpande said that dependence on the agriculture sector could go up.
“Dependence on agriculture sector is expected to go up, and marginally also increase. However, a great deal of people who depend on agriculture don’t own land. It remains to be seen if their income levels will go up, but the livelihood numbers in the sector could,” Deshpande said.