India added 16 million jobs in July, but mostly of 'poor quality': CMIE

India added a massive 16 million jobs in July, however, all the additional employment provided during the month was of 'poor quality', according to private think tank CMIE.

During the month, 18.6 million additional people were employed as small traders and daily wage labourers, with most of these engaged in agriculture, where 11.2 million additional people were employed.

However, the number of salaried jobs, which are mostly better quality jobs, fell by 3.2 million in the month to 76.5 million, CMIE said. The salaried jobs were 3.6 million short of the pre-second wave level of 80 million in January-March 2021 and over 10 million less than during pre-pandemic times.

While construction sector absorbed an additional 5.4 million people, manufacturing sector shed 0.8 million jobs during July. The services sector could absorb only an additional 0.5 million people.

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According to CMIE MD and CEO Mahesh Vyas, the big jump in employment seen in agriculture in July was a reflection of the increase in sowing activities. As monsoon picked up, kharif sowing, which was more than 20 per cent lower in June than in the corresponding period of 2020, improved to less than 5 per cent lower than a year ago.

Employment in agriculture usually rises in July, with the increase often beginning in June, peaking in July and sometimes remaining elevated in August, Vyas wrote in an article. This is the kharif time of sowing and post-sowing agricultural activities. Employment then rises again in November during the kharif harvesting season.

"This seasonal absorption of labour into agricultural activities is different from the large scale migration of labour into agriculture as farmers. This happens when other sources of employment start drying up as witnessed in 2020 during the pandemic," he said.

During July, while employment in agriculture grew by 11.2 million, employment as farmers grew by only 1.8 million.

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"Employment in agriculture mostly consists of two kinds of occupations farmers and farm labourers. The latter, farm labourers are a part of daily wage labourers. It is this category that seems to have increased dramatically during July," Vyas said.

At the end of kharif season, it is likely that the agricultural labourers will lose the source of employment. Unless the economy grows at a healthy clip, these people will find it difficult to find alternate jobs. In three of the five months of August for which data is available since 2016, the agricultural sector shed, on an average, about 3 million jobs, CMIE said.

On salaried jobs, Vyas said that while employment in July 2021 was down by 2.3 per cent compared to 2019-20 levels, the decline was much larger at 11.7 per cent for salaried jobs.

Saying that salaried jobs are not as elastic as that of small traders and daily wage labourers, Vyas wrote, "It is difficult to retrieve a lost salaried job. As a result, the cumulative impact of the steady loss in salaried jobs during the several lockdowns and their after effects is much worse."

Till investments do not pick up, it may be difficult to see most of the 10 million salaried jobs lost since 2019-20 to come back, Vyas said, adding that this could be the biggest hurdle to India's recovery.

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