Balwant Singh Mehta and Arjun Kumar
The ongoing lockdown due to the pandemic crisis has compounded the challenges for the workers in the informal sector. This article provides evidence from the official data sources like the Periodic Labour Force Survey on the estimates of informal workers put of employment. It estimates the number of most vulnerable informal workers in urban areas by three ways (i) the most affected sectors; (ii) status of work and (iii) vulnerable occupations, where they are engaged in urban areas.
The Global Scenario of Job Losses in Informal Economy
International Labor Organization (ILO) estimated that globally more than 25 million jobs would be threatened due to the spread of coronavirus. It is estimated that four out of five people (81%) in the global workforce of 3.3 billion are currently affected by full or partial workplace closure. The US, UK, Canada and most of the European and Asian countries have begun to register huge job losses leading to a significant rise in unemployment rate. The ILO, in its report ‘ILO Monitor 2nd edition: COVID-19 and the world of work- Updated Estimates and Analysis‘, describes COVID-19 as ‘worst global crisis since World War II. ’The head of the International Monetary Fund (IMF) Kristalina Georgieva said the world faced the worst economic crisis since the Great Depression of the 1930s.
Most of the world’s informal workers are from developing countries, and most them would be worst affected by COVID-19. There are severe concerns for low-paid and low skilled informal workers in low- and middle-income countries, where the industries and services have a high proportion of such workers, who account for 61% of the global workforce or 2 billion people and they lack any social protection or safety net. This sudden loss of livelihood would be horrifying for them.
As per ILO report, sectors such as food and accommodations, retail and wholesale, business services, construction, and manufacturing have experienced drastic effects with falling production and losses in employment hours and numbers. Combining 1.25 billion workers employed in these sectors, over one-third (37.5%) of the global workers are at high risk.
State of Affairs in India
The Indian economy, especially informal or unorganized sector,has been witnessing an unprecedented slowdown, downturn, and unemployment in recent months;this has aggravated due to the COVID-19 pandemic crisis and the lockdown. In light of the vulnerableand life-risking situation of the migrant workers, mainly who works in informal sectors, poor and destitute, the governments, NGOs, employers, and even the Supreme Court stepped in to cater to their plight. As a result, 26,000 shelters (for 1.5 million) and over 38,000 food camps were set up across the country in the initial weeks of the lockdown and which took care of more than 10 million people together for food and around 2 million for shelter, supported by the government (accounting for around four-fifth), NGOs and employers (as on 12 April 2020, Source: PIB).
The initial evidences of lockdown on employment can be seen from Centre for Monitoring Indian Economy (CMIE) report. In the weeks after the lockdown, only a little over one-fourth (28%) i.e. 285 million people were working out of total working-age population of 1003 million, which was way behind than the corresponding figure (40%) i.e. 404 million workforce before the lockdown. This indicates that within the two-week period of lockdown, around119 million workers have lost their jobs in the country. The CMIE report also indicates a significant increase in the unemployment rate of 8.7% in March 2020, which is way higher than the government unemployment estimate at a 45-year high of 6.1% in 2017-18. This is the highest unemployment rate since September 2016. The numbers of unemployed persons have gone up by 6 million from 32 million to 38 million during the sameperiod. The employment ratesoaredduring the lockdown period of March last week at 23.8%.
Understandably, these numbers indicate that the current nationwide lockdown has been the biggest job-destroyer ever in the history of the country. However, these estimates only reveal the impact on jobs during the lockdown period, and should not be considered as a permanent loss of livelihood of those persons. Many of them may be able to get back to their employment status after the lockdown would be over. Indeed, many of them would also not be able to get their jobs back, such as informal workers, who involved in casual or contractual work and those who returned to their villages.
Nevertheless, CMIE estimates has many caveats as it is based on telephonic interviews with a smaller sample and likely to have a high probability of error. Thus, the other source such as estimates from government, Periodic Labour Force Survey (PLFS) need to be examined for the comparison and understand the likely impact on informal workers during and after the lockdown period. The CMIE survey results may have estimations errors, but there are many anecdotal evidences that show a substantial job losses in the country after the lockdown and the worst affected are the informal workers, who are facing a livelihood crisis.
Estimates of Job Losses in Urban Informal Economy
This article estimates, the number of most vulnerable informal workers by three ways in the context of lockdown and its impact on jobs (i) the most affected sectors; (ii) status of work and (iii) vulnerable occupations, where they are engaged in urban areas in non-agricultural sector.
According to the PLFS, 2017-18, about 90% (or 419 million) workers are engaged in informal sector, out of the total 465 million workers, in the country.In magnitude, the informal workers in rural areas (298 million) comprise almost 2.5 times higher than urban areas (121 million). The workers in the informal sector in rural areas (95%), is significantly higher than urban areas (80%). This is primarily because of large number of informal workers are engaged in farm or agricultural activities (62%) in rural areas than only 8% in urban areas, which is likely to have less impact on their livelihood and employment by the lockdown than informal workers engaged in urban in non-farm sectors i.e. 92%.
These informal workers’ livelihood is likely to be affected more by the lockdown because of the halt in economic activities.About 419 million such informal workers are at the risk of losing their livelihood and falling into deeper poverty. The impacts of Coronavirus pandemic crisis and lockdown on informal workers’ jobs and livelihood are being increasingly felt in India.
To ascertain the estimates of the most affected sectors and workers from the PLFS, we have chosen top five affected sectors and top ten vulnerable occupations in urban areas.This is based upon the calculation computed by authors using PLFS 2017/18 unit record data. For arriving at the occupation wise estimates- National Classification of Occupations (NCO) 2004, National Industrial Classification (NIC) 2008, and, census adjusted figures have been applied.
The analysis from the unit record data of thePLFS 2017-18 shows that, in urban areas about 93 million informal workers are involved in five sectors that are most affected, namely, manufacturing (28 million); trade, hotel and restaurant (32 million); construction (15 million); transport, storage and communications (11 million); and finance, business and real estate (7 million). As many as 50% of these informal workers are engaged in self-employment, 20% are casual workers on daily wages, and 30% are salaried or contract workers without any social safety net.
Source: Computed by Authors using PLFS 2017-18 unit record data.
Due to the lockdown, all economic activities (with exception of essential and emergency services) related to physical labor at workplaces are banned. Therefore, about 93 million urban informal workers in these five sectors have been most hit. This is the largest informal sector worker group next only to agriculture and allied activities, and constitute the size of population greater than most of the countries in the world, for example. UK, Australia, Japan, etc. In urban areas, the informal workers tend to work in sectors that directly impacted by lockdown measures and carry a high risk of virus infection such as rag picking, street vending, food stalls, construction, transport, and domestic help. The current nationwide lockdown in India has severely impacted informal workers significantly and forced many of them to either stay in shelters or return to their native places.
Technical analysis shows that the worst affected informal workers are around 40 million, who are casual or daily wage workers involved in top ten vulnerable occupations in urban areas, who may not get their employment or livelihood status for an extended period and are threatened withgetting trapped in deeper poverty. These are small shop salespersons and demonstrators (13 million), labourers in: construction (7 million), manufacturing (3 million) and transport (2 million), domestic helps (4 million), housing keeping and restaurant service workers (3 million), painters and building structure cleaners (3 million), stall and market salespersons (2 million), street vendors (2 million), and garbage collectors (1 million).
Source: Computed by Authors using PLFS 2017-18 unit record data.
If we assume half of those who have lost their jobs are main or single earning family member of an average of 5-member family size (as per Census 2011) households, around one-third (60 million households or 300 million people) of India’s households, could be facing a severe livelihood crisis.
SOS! Urgent need for real-time evidence-based, responsive implementation and delivery system!
Besides, these informal workers, many persons involved in the organized sector (unregistered firms) who may be not jobless at present but could find themselves without a job after the lockdown period is over, if many enterprises refused to take them back. Many self-employed persons like street vendors and other small entrepreneurs may not be left with the capital to restart their businesses, and many may not return from their native places.
Of these, the casual workers are the most vulnerable due to the unpredictable nature of their work and daily-wage payment, which are highest in the construction sector. So, all these regular salaried or contractual employee, those who are currently not working, and skilled workers and petty shopkeepers who may be sitting idle at home or return to their native places or staying in shelter homes may not be able to recover their jobs once the lockdown period is over. Added precautions like social distancing, contact tracing, and strict health controls over entry at the workplace and market would also impact the employer-worker relationship, thereby proving to be a massive departure from the casual business as usual approach.
There is a silver lining for gig work (such as online delivery services), highly skilled professional, and technology interface sectors, which has been positively impacted by the pandemic crisis. Nonetheless, their contribution to the addition in the workforce is estimated to be minimal to substantially offset the overall losses in job and work. Less than one-tenth of the workforce, those in regular salaried or about essential services businesses and self-employment, will continue to receive their regular income (with caveats of further lay-offs, trim or spur in the salary/income, e.g. many government employees’ salaries would be revised downwards and in private sectors, adjustments would be done owing to the non-revenue generation, and, rise in revenue of those engaged in essential commodities supplies). So, the government today has dual challenges to provide immediate assistance to: first, informal workers who have lost their jobs, and second, to those who are already unemployed and are looking for jobs. Apart from assisting informal workers, who are migrants, their families for whom s/he is the sole earner need to be considered, as they await the Pradhan Mantri Garib Kalyan Yojana 2.0 to be rolled out soon to improve upon the inclusion of all. The lackadaisical response of the Ministry of Labour and Employment showcases its insensitivity to the state of affairs on the current pandemic crisis in (especially pertaining to data, registries or mapping of beneficiaries, policy and scheme related levers or planning). The real-time implementation and fulfilling the promises on the ground as well as monitoring and evidencing using dynamic and responsive system is urgently required. The time to demonstrate seriousness in attaining the ‘antyodaya’ through Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM) – Aajeevika and the Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM), Skill India, Digital India, Smart City, RURBAN mission, etc. is now.
Read at: The Times of India | News – Blogs – India | Covid-19 and the lockdown impact: Estimating the unemployment and job losses in India’s informal economy | Arjun Kumar, Balwant Singh Mehta | April 13, 2020
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