Learning poverty in India will induce huge loss of jobs and GDP

By Dr Gyan Pathak

The COVID-19 crisis has caused school closures in India and has induced learning poverty to such an extent that the country is set to suffer the worst in South Asia in absolute terms, both in terms of job losses as well as the decline in GDP, which in turn can accelerate each other. together creating a vicious circle of shrinkage in both.

Jobs for skilled labor in India will decline by 1 percent while for unskilled labor it would be 2 percent due to this factor alone, says a recent ADB Economics Working Pager titled “Potential Economic Impact of school closures related to COVID-19.” As the most populous country in the region, it would translate into the largest loss of jobs in absolute terms.

In terms of GDP, India will also suffer the largest drop in South Asia at around $98.84 billion in absolute exchange terms in 2030. In percentage terms, its GDP will decrease by 0.34 percent in 2023, 1.36 percent in 2026 and 3.19 percent. cent in 2030. Due to the larger size of the economy in the region, it would translate into the worst loss in absolute terms.

However, in percentage terms, the effect will be deeper in this region of Nepal, where GDP is projected to fall by 0.48% in 2023, 1.42% in 2025, 4.34% in 2028 and 4.97% in 2030. Nepal’s share of unskilled labor employment is well above other South Asian economies, so the impact seems more pronounced. Nepal will experience the largest decline in employment between skilled and unskilled labor in percentage terms. Employment of skilled labor in Nepal will decrease by 1.15% in 2025 and 3.84% in 2030, while the decrease in unskilled labor will be 1% in 2025 and 3% in 2030.

The decline in skilled labor employment in India will be around 0.214 per cent next year in 2023, increasing more than three times to 0.731 per cent in 2026, and around five times to 1,015 per cent in 2030 For unskilled labor, the employment decline will be 0.243 percent in 2023, which will further deteriorate to a decline of 0.853 percent in 2026 and 2.016 percent in 2030.

The study says that the labor productivity loss calculated for closures in secondary education is taken in this model as a shock to unskilled labor for the period 2023-2030, as high school graduates take at least three years to enter the unskilled labor force. The loss in primary education is reflected in the unskilled labor force by 2026-2030, as primary school students would take longer to enter the labor force. The loss in tertiary education also carries over to 2026-2030, as university students will need to extend their study time to compete in higher education and join the skilled workforce.

When calculated on this basis, the study puts the average annual labor productivity impact in India for unskilled labor at $408.43 million and for skilled labor at $72.65 million, which combined revenue loss of about 4.7 percent. The average annual shock to labor productivity for those in primary education will be 0.343, in secondary education 2.145, and in tertiary education 6.657 percent.

The study estimates that revenue losses from school closures cause GDP to fall in almost all economies, including subregions in Asia. Globally, the decline amounts to 0.19% of GDP in 2024, 0.64% in 2028, and 1.11% in 2030. In absolute terms, closing schools during COVID-19 would cost the global economy $943 billion in 2030. Overall, economies with a significant population of school-age children and college-going youth in rural areas, and in the poorest and second-richest quintile, have been most affected, as they lack access to the stable internet connections needed to study online. Furthermore, if the share of unskilled labor employment in the labor force is high, the learning and earnings losses are significant. This is because a significant portion of the affected population will migrate into the unskilled labor force.

Taking skilled labor into account, global job losses amount to decreases of 0.05% in 2024, 0.25% in 2026 and 0.75% in 2030. The study estimates that school closures will deny around of 5.44 million people worldwide employment in the skilled labor force by 2030. Furthermore, in terms of absolute costs, lost wages in the reference scenario add up to $94.86 billion.

For unskilled labor, the global employment contraction is estimated to be 0.22% in 2025, 0.51% in 2027 and 1.15% in 2030. About 35.69 million people in everyone would have become unskilled labor had the pandemic not caused schools to close. In terms of costs, lost wages amount to $121.54 billion in 2030.

The study has found that in economies with a significant student population from rural areas, those in the poorest and second-richest quintile have been hit the hardest. This is because the lack of access to stable internet connections and online education hampers their learning opportunities. Learning and earnings losses are also significant in economies where the share of unskilled labor in the overall labor force is high. This is because school closures will push a notable portion of affected students into unskilled jobs.

In this context, the study has made three policy recommendations on actions to mitigate these impacts while building a more resilient education system. These recommendations are: Support the recovery of learning; Invest in education and skills; and Embrace digital transformation in education. (IPA service)

The publication Learning Poverty in India to Induce Huge Loss of Jobs and GDP first appeared on IPA Newspack.

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