Covid impact on labour in India

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  Covid impact on labour in India

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1. Indian labour and Covid lockdowns: About 1.23 crore migrant labourers (official number) returned to their home States during the Covid–19 lockdowns during 2020 and once again many State governments including Maharashtra government are considering lockdowns to curb rising Covid-19 cases. While industrial and business sectors are strongly opposing the move, labourers face another livelihood crisis and horrifying journey to their home States.
2. What next: About 67 per cent (61,34,943) migrant labourers who returned to their home State in the 2020 lockdown were from Uttar Pradesh, Bihar, West Bengal, Rajasthan and Odisha. According to the Ministry of Labour and Employment most of these migrant workers have returned to their workplaces and have resumed productive employment. But what happened to livelihood and wages of workers including formal and informal workers last year?
3. Data: A World Bank Group’s policy research working paper has found that the differential labour market shock experienced by informal wage workers during the national lockdown due to Covid -19 pandemic in 2020 did not persist for long. After April-May 2020, the labour market outcomes of informal workers began recovering towards their pre-Covid levels faster than those of their formal counterparts. By August 2020, there was no longer a significant differential between informal and formal wage workers in terms of the decline in the employment rate or income from pre-Covid levels.
4. Self-employment rose, formal wage employment down: By August 2020, six months into the Covid crisis in India, employment (as a share of the total working age population) had nearly recovered to its pre-Covid levels but its composition had shifted markedly towards self-employment. Expressed as a share of total employment, formal wage employment shrank by nearly 30 per cent between December 2019 and August 2020. Informal wage employment too shrank marginally, while self-employment expanded from 48.2 per cent of total employed persons in December 2019 to 55 per cent of all employed persons in August 2020.
5. Informals hit hard: There was considerable heterogeneity in the Covid shock, with the likelihood of employment loss being higher among those initially working in the informal sector than those initially in formal jobs. Informal workers are also more vulnerable than the self-employed. Among those in informal jobs in December 2019, over 57 per cent were not in employment by April 2020. Those initially self-employed in December 2019 had a 33 per cent chance of not being in employment by April 2020, while those initially formally employed in December 2019 had a 28 per cent chance of being unemployed by April 2020. Informal workers experienced a more severe shock than formal workers. 
6. Gig economy: The increasing role of the gig economy was evident with significant growth of online retail business. The lockdown period also saw employers preferring ‘Work from home’ of their employees, cutting down on staff strength and engaging freelancers or outsourcing tasks to reduce overhead costs. Drivers engaged in platforms like Uber/Ola, Swiggy, Big Basket and Pizza Hut are now showing potential as well. 
7. Employment opportunities: The World Bank paper adds that after the lockdown, a strikingly large proportion of those initially working in the formal sector transitioned to the informal and self-employed sectors. In addition, an unusually large proportion of those initially employed in informal wage jobs transitioned to self-employment. Overall, both among those with formal and informal wage jobs in December 2019, about 18 per cent were in self-employment by April 2020. Self-employed fared better than informal wage workers in the early phase of the Covid-19 crisis. Self-employment may also have served as a fallback for wage workers who lost jobs: both among those with formal and informal wage jobs in December 2019, about 18 per cent were in self-employment by April 2020.

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