Where are Britain's missing million workers?

There could be as many as a million missing workers in the UK job market, experts say.

Latest figures suggest that the vast majority of livelihoods survived the end of the furlough scheme, designed to protect the economy from the ravages of Covid.

Fears of a huge spike in unemployment when the support was withdrawn have failed to materialise.

On the contrary: with vacancies at a record high of 1.2 million, many employers are struggling to cope with a shortage of skilled workers.

On Thursday, the government announced plans to get 500,000 jobseekers into jobs by the end of June, with those claiming Universal Credit having to look for jobs outside their chosen field more quickly or face sanctions.

According to the director of the Institute for Employment Studies, Tony Wilson, the problem is that the pandemic has caused the UK labour market to shrink.

"We're seeing unemployment falling, but we're also seeing employment quite a lot lower than it was before the crisis began," he told the BBC.

EPA

So how has that happened?

Well, since the onset of coronavirus, there has been a big rise in the number of people classed as "economically inactive" - that is, people who are not looking for jobs and are not available for work.

The Office for National Statistics (ONS) reckons that there are 400,000 more people in that category than there were before the virus hit.

Darren Morgan, director of economic statistics at the ONS, says that total "increased sharply" at the beginning of the pandemic, a rise he describes as "understandable".

"If you lost your job then, there was little point in looking for one, given the economy was closed," he told the BBC.

But since then, the number of economically inactive people has proved "far stickier" than the number of people out of work, he adds.

"We have not seen falls like we've seen in unemployment, and this is particularly the case for those over 50," he said.

That, of course, includes some people who have chosen to take early retirement, although others may feel the choice has been made for them.

Recent research by the Resolution Foundation think-tank also suggests that fewer young men are now economically active, perhaps due to fear of illness or suffering with long Covid, while more women have taken up roles due to the rise in flexible working.

Who else is economically inactive?

Tony Wilson of the IES says students are also a factor.

"A lot of young people decided to stay in education instead of entering the labour market a year ago," he said.

"But actually, more recently it's been growing because of longer-term ill-health" - a problem that includes people suffering from the after-effects of the virus known as "long Covid".

"All told, we think because the labour market was growing pretty consistently over the last few decades, the fact that it's now gone into reverse means that this gap, this half a million gap in employment, is even larger when you account for the growth in the labour market that we were seeing," Mr Wilson says.

"We think there's a gap of about a million people between what the labour market would have been like without Covid and where it is now."

Are there other factors?

Many of the labour shortages in particular sectors have been attributed to a decline in the number of foreign workers in the UK.

Because of a combination of Covid and Brexit, many EU nationals who worked in the UK have returned to their countries of origin.

Mr Wilson of the IES believes that the lack of migrant workers is responsible for the one-third of the shortfall in the labour market, while the rise in economic inactivity accounts for the other two-thirds.

Which sectors are worst affected?

Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation (REC), says the run-up to Christmas was "a touch-and-go moment" for many businesses, with Covid and recruitment problems coming together.

"It was a combination of the lowest candidate availability we've ever known and absence rates creeping up," she told the BBC.

Now Covid sickness rates are settling down, but shortages are still "a big sticking point", she says.

She singles out healthcare as one of the worst-affected sectors currently, with the NHS and private providers trying to woo a limited pool of skilled workers amid high demand for services.

"Sometimes the NHS will be paying more to retain staff, because the NHS and the private sector are competing on wages," she says.

Elsewhere in the economy, efforts to address the chronic shortage of lorry drivers have borne fruit, but at the price of attracting people from other sectors, such as fork-lift truck drivers or warehouse workers, she says.

"You have to look at the supply chain as a whole. There's a sense that we're robbing Peter to pay Paul."

And the beleaguered hospitality sector is under renewed pressure to raise wages, while not having had the chance to replenish cash reserves over the festive season because of Plan B Covid restrictions, she adds.

So what's the solution?

Ms Shoesmith says the answer lies in persuading the economically inactive to return to the job market.

But doing it properly, she says, will require a joint effort between the public and private sectors.

Jobcentres and recruitment agencies "working hand in hand" could rebuild the confidence of people who have dropped out of the job market and help them back into work, she adds.

"After the 2007-08 crash, there was a shared sense of purpose, a combined effort," Ms Shoesmith says.

"Jobcentres can get people in, while recruiters can offer deep understanding of a sector," she says. "We've done it before and we can do it again."

(Source: BBC)

Instagram has largely replaced TikTok in India, and erased working-class creators

 “TikTok was a canteen; Instagram is a café. But the canteen has better food, and the café serves costly coffee that not everyone drinks.”

Savitri and Sanatan Mahto were unlikely influencers. Sister and brother, they live on the edge of Nipania, a village in the Indian state of Jharkhand. It is remote from any city: if the siblings feel like eating at a restaurant, it entails half a day’s walk down a 15-mile-long dirt road, dotted with swamps. 

While India’s Instagram elite presented a polished facade of overseas vacations and perfectly groomed cats, the Mahtos shot to fame dancing on TikTok, singing indigenous rhymes as floodwaters clogged their mud house. Over three years, their unvarnished, but joyful, depictions of village life amassed them 2.7 million followers on the short-form video platform.

When the Mahtos started using TikTok in 2018, they found they could earn decent money, and a certain level of celebrity. If they went to a restaurant, the owner would barely register their presence. Waiters, though, would approach to snap a selfie. In a gleaming motorcycle showroom last year in Dhanbad, their nearest town, the manager ignored Sanatan when he asked for a test ride — but a regular mechanic came up to congratulate him, requesting a shoutout.

At its peak in 2020, TikTok had 200 million users in India. What made it remarkable was the opportunity it offered for creators like the Mahtos, economically downtrodden and from marginalized caste backgrounds, who were otherwise invisible on the Indian internet. It allowed them to become bona fide pieces of the nation’s digital culture, and to build a career online. 

“I’m not able to connect with the songs in the trends on Instagram,” said Sanatan Mahto. Courtesy of Sanatan Mahto

That was taken from them when, in June 2020, the Indian government banned the platform, along with 58 other Chinese-owned apps, in retaliation for the deaths of 20 Indian soldiers in a border clash.

What was a gutting blow for Indian creators has transpired to be a gift for Facebook, whose Instagram Reels, a competing short-form video platform, has grown swiftly to fill the vacuum. But Facebook’s expansion strategy involved courting upper-class and caste influencers, who set the tone for a very different online space. Critics say that Reels has replaced the textured, complex, and often inclusive creator community on TikTok with bland, aspirational content: an advertisement for a middle-class lifestyle unobtainable for Indians from marginalized communities, like the Mahtos. 

“Instagram has been the place for a … fantasy of a better life; of fashion and better aesthetics,” said Divya Kandukuri, a 24-year-old anti-caste activist from Andhra Pradesh. “TikTok was a more democratic space, more acceptable to change.”

As social media spread in India, it replicated the class lines that divided wider society. TikTok launched in India in 2017 and soon became wildly popular, particularly among users — and creators — from outside the middle classes, who themselves congregated on YouTube and Instagram. 

Among TikTok’s library of songs, which run in the background of its videos, were exuberant, regional Indian hits. It was a feature that users loved and couldn’t find on other platforms, which were built around mainstream U.S. and Bollywood cultural references. That, together with TikTok’s intuitive UX design and short, 15-second upload length, which lent itself to showing snatches of daily life, endeared the platform to rural users.

At the same time, TikTok users in India became accustomed to online harassment. In an infamous tussle with a YouTuber community in 2020, casteist remarks were directed at TikTokkers by the popular creator CarryMinati, calling them “cringey” and talentless.

But the huge audiences coming to the platform soon attracted advertisers. Leading brands, including fast-moving consumer goods suppliers like PepsiCo, adopted TikTok strategies to reach the youth market across India, looking to access the vast rural market. Creators benefited.

“[TikTok] democratized the creator economy and brought money to marginalized groups,” Sahil Shah, managing partner at WatConsult, a leading Indian digital agency, told Rest of World. Someone like Mahto could make $2,000 per month from brand partnerships, said Shah, compared to around $130 as a farm laborer.

Before the ban, India had four of the top 15 paid TikTokers around the world, according to HypeAuditor, an influencer analytics company. The firm located 7.7% of the total TikTok influencers in India. Top influencers could make around $25,000 per partnered post.

Then, in late June 2020, came the ban. Instagram Reels appeared almost instantly, in early July. 

There was no question that Reels wanted to fill the vacuum left by TikTok. But rather than court the same creators who had driven the Chinese company’s success, Facebook, Reels’ owner, kick-started its launch campaign by courting a set of influencers from upper-class backgrounds, including Komal Pandey, Kusha Kapila, and Ammy Virk: “A catalog of aspiring lifestyle [examples] for middle-class and upper-middle-class Indians,” was how Dr. Rahul Advani, a research fellow at the University College London, described the launch to Rest of World. 

Advani has studied the ways that the poorer strata of Indian society engage with the internet, particularly methods of self-expression, like selfies. There is a clear difference between Reels and TikTok, he said: Reels is for curators, not creators, which makes it a more upmarket space.

“The aesthetics of curation were defined very early on by people [with resources],” Advani said. That is, that first round of influencer recruits established the tone for future content.

To keep its curated look and feel, Reels has stricter requirements on quality. In its latest guidelines, Instagram announced a change in its algorithm, stating that it wouldn’t recommend videos that are blurry, bear a watermark or logo, or have a border around them. This raises the barrier to entry for users. Instagram did not respond to request for comment from Rest of World. 

To achieve stardom on TikTok, Sanatan Mahto had only to access a low-end smartphone and a limited data connection. “My smartphone was so slow that I couldn’t upload a YouTube video on that. A 15-second was easy,” Sanatan said. He taught himself to use the TikTok app by playing around with the buttons, and never gave too much thought to the image he was presenting of himself.

“We never realized that [the elements in our] frame would make a difference. I never placed a plough or the cow dung in the frame,” Savitri, his sister, added. “This is my life.” 

Divya Kandukuri, the anti-caste activist, was a devoted TikTok user who migrated to Reels after the ban. Describing the difference between platforms, she drew parallels to her first day at a privileged government-run college in New Delhi in 2014, when her classmates admonished her. Where they were eating was not a “canteen,” they said, but a “café.” 

“TikTok was a canteen; Instagram is a café,” said Kankaduri. “But the canteen has better food, and the café serves costly coffee that not everyone drinks.”

WatConsult’s Shah said that the changes have effectively shut people like the Mahtos out of the creator economy.

“Tier three and tier four [creators] have lost, again,” he said. “On Instagram, to get 30 million followers, you have to be a Deepika Padukone,” referring to India’s highest-paid actress.

Reels has grown dramatically since it launched in India. Instagram itself has 210 million active users there, who are uploading 6 million short videos daily. Several desi, or local, alternatives of TikTok, have also launched. The largest of those is ShareChat’s Moj, with 2.5 million videos uploaded per day. 

The short-video boom has helped boost the overall influencer economy. Rahul Vengalil, managing partner at agency Isobar India, told Rest of World that the share of marketing budget his clients devote to digital advertising has risen from 5% to 25%. Reels, unsurprisingly, is the home of premium brands like high-end skin care and accessories, Vengalil said — a break from TikTok, which would commonly feature ads for instant loans and cheap homewares.

But the India now reflected back in Reels — and, by extension, the majority of India’s short-video market — is unrecognizable to former TikTok stars and to many of the now-banned platform’s users. 

A year after the ban, Sanatan Mahto remembers going to the restaurant nearest his home. The waiter came to him, he said, and asked in a curious whisper: “Where are you hiding these days? Where are the videos, brother?”

“Instagram,” Sanatan replied, with a grin. “And what’s that?” the waiter responded.

Instagram’s dominance in the short-video market isn’t yet assured. The landscape continues to shift, with a reported re-emergence of Snapchat, and a rise in the popularity of YouTube.

In their village, the Mahto siblings are still visited by fans. A YouTube vlogger duo — who arrived dressed in tight jeans and neat shirts — drove 62 miles to meet them, unannounced, in August, when Rest of World visited. To produce a quick Reel, the duo asked if Sanatan would like to perform an “Alors on Danse” trend; Sanatan wasn’t sure what they meant. 

“I’m not able to connect with the songs in the trends on Instagram,” he later said, loitering on his pebbled porch, barefoot. “Samaj hi nahi aata hai.” (I cannot understand it.) 

The Mahtos have found some success on Instagram, with Sanatan collecting around 482,000 followers and Savitri 137,000. They upload vlogs to YouTube. Comments praise the “rawness” of their content. But when well-meaning followers suggest that Sanatan smarten up his appearance to better suit the new platforms, he objects. 

“I wanted to alter the idea that you are more than the [aesthetics]; you are what you do,” Sanatan said, rubbing his hands nervously. “But I think that’s not true.”

(Source: Rest of World)

What if Indian states were countries

 If we compare Indian states to India’s neighbourhood, we find that only Goa, Sikkim, and NCT of Delhi have a GDP per capita higher than China’s GDP per capita of $16,772.

India is the seventh largest country in the world in terms of area and has the second largest population in the world at 1.36 billion. In 2015, The Economist called it “a continent masquerading as a country.” Taking this thought forward, CEDA is starting a series where we will look at how Indian states compare with other countries in the world.

Representational image | People at a market place in Ranchi | Bloomberg Photo

In the picture above, we have tried to find countries comparable to Indian states based on GDP per capita (International Dollars, purchasing power parity). According to the World Bank, “an international dollar would buy in the cited country a comparable amount of goods and services a U.S. dollar would buy in the United States.” Purchasing power parity refers to the rate of conversion that equalizes the purchasing power of different currencies by eliminating the differences in price levels between countries.

When we hover over a state in the heat map above, we can see the state’s GDP per capita in the year 2019 and the country closest to it in terms of GDP per capita in purchasing power parity (PPP) terms.

For example, when we hover over Goa, we see that the GDP per capita (International Dollars, PPP) is $21,922. An equivalent country for Goa is the Caribbean country, Antigua and Barbuda with GDP per capita of $22,460. Goa is also the state with the highest GDP per capita in India.

Sikkim ranks second in the country with a per capita GDP of $20,098 which is like Belarus which has a GDP per capita of $20,099. The NCT of Delhi follows Sikkim at third place with a GDP per capita of $17,808 and finds itself at par with North Macedonia ($17,583).

Among south Indian states, Telangana at $10,857 finds itself at par with Iraq in GDP per capita terms while Karnataka ($10,644) and Kerala (10,572) have similar GDP per capita as Jordan ($10,497). Andhra Pradesh ($7,835) is at par with Morocco ($7,856).

Uttar Pradesh has a GDP per capita of $3,310 which is like the west African nation, Benin ($3,426). Bihar has the lowest GDP per capita in India at $2,076 and it is at the same level as another west African nation, Guinea-Bissau ($2,021).

States domestic product for the year 2019 has been taken from the Ministry of Statistics and Programme Implementation. GDP per capita for Indian states has been calculated using official population projections for 2019 based on Census 2011 and figures in Indian Rupee have been converted to International Dollars on PPP basis using OECD’s conversion factor. Other countries GDP per capita for 2019 has been taken from the World Bank.

If we compare Indian states to India’s neighbourhood, we find that only Goa, Sikkim, and NCT of Delhi have a GDP per capita higher than China’s GDP per capita of $16,772.

Author: Vibhav Khandelwal is a student of economics and finance at Ashoka University. Views are personal.

(Source: The Print)

Post-coronavirus, the UK must find some friends to stand up to China

Covid-19 has seen China supplant the US in the global power league. Alliances are now crucial to reject the superpower’s bullying

Amid the pandemic, the great issues of the day are inescapably immediate and health-centred. But eyes will lift eventually, and as that happens we will notice how the wider world has already changed as a result of Covid-19. A lot of the speculation about the post-coronavirus political world is plain fanciful. But there was a gripping reminder this week about one effect that is now more real than ever: the pandemic’s role in boosting the global heft of China.

The rise of China is of course not new. In some Chinese perspectives, it goes back centuries. Even from a western viewpoint it was already well advanced before the pandemic. But when the Obama administration’s US ambassador to the United Nations, Samantha Power, was asked this week by the Commons foreign affairs committee to assess Covid-19’s impact on the global order, she turned first and without hesitation to China’s rise.

Covid-19, said Power in her evidence, has accelerated all the trends. The US is now decoupling decisively from China. The developing world, bound to China by the debt and dependency of the “belt and road” strategies, is in contrast binding more firmly to it. China’s “wolf-warrior” diplomacy against states that criticise it is increasingly aggressive. Meanwhile, in the global forums, China is stepping in to fill the vacuum left by Donald Trump’s US. Chinese president Xi Jinping, said Power, is now well on his way to supplanting the postwar order based on the western alliance with a new China-centred network.

Illustration: Eva Bee

For proof of this, look no further than what happened at the World Health Organization assembly in Geneva this week. On the one hand, Trump spent the week slagging off the WHO, threatening to withdraw all US funding, promoting quack medical remedies and attacking China. On the other, Xi addressed the assembly, donated $2bn to the WHO for the coronavirus battle, called for a vaccine to be made available to all, and successfully watered down the planned post-pandemic international investigation into Covid-19. 

Having done that, Xi slapped a punitive 80% tariff on Australian barley to punish Canberra for pressing for a fuller, more independent Covid-19 probe. Stand by, if it takes place, for a similar Xi approach at the postponed Cop26 climate conference.

As the world emerges from its coronavirus bunker, governments will discover a fast changing geopolitical landscape. It will be one in which the authoritarian pull exerted by China is now steadily outmuscling the democratic and rights-based push of what used to be the US-led western alliance. A potent catalyst for this has been Trump’s unilateral retreat into American nativism. But, as Power pointed out, the authoritarian process can be measured in other ways too, including China’s increasing use of cyber warfare against international Covid-19 critics, the more than 80 countries currently governed by emergency pandemic legislation and the upwards of 50 nations in which elections have been postponed, almost without debate.

At this point, we must ask what role Britain should play in this new global order. That question lies behind Power’s appearance at the Commons foreign affairs committee this week. It is examining the Johnson government’s “integrated review” of Britain’s foreign, defence, security and development policy, announced in February. 

This review was originally conceived as a root-and-branch recalibration of Britain’s role in the world after Brexit. But it has now inescapably evolved into a review of the global post-coronavirus reset too.

Covid-19 is obviously part of any explanation about why the China issue has become a lot more volatile and salient in British politics. It is only 10 years since Tony Blair could write that Britain should ensure that Europe, in partnership with America, should offer China a new global partnership. Every aspect of that proposition has now gone. Britain is no longer part of Europe. Europe is itself in existential difficulty. The US is no longer a partner. Meanwhile China has forged ahead on its own.

But it is not just the Blair approach that is long gone. In his own memoirs, David Cameron explains how he advocated an economic “long game” with China that would give Britain greater political leverage “to bring China into the rules-based international system – through rules on trade, but also rules on climate change, terrorism and human rights.” Cameron even took Xi for a pint in a pub near Chequers. But where, in the Trump era, is that rules-based system now? And where, post-Brexit, is Britain’s leverage in that or any other global order?

Johnson’s Conservative party is struggling to find a plausible answer to this last question. Perhaps the integrated review will provide it. If so, it will need to come up with an extremely realistic containment strategy towards China. This would need to echo the approach – an alliance based on rules, values and engagement to face down the Soviet Union without tipping into nuclear war – that the American diplomat George Kennan crafted in 1946, and which shaped US foreign policy for nearly half a century. Yet it would have to do it in the full knowledge that the UK is nowhere near as powerful as the US was in the postwar world, that the US has defected to isolationism, and that Brexit Britain is itself seen – and partly sees itself – as an alliance breaker.

China in 2020 is not the USSR in 1946. But there is little sign that the Tory party is anywhere close to agreeing on the mature, long-term strategy on China that is needed. The cold war and Euroscepticism both cast long shadows. The bulk of newer Tory MPs, many of them active in the new China Research Group of MPs chaired by the foreign affairs committee chair Tom Tugendhat, now think about China as a threat but regard European allies as the past and thus lack any workable strategy for constraining Chinese power.

Yet Covid-19 has made the question of how to stand up to China more pressing than before. The dilemmas are not restricted to the Tory party or to Britain. Labour has notably toughened its line, as its China spokesman Stephen Kinnock made clear this week. But no single nation state, even the US, can stand up to China and its authoritarian model without alliances, without patient deployment of hard and soft power, and without a readiness to make tactical compromises.

The answer for a medium-sized power like Britain is to have an alliance-based and institutions-based containment strategy and to work with Germany, France, the EU, India, Australia and others to achieve a relationship with China that rejects both Chinese and American bullying. The problem is that this is the one thing that this government, besotted with its self-image of Britain as an independent, buccaneering world player, cannot bring itself to do.

(Source: The Guardian)

Make no mistake: Agriculture alone has the potential to reboot the economy

Agriculture, food and trade policy expert Devinder Sharma writes: “My understanding is that only agriculture can reboot the economy, sustain millions of livelihoods, and reduce global warming.”

At a time when Nobel laureate Joseph Stiglitz says that neo-liberalism is ‘dead and buried’, and the world as a result is increasingly grappling with the gigantic problems of rising unemployment, gnawing inequality and climatic change reaching a tripping point, agriculture alone has the potential to reboot the economy.

While the accumulation of wealth in the western countries is essentially built on greenhouse gas emissions, as author Amitabh Ghosh would say, the former UN Secretary General Ban Ki-moon had the courage to acknowledge: “The world’s current economic model is an environmental suicide. Climate change is showing us that the old model is more than obsolete. We need a revolution on how best to make the global economy sustainable.”

His clarion call at the World Economic Forum 2011 however went unheeded. No media even thought of initiating a discussion on this grim portrayal of the global economic future.

While the current economic model has outlived its utility, more of the same will only exacerbate the destruction of natural resources, advancing the climatic catastrophe the world is staring at, and lead to unimaginable socio-economic disruptions. Already with the Himalayas melting at an alarming rate, reducing the snow depth by one-and-a half feet every year, with river flow shrinking, lakes and water bodies disappearing; and with oceans polluted and rising, the environmental consequences of economic growth have been dastardly.

As if this is not enough, look at the environmental fallout of industrial agriculture. Soil fertility has declined to almost zero in intensively farmed regions; excessive mining of groundwater sucking aquifers dry; and chemical inputs, including pesticides, becoming extremely pervasive in environment, the entire food chain has been contaminated.

As soils become sick, forests are logged for expanding industrial farming, soil erosion and water depletion takes a heavy toll leading to more desertification. Not drawing any lessons, Brazil’s new president, Jair Bolsonaro, has launched an assault on the Amazon rainforests. Within hours of assuming office he issued an executive order that practically spells a death-knell for the pristine forests, considered to be a global lung.

In Punjab, the Chief Minister has time and again warned of creeping desertification if the present rate of ground water withdrawal is not corrected. A report by the Central Ground Water Board has warned that Punjab and Haryana will turn into a desert in another 25 years if it continues with the current rate of exploitation.

And yet I find expectations on economic reforms have risen significantly. In the second tenure of Prime Minister Narendra Modi, corporate-backed think tanks, credit rating agencies, and economic writers without exception have called for more reforms, going to the extent of seeking bold reforms.

HOW DID HIGHER GDP HELP ?

I fail to understand that if a higher GDP in the ten years of UPA-1 and UPA-2, an outcome of economic policies driven by the ideology of economic reforms, had failed to translate into jobs, how will aggressively pursuing more reforms create more jobs now. That’s a question no one wants to answer. More so at a time when we are fast moving from jobless to job-loss growth. Recent studies show that besides the urban centres, huge job losses have taken place for the rural farm and non-farm workers as well.

Similarly, the growing demand for reducing corporate tax to attract investments and provide jobs has come at a time when globally there is no empirical evidence for it. Just because the corporate bodies need it, credit rating agencies and think-tanks are going overboard justifying it. Nobel laureate Paul Krugman has in a tweet questioned this flawed thinking saying how wrong it was to imagine that slashing corporate taxes would lead to a huge surge in investments.

In a graph he tagged, sourcing the US Bureau of Economic Analysis, he showed clearly that there is no relation between corporate tax cuts and rising investments. Nor does it lead to more job creation. In fact, he further explains that the tax cuts had only enabled the rich to invest more in the stock markets.

Another bold reform that the industry associations are crying for is reforming the labour markets, which essentially means the privilege to ‘hire and fire’ workers. Again, Paul Krugman in a tweet said “basically very little evidence that we gain anything from the brutality of our labour markets”.

In simple words, the ‘brutal’ labour reforms in the US haven’t worked. If it didn’t work in the US, from where we copy and paste economic policies, I wonder how will the same labour reforms work in India.

This has to change. Not an easy task, but considering the realisation that agriculture needs structural reforms; I see a ray of hope.

DRIVING OUT PEOPLE FROM AGRICULTURE IS FOOLISH

In the given economic scenario, my understanding is that only agriculture can reboot the economy, sustain millions of livelihoods, and at the same time substantially reduce global warming.

The first and foremost requirement is to accept the yeoman role agriculture can play in revitalising the economy in the years to come. The economic thought that encourages farmers to be forced out of agriculture to the cities where cheaper labour is needed has to first change.

If agriculture becomes economically viable, the rural economy too undergoes a rapid transformation thereby drastically reducing the rural-urban migration. While the villages will become pivot of economic growth, the cities will be saved of a huge migratory influx protecting them from an impending collapse. With farming becoming viable, it will also reduce the pressure on creating more jobs in the cities. Agriculture therefore is the saviour.

Addressing the fifth meeting of the governing council of the Niti Aayog recently in New Delhi, the Prime Minister had announced the formation of a high-level task force for suggesting structural reforms in agriculture. This is a positive development, and if curated properly has the potential to propel the much needed agricultural transformation by the year 2024.

This requires fresh thinking, and banking on approaches that are ecologically sustainable and conform to the location-specific needs of the country.

For instance, the Prime Minister’s focus on water harvesting and conservation is driven by the desire to reactivate traditional water harvesting technologies, and make water conservation an important factor in farming strategies. Instead of intensive farming, the emphasis has to shift to agro-ecological farming systems requiring less water, with the focus diverted to local production, local procurement and local distribution.

What India needs is a series of desi reforms in agriculture, ensuring that growth in agriculture is so entwined with food policies that hunger and malnutrition is relegated to the past.Meanwhile, a high-level task force of chief ministers headed by Maharashtra Chief Minister Devendra Fadnavis has been formed.

The task force would do well if it does not copy the failed agricultural reforms from the United States and European Union. To illustrate, Indian economists are building up pressure to open up agriculture to foreign direct investment in multi-brand retail trade as well as in preparing the farm markets for commodity trading. If this had worked, I see no reason why the average farm income in the US should have nosedived in 2018.

The US Department of Agriculture (USDA) had estimated the ‘median’ farm income to be in the negative at minus $ 1,553 (or minus Rs 107,739). In other words, the average farm household in the US was living in debt, with the debt margin increasing substantially for half the households existing below the ‘median’.

In fact, the Chief Economist for USDA had admitted that real farm incomes have been declining since the 1960s, thereby necessitating huge farm subsidies to keep farming viable. This is happening at a time when the world’s biggest commodity trading centre, the Chicago Mercantile Exchange is located in the US, and the world’s biggest organised retail chain the US-based WalMart has completed more than half a century. But neither commodity trading nor the entry of private markets could rescue agriculture.

DIRECT INCOME SUPPORT IS WELCOME

To me, this is a great opportunity. The Prime Minister has already set the ball rolling when in the interim budget in February made a provision for providing a direct income support of Rs 6,000 per year to small farmers, which was extended later to all land-owning farmers.

In my understanding, it was a tectonic shift in economic thinking, moving away from ‘price policy’ to ‘income policy’. Gradually, I am sure the direct income support in the years to come will one day increase from Rs 500 a month to as much as Rs 5,000 a month. And I am hoping that PM-Kisan scheme is followed by setting up a National Commission for Farmers Income & Welfare, incorporating the existing Commission for Agricultural Costs and Prices (CACP), with the mandate to provide an assured income of Rs 18,000 per month per farming family. This has to be provided by way of topping-up on the average incomes in each of the districts. The date for assessing farm incomes district-wise is available.

Considering that the average farm income in 17 states of India or roughly half the country stands at a mere Rs 20,000 a year, the importance of direct income support can be easily gauged.

At the same time, public sector investment between 2007 and 2017 being in range of 0.4 per cent of GDP, the reason why agriculture is

faced with a terrible agrarian crisis becomes obvious. With low investment and low incomes, no miracles can be expected.

Agriculture therefore needs massive infrastructure investments, including expanding the existing APMC regulated markets infrastructure to reach 42,000 mandis in 5 kms radius, linking these mandis with a network of village link roads, strengthening the MSP delivery system, and providing for a network of godowns, food grain silos and warehouses. This has to be accompanied by formulating Ease of Doing Farming initiatives on the same lines as ease of doing business. Ease of Doing Farming will be a governance reform removing bottlenecks and hurdles farmer’s encounter during crop production, harvesting and marketing operations.

Transforming agriculture is only possible provided policymakers get out of the dominant mindset that considers agriculture to be a burden on the national exchequer.

It has to be acknowledged that the path to future economic growth definitely passes through agriculture. Given the right kind of policy push, farming can turn into an economic activity thereby not only strengthening the livelihood security for 600 million people directly or indirectly dependent on farming but in addition creating a huge demand that will reignite the wheels of economic growth.

This is the probable image of a sustainable future that the world awaits eagerly, where an ecologically sustainable agriculture corrects the climate imbalances, reduces income inequality and helps builds up sustainable livelihoods.

(Source: National Herald)

British households face disposable income fall of £515 per month

UK consumers could take £43bn hit as coronavirus crisis ravages UK economy

British households will have £43bn less cash available for essential spending between April and June, as the UK slides into its deepest recession in decades.

Disposable income earned by UK households, once it has been adjusted for tax and benefits, will be 17% lower in the second quarter of this year, according to analysis from the Centre for Economics and Business Research consultancy.

The CEBR has calculated the monthly hit to disposable incomes will reach £14.2bn per month, meaning a monthly fall of £515 per household as workers lose their jobs, accept reduced pay or hours, or are placed on furlough.

Economic data due this week is expected to show early signs of the pandemic’s impact on the economy, even before workers’ income is fully hit. UK retail sales are expected to have fallen by up to 10% in March.

Businesses closed during Britain’s coronavirus lockdown, in Camden High Street, London. Photograph: Kirsty O’Connor/PA

“These numbers are likely to be awful, supermarket food sales notwithstanding,” said Michael Hewson of CMC Markets. While food sales surged in the runup to the lockdown, demand for other items declined sharply.

“Fuel sales are likely to have contributed a good proportion of losses as everyone is confined to their home,” Hewson added.

The drop in consumer spending has already forced several struggling retailers including Debenhams, Oasis, Warehouse and Laura Ashley to call in the administrators since the shutdown began.

The data firm Markit’s survey of UK purchasing managers, due on Thursday, is likely to show that output across the economy slumped in April, faster than in the depths of the financial crisis in 2008-09.

The CEBR predicts the pandemic will cause the deepest recession since the financial crisis, with unemployment more than doubling, after businesses had to temporarily close as a result of lockdown restrictions and cutting costs to preserve cash.

The Office for Budget Responsibility estimates up to 2.1m people could lose their jobs in the second quarter, and data from the Department for Work and Pensions showed 950,000 people applied for universal credit in the second half of March.

The CEBR calculates that the biggest increase in unemployment will be among the lowest-paid workers, and estimates benefits claims will only go some way towards replacing disposable income.

The consultancy estimates that the cost to households could have been twice as bad as they have calculated if the government had not implemented the furlough wage-subsidy programme. The Treasury has agreed to cover 80% of the wages of workers up to a maximum of £2,500 per month to prevent them being laid off by their employers. In the majority of cases workers have seen a 20% fall in their earnings.

The government has extended the scheme until the end of June, following the decision to extend the lockdown for a further three weeks.

The Resolution Foundation thinktank calculates that the coronavirus job retention scheme (CJRS) will cost the exchequer £40bn in its initial March-to-May phase, because of the large number of private firms taking advantage of it.

Once the government ends the lockdown and begins to ease restrictions on the economy, the CEBR is calling politicians to take further measures “to put cash into people’s pockets” to kickstart the economy. Among the measures it proposes are a temporary reduction in VAT, or stamp duty exemptions.

(Source: The Guardian)

Amazon reaps $11,000-a-second coronavirus lockdown bonanza

Shares reach record high, pushing fortune of CEO and founder Jeff Bezos to $138bn

The online retailer Amazon has been described as a “clear winner” from the coronavirus crisis, its share price surging by more than a third inside a month, its customers spending almost $11,000 a second on its products and services, and its owner, Jeff Bezos, reinforcing his position as the world’s richest person with a fortune of $138bn.

While most businesses have been hit hard by the impact of the pandemic and the looming recession, shares in Amazon have risen to a record high as hundreds of millions people stuck in lockdown conditions turn to the delivery giant to keep them fed and entertained.

Bezos, who started Amazon in his garage in 1994 and still owns 11% of the company’s shares, saw his paper fortune swell by $6.4bn (£5.1bn) on Tuesday alone as Amazon’s shares hit a record $2,283 – valuing the Seattle-based company at $1.14 trillion.

The shares continued to climb on Wednesday and were changing hands at $2,295. One month ago they were changing hands at $1,689.

Jeff Bezos has been criticised for not giving more of his fortune to the efforts to tackle the coronavirus. Photograph: Katherine Taylor/Reuters

Bezos, who also owns the Blue Origin company aimed at providing passenger flights into space, has faced criticism for not donating more of his fortune to the efforts to tackle the coronavirus and the economic destruction it is causing.

He has so far handed $100m (£80m) to the food bank charity Feeding America; critics have pointed out that the $100m donation made public by Bezos represents less than 0.1% of his fortune.

Amazon has also been accused of not doing enough to protect its workers from the virus. The company this week fired two employees who criticised Amazon over allegedly unsafe conditions at some of its warehouses.

About 75 Amazon warehouses and delivery workers in the US have been infected with the virus, according to the Washington Post, the newspaper owned by Bezos.

The jump in Amazon’s shares came as financial analysts said they expected the company to be crowned “a clear winner” from the Covid-19 crisis and to report record sales and profits this year due to demand for deliveries and its cloud-based services.

Josh Brown, chief executive of Ritholtz Wealth Management, said on Twitter: “Amazon became a utility in this crisis – defensive, reliable, indispensable.”

Analysts at the US investment bank Cowen likened the impact of the lockdown to the Black Friday shopping frenzy in November.

“Covid-19 surge led to ‘Prime Day in March’,” the analyst said in a note to clients. “Amazon has seen an ‘enormous increase in demand’ as shoppers are forced to stay home, essentially creating an extended Prime Day/Black Friday type of situation.”

While many companies across the world have been forced to make staff redundant or place them on government-funded furlough schemes, Amazon is hiring tens of thousands of staff as the business struggles under the weight of orders from consumers trapped at homes all over the world.

The company on Monday said it was hiring an extra 75,000 staff to help it to process the increase in orders. The recruits come on top of 100,000 taken on already since the coronavirus crisis hit western economies last month.

The additional workers will take Amazon’s global workforce to nearly 1 million. 

Amazon said: “We know many people have been economically impacted as jobs in areas like hospitality, restaurants and travel are lost or furloughed as part of this crisis. We welcome anyone out of work to join us at Amazon until things return to normal and their past employer is able to bring them back.”

Brent Thill, an analyst at the US investment bank Jefferies, said the hirings were “direct proof consumers are breaking the Amazon supply chain with overwhelming demand”.

Mike Pence, US vice-president, took to Twitter to thank Amazon staff for “working every day to meet the needs of the American people as we face this pandemic together”.

In addition to the 100,000 workers already hired, @Amazon is adding another 75,000 & increasing hourly pay. Thank you, @Amazon for working every day to meet the needs of the American people as we face this pandemic together.https://t.co/nDmoy02E6u

— Mike Pence (@Mike_Pence) April 13, 2020

Analysts expect Amazon to increase its annual sales by nearly 20% to reach $335bn.

Amazon on Wednesday threatened to withdraw all deliveries in France, after a French court ruled that it must stop selling “non-essential” items or face a fine of €1m a day.

“Our interpretation of the ruling suggests we might have to suspend the activities of our fulfilment network in France,” an Amazon spokesperson said, “We’re working rapidly to understand the judgment and evaluate our options, and we expect to appeal.”

Joshua Warner, an analyst at the London-based online trading firm IG Index, said: “Amazon shines from all angles during coronavirus crisis. Ultimately, Amazon will remain one of the most important businesses during this crisis, providing key services including food, entertainment and shopping at a time when consumers have fewer retailers to choose from.

“Amazon stock has rocketed to a new record high,” he added. “Of all the firms that might stand to benefit, Amazon is a clear winner.”

Other expanding fortunes

Jeff Bezos is not the only very wealthy person to have seen their fortune swell as a result of the coronavirus outbreak.

Reed Hastings

The founder and chief executive of Netflix has seen his estimated fortune rise by $195m so far this year to $5.1bn as shares in the entertainment service rose by 40% from the market nadir last month. Hastings owns 2.5% of the shares. Analysts said they expected more people stuck at home to sign up to the streaming service. Analysts at Pivotal Research Group said: “We believe the unfortunate Covid-19 situation is cementing Netflix’s global dominance .”

Tim Steiner
The co-founder and chief executive of Ocado has seen his the value of his stake jump 40% over the past month as shoppers flock to online supermarkets. Steiner owns about 4% of the shares, which are worth more than £400m at current prices. He is also in line for a £59m pay package to be voted on at Ocado’s AGM next month.

The Waltons
The family behind Walmart, which also owns Asda in the UK, have seen their combined net worth rise 5% this year to $169bn. Shares in the US supermarket group have risen 23% from a low on 12 March. The Walton family own 51% of the shares.

(Source: The Guardian)