The gloom of the pandemic is still very apparent in India’s job market. Unemployment further swelled in the country during the last month of 2021, with 10.5 million salaried employees and entrepreneurs losing their jobs during December, according to a report by the Centre for Monitoring Indian Economy. Employment has not reclaimed pre-Covid-19 levels even 18 months after the Indian economy was hit by the black swan event, the Mumbai-based think tank stated.

By December 2021, India had employed 406 million, which is 2.9 million less than 408.9 million employed individuals during 2019-20. While India’s working age population has increased but its employment has shrunk since the pandemic, CMIE said.

More worrisome is the fact that the recovery after the pandemic has worsened the employment composition of India. The shortfall in employment compared to last year was disproportionate for the salaried employees, who saw the biggest decline in job opportunities last month. In December 2021, salaried workers accounted for only 19% of all employed persons, slipping down from 21.2% in 2019-20.

“This class saw a loss of 9.5 million jobs. Another 1 million jobs were lost among entrepreneurs. This massive 10.5 million loss of jobs was offset by gains in employment among daily wage labourers and more so among farmers,” wrote CMIE CEO Mahesh Vyas.

Industry-wise comparison of employment number in December 2021 and 2019-20 reveals that the manufacturing sector has lost 9.8 million jobs. This was, however, countered by 3.8 million new jobs in the construction segment and 7.4 million jobs in the agricultural segment.

In the services sector, 1.8 million jobs were lost. Within services industries, hotels and tourism lost 5 million jobs and education lost 4 million jobs, but retail trade gained 7.8 million jobs.

“With due respect to all kinds of labour it can be argued that manufacturing jobs are usually better quality jobs compared to construction and agricultural jobs. And, within services, employment in hotels and tourism or education is often of better quality than employment in retail trade which is mostly delivery agents,” Vyas wrote.

India is already suffering from lukewarm revival in domestic consumer demand and low capacity utilisation. Meanwhile, interest rates in the market are rising and banks are likely to follow suit. Rupee, on the other hand, has been depreciating through most of 2021 – it has fallen by 3% to 75.5 to a US dollar during January to December 2021.

“A combination of tepid growth in domestic consumer demand and low capacity utilisation levels has already adversely impacted investments in India. Rising interest rates and a depreciating currency could make it worse,” Vyas wrote.

Till investments by large business entities return, India will not be able to generate the jobs that it needs. Without such influx of funds, the quality of employment will be mostly of poor quality, warns CMIE. While the recent push in the infrastructure segment can create jobs in construction, it will not be able to create adequate stable middle-class salaried jobs, the think tank adds.

“India will be able to generate more better quality jobs only if employment is generated either directly in government or in large private enterprises,” opined Vyas.

“The combination of rising inflation, rising interest rates and depreciating exchange rate along with poor growth in consumer demand, low consumer sentiments and low capacity utilisation do not help create the environment necessary to spur investments by large enterprises required to generate good quality jobs,” he further stated.

Stressing on the need to remedy the decline in salaried jobs, the CMIE report noted that mere increase in employment, as seen during December 2021, is not ideal.

Unemployment rate in the country rose to 7.9% in December from 7% a month ago. With the inflation rate hovering around 5%, and poised to rise in future, there is no indication that the unemployment rate will come down in tandem.

“The near term economic outlook therefore looks worse than where India stands today,” stated Vyas.

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.