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Why urban poor remain a worry for FMCG companies
By Viveat Susan Pinto
July 07, 2021 16:00 IST

30 per cent of total sales comes from the urban poor, especially for food firms.



As the second wave of the pandemic ebbs and the daily caseload falls, the struggles of the urban poor have come into focus.
Many have suffered income and job losses after two successive waves.


The second wave, in particular, has seen the poor being hit hard on account of lack of medical and financial help.
For the fast-moving consumer goods (FMCG) companies this has meant that an important segment is under severe distress.
To put things in perspective, urban areas contribute 60-65 per cent to an FMCG firms’ total sales.
The rest 35-40 per cent comes from rural areas, according to market research agency NielsenIQ.

According to experts, half of urban sales or 30 per cent of total sales comes from the urban poor, especially for food firms.
While home and personal care companies get 20 per cent of their total sales or a third of their urban sales from the urban poor.
Which is why the lack of policy measures for the urban poor hit by the pandemic has been concerning for companies.
“There are no social security or employment guarantee schemes for the urban poor, which exists for the rural poor.
"Last year, there was a major reverse migration of the poor in urban areas to their villages because of the disruption caused by Covid.
"There is certainly some policy-level support that is needed to help the urban poor,” Sunil Kataria, chief executive officer (CEO), India & SAARC, Godrej Consumer Products (GCPL), said.
NielsenIQ had indicated in May that it was monitoring the drop in consumption closely due to the pandemic across key segments.
The Rs 4.3-trillion FMCG market had closed the March 2021 quarter with an overall growth rate of 9.4 per cent.
But given how strong the second wave was, said industry experts, the June quarter may see a drop in FMCG growth rate because of localised lockdowns through April and May.
The growth rate for the April-June period, according to industry estimates, is likely to be in the region of 5-6 per cent, though the July-September period may see a rebound, touching levels of 10-15 per cent in terms of FMCG growth rate.
Some senior executives say the unlock process does hold hope for the urban poor, since resumption of economic activity will restore jobs and therefore incomes for many.
“I see the unlock process offering some comfort for the poorer sections in the urban areas.
"As businesses resume, the requirement for people will grow, giving some respite to the poor, many of whom are daily wage earners.
"At the same time, states such as in Maharashtra and Delhi have announced welfare measures recently for the urban poor,” Mayank Shah, senior category head, Parle Products, said.
Maharashtra, for instance, had announced a Rs 5,746-crore relief package for the economically weaker sections of the state in April, including providing free food, grants to construction workers, rickshaw drivers, and pension scheme beneficiaries.
Delhi announced free ration, education, and financial aid for the Covid -affected in May and the Centre too announced distribution of free foodgrains to the poor across the country till November.
Mohit Malhotra, CEO, Dabur India, said FMCG companies may push more low-unit packs into areas dominated by the urban poor.

“Companies push small packs into rural areas and large packs into urban areas.
"But given the stress that the urban poor have witnessed with two successive Covid-19 waves, low-unit packs could be pushed even more into areas where the urban poor are dominant,” he said.
Photograph: PTI Photo


Why urban poor remain a worry for FMCG companies
 

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Urban men lost more jobs than women in 2nd wave: CMIE
Source: PTI
July 16, 2021 23:45 IST


Urban men lost more jobs than women during the second wave of COVID-19, implying a complete loss of livelihood for millions of households, according to the Centre for Monitoring Indian Economy (CMIE).


Job loss



Illustration: Dominic Xavier/Rediff.com

The most disproportionate loss of jobs because of the first wave of COVID-19 was among urban women, CMIE's MD and CEO Mahesh Vyas said in his analysis.
He said urban women account for about three per cent of total employment, but they accounted for 39 per cent of total job losses in the first wave of the pandemic.

Of the 6.3 million jobs lost, urban women accounted for a loss of 2.4 million, Vyas noted.
However, during the second wave, urban women suffered the least loss of jobs, he stated.
The burden of job losses has shifted to men and during April-June 2021, a disproportionately higher loss of jobs was incurred among urban men.
“Urban males account for about 28 per cent of the total employment in India.
"They accounted for a lower 26 per cent of the loss of jobs till March 2021. But, in the quarter ended June 2021 their share in total job losses was higher at 30 per cent,” he pointed out.
Usually, urban male jobs are the better quality jobs and their disproportionate loss could imply a greater fall in income than witnessed so far, he said.
It is also likely that women are often the second earning member of a household and the loss of jobs among women more often than not implies a fall in income but not a complete loss of income, Vyas opined.
“But, a loss of job among men often implies complete loss of livelihood. This greater loss of urban male jobs is worrisome,” he added.

Vyas further stated that while many of the lost jobs will come back, the current loss is huge and its impact on the households that have suffered because of this cannot be captured in the cold statistics rolled out here or in the comfort that jobs will come back eventually.
Many of those who got their jobs back or found alternate jobs got them at lower wage rates and household incomes have fallen a lot more than employment has, he added.

Source: PTI


Urban men lost more jobs than women in 2nd wave: CMIE
 

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Imagine more numbers in 2021 as more than 122 Millions lost their jobs in 2020.



122 million jobs have been lost because of the lockdown
By Mahesh Vyas
May 20, 2020 08:25 IST


'Over 27 million youngsters in their 20s lost their jobs in April.'
'33 million men and women in their 30s lost jobs in April,' points out Mahesh Vyas.





IMAGE: Migrant workers collect food items, distributed by volunteers, as they ride a truck from Maharashtra to their villages in Malda, West Bengal, on the Ranchi-Bengal highway, May 19, 2020. Photograph: PTI Photo


Labour statistics improved during the week ended May 10, 2020.
But only in comparison to the previous week, which was the worst that India has witnessed so far.
The unemployment rate fell from 27.1 per cent to 24 per cent.
Labour participation rate rose from 36.2 per cent to 37.6 per cent.
And employment rate rose from 26.4 per cent to 28.6 per cent.
These improvements notwithstanding, this is not a good place to be in.
In spite of very low income levels, open unemployment in India in April 2020 was 23.5 per cent.
In comparison, a much richer USA reported an unemployment rate of 14.7 per cent in April.
In India, the rate shot up 14.8 percentage points. In the US, it shot up by 10.3 percentage points.
Labour force participation rate fell from 41.9 per cent in March 2020 to 35.6 per cent in April, a fall of 6.3 percentage points.

In the US, it fell by 2.5 percentage points to 60.2 per cent.
Compared to Indians, Americans can afford to remain unemployed for some time as the state provides assistance to the jobless.
While the US government has announced a handsome fiscal package to reduce the economic pain of the pandemic, the Indian government has dithered for too long on this count.
No wonder gradually voices against the lockdown have been rising.
The window of the benefit of the doubt in favour of a lockdown is closing.
Claims that the pandemic can be devastating is countered by the fact that the lockdown is already devastating.
122 million jobs have been lost because of the lockdown.
We do not know how many deaths could have been caused by job losses, but we know that scores of lives were lost because of people falling asleep on tracks or dropping dead on their way walking home.
We will probably never know how many died because of hunger, how many children were stunted because of malnutrition caused by the lockdown.
And, we can never count the loss of dignity.
Hunger, fear, anger and desperation is writ large on the faces of people wanting to save their lives from the lockdown.
We are given to understand that older people are more vulnerable to the virus.
It is also logical to believe that children suffer life-threatening or highly debilitating malnutrition during such times.
Researchers have shown that this malnutrition during childhood hurts their ability to earn a living later in life and therefore it plays an important role in keeping them perpetually trapped in poverty.
The long-term impacts of the lockdown are probably worse than what we witness today.
Data from CMIE's Consumer Pyramids Household Survey tells us a disturbing story of young aspiring Indians who have just stepped into the labour markets.
Youngsters in the age group 20 to 24 years accounted for 8.5 per cent of the total employed persons in the country in 2019-2020.
But they accounted for 11 per cent of those who lost jobs.
34.2 million of these young men and women were working in 2019-2020. In April 2020 their numbers were down to 20.9 million.
Over 13 million youngsters lost their jobs in the lockdown.
Another 14 million jobs were lost in the age-group 25 to 29 years.
This loss again, was disproportionately high.
This group accounted for 11.1 per cent of total employment in 2019-2020 but it accounted for 11.5 per cent of the job losses.
Over 27 million youngsters in their 20s lost their jobs in April.
This has serious long-term repercussions.
It is during this age that young India builds its career in the hope of a bright future.
If the career of this cohort is disrupted or postponed by even a year it will have to compete with the new cohorts joining the labour force after them -- arguably, for fewer jobs.
Young India will not be able to build the savings it will require later in life.
33 million men and women in their 30s lost jobs in April.
86 per cent of the job losses were among men.
Job losses have been registered in every age-group of five years.
However, job losses are disproportionately high among the younger age groups.
Collectively, 44 per cent of those employed in 2019-2020 were under 40 years of age.
However, 52 per cent of the job losses were among those who were under 40 years of age.
In contrast, while those of 40 years or more accounted for 56 per cent of the total employed in 2019-2020, they account for only 48 per cent of the job losses.
Job losses among the vulnerable are likely to raise the proportion of households in debt.
It will also possibly raise debt delinquency.
Job losses among the young population would have implications on savings.


While households may well conserve cash during these times, the loss of jobs among the young deprives households of the extra cash that is mostly saved for either buying a house or durables or for retirement.
This loss of savings will have long-term implications.

Mahesh Vyas is MD & CEO, CMIE.


122 million jobs have been lost because of the lockdown
 

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India has lost 25.3 million jobs since January
By Mahesh Vyas
June 17, 2021 07:30 IST

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Employment fell by 2.5 million in February, 0.1 million in March, 7.4 million in April and then by 15.3 million in May, explains Mahesh Vyas.

IMAGE: A factory in New Delhi after after the government went in for a gradual unlock. Photograph: Prateek Kumar/ANI Photo
The unemployment rate that reached 11.9 per cent in May 2021, continued to rise into early June.
The 30-day moving average unemployment rate as of June 6, 2021 was 13 per cent.
The labour participation rate that had fallen to 40 per cent has fallen further to 39.7 per cent.
And the most important labour market indicator, the employment rate which had fallen to 35.3 per cent in May, dropped to 34.6 per cent by June 6, 2021.
The Indian labour market is in its worst condition since the nation-wide lockdown months of April and May 2020.
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The last four weeks have seen a particularly sharp deterioration in labour market conditions. The downturn began in the week ended May 16.
During this week, the labour participation rate was at 40.5 per cent which was higher by a whisker than the average 40.4 per cent rate around which this ratio has been hovering for several months since the 2020 lockdown.
But the unemployment rate shot up suddenly to 14.5 per cent after remaining stable for several weeks at around 8 per cent.

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This implies that during this week of May 16, a number of people lost employment suddenly and they continued to look for jobs, albeit unsuccessfully.
In the next week that ended on May 23, the situation got worse with the unemployment rate shooting up to 14.7 per cent.
This happened even as the labour participation rate declined to 39.4 per cent.
The exceptionally high unemployment rate of the previous week apparently seriously discouraged labour from looking for work.
They retreated and brought the labour participation rate down.
The result of low labour participation and high unemployment was the lowest employment rate in nearly a year.
It fell to 33.6 per cent. This was the lowest since the week of June 7, 2020.
There was a recovery of sorts in the week of May 30.
The unemployment rate fell sharply to 12.2 per cent from its recent peak of 14.7 per cent in the previous week.
But, labour continued to reel under the effect of the previous week's high unemployment rate.
Their disappointment with the high unemployment rate is seen in the continued fall in the labour participation rate.
This fell to just below 39 per cent from 39.4 per cent in the previous week.
The feeling of being discouraged is understandable because the unemployment rate inched up again in the week ended June 6 when it ended at 13.6 per cent.
Labour participation rates have been decidedly under 40 per cent.
The average over the three weeks ended June 6 was 39.2 per cent.
This consistent fall in the labour participation rate is a matter of concern.
Low and falling labour participation rate and high unemployment rate imply a fall in the employment rate and a fall in absolute employment.
The employment rate fell from 36.8 per cent in April 2021 to 35.3 per cent in May 2021.
This translated into a loss of 15.3 million jobs.
As mentioned earlier, this fell to 34.6 per cent measured by the 30-day moving average on June 6.
During the week ended June 6, it was much worse at 33.9 per cent. This implies a further loss of jobs.
Employment has been falling since January 2021 when it had touched a recent peak of 400.7 million.
It has fallen in each of the four months since then.
It fell by 2.5 million in February, 0.1 million in March, 7.4 million in April and then by 15.3 million in May.
The cumulative loss since January therefore is a substantial 25.3 million.
This is a significant 6.3 per cent fall in the employed workforce over a four month period.
More recent data on the employment rate suggests that the fall in employment may not have stopped till the first week of June.
This relentless loss of employment can be expected to abate somewhat in the coming weeks as many parts of the country that were under a lockdown have started announcing cautious relaxations.
These could provide some succour to the daily wage labourers who have suffered during the calibrated and localised lockdowns of May 2021.
Nearly 17 million daily wage labourers and small traders such as hawkers lost employment in May 2021.
Most of these losses were the direct outcome of the increasing lockdowns across the country during the month.
As these restrictions on movement are relaxed, these workers can be expected to return back to their haunts in search of employment.
We can expect a quick recovery of the informal jobs that were lost in the unorganised sectors because of the local lockdowns.
But, there is also a steady fall in the employment independent of the lockdowns.
The total non-farm jobs lost since January 2021 works out to 36.8 million.
Of this, daily wage labourers account for 23.1 million. Salaried employees account for 8.5 million and the rest are entrepreneurs.
It would take a strong recovery of the India economy to recover the remaining jobs or revert to the employment levels of 2019-20.
The unlocking process can be expected to repair about two-thirds of the job losses associated with the lockdown of May 2021.
That would be 17 million out of the 25 million non-farm jobs lost during the month.















Mahesh Vyas is MD and CEO, CMIE P Ltd.
 
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