COVID-19: Lockdown Impact on Informal Sector in India
The paper by K. Chandra Shekar and Kashif Mansoor – scholars at the Centre for Development Studies, Thiruvananthapuram – was published by Azim Premji University, Bengaluru, in July 2020.
Most of the world’s
poorest people, the authors note, work in the informal economy, which employs
more than half the workforce in developing countries. This 12-page paper
discusses the impact of the Covid-19 lockdown on the informal sector in India, by
looking at the employment and unemployment rates in India before the lockdown.
The paper recommends
the “integration of [the] informal sector into the economic development process
after the COVID-19 lockdown.” The authors say it is essential for the
government to aim to reduce poverty and implement schemes for the social
well-being of workers in the informal sector.
According to data from the International Labour Organization (ILO), the paper states, more than 40 crore informal workers in India may be pushed further into poverty due to the Covid-19 outbreak.
Globally, the 1.25 billion workers employed in the sectors of hospitality and accommodation, business services, retail and wholesale, and construction and industry, have suffered due to a decrease in production, and loss of working hours and employment, after the outbreak of Covid-19.
The paper cites 2012 data by the ILO stating that employment in the informal sector constituted 48 per cent of non-agricultural employment in North Africa, 51 per cent in Latin America, 65 per cent in Asia, and 72 per cent in Sub-Saharan Africa.
The government of India’s National Commission for Enterprises in the Un-organised Sector observed, in 2009, that 98 per cent of employment in agriculture, 75 per cent in industry and 72 per cent in services was of an informal nature.
The annual Periodic Labour Force Survey (PLFS) of 2017-18 (conducted by the National Statistical Office, Ministry of Statistics and Programme Implementation) notes that about 57 per cent of rural households derived a major share of their income from self-employment activities, and 25 per cent from casual labour. In urban areas, about 38 per cent of households earned most of their income from self-employment, and 12.68 per cent from casual labour. ‘Regular/wage salaried earners’ accounted for 12.81 per cent of rural and 41.66 per cent of urban households.
In 2017-18, the average wage of a casual worker was Rs 254.83; it was Rs. 276.09 for self-employed persons and Rs. 530.76 for ‘regular-salaried’ persons. Around 68 per cent of all workers reported earning less than the recommended national minimum wage of Rs. 375, notes the paper.
The 2017-18 PLFS also states that 90 per cent of India’s workers – 411 of 461 million people – were informal workers, with no social security provisions. Around 98.5 per cent of India’s agricultural workers were informally employed, as were 88 per cent of workers in industries and 78 per cent in the services sector.
According to a survey of migrant workers conducted in April 2020 by Jan Sahas (a Delhi-based organisation), 90 per cent of the surveyed workers had lost their only source of income after the lockdown, and 42 per cent did not have enough food for another day.
According to data from the Centre for Monitoring Indian Economy, Mumbai, the ‘labour force participation rate’ has fallen drastically and the unemployment rate has risen sharply since January 2020. Nine million people became unemployed between January and March 2020.
The paper states that the Covid-19 lockdown will particularly impact socially vulnerable populations. It observes that Muslims constitute the ‘highest share’ of informal workers in India, followed by those from Scheduled Tribes, Scheduled Castes, Other Backward Classes, and others.
Focus and Factoids by Archita Joshi.
K. Chandra Shekar and
Azim Premji University, Bengaluru