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India may beat Covid-19, but will it recover from the unemployment spiral?

CMIE, ILO paint bleak future particularly for unorganized or informal sector workers

Deborah Grey 13 Apr 2020

unemployement

It is no secret that unemployment is at an all-time high in wake of the nationwide lockdown brought about to curb the spread of the Coronavirus. However, given how informal sector workers, who are the backbone of the Indian economy, are the worst affected, there are grave concerns about economic recovery.

Unemployment and vulnerability of informal sector workers

According to the Center for Monitoring the Indian Economy (CMIE), unemployment stood at 7.16 percent in January 2020. However, by the last week of March 2020, the figure had jumped to a whopping 23 percent! Before this the highest spike in the last 12 months was recorded at 8.2 percent in August 2019. 

Unorganised and informal sector workers are bearing a disproportionately higher burden of the lockdown, and their lives and livelihoods have been impacted in a manner that will take a long time to recover from, if recovery is even possible.

The International Labour Organisation (ILO) in a recent report titled ILO Monitor 2nd edition: COVID-19 and the world of work, says, “In India, with a share of almost 90 per cent of people working in the informal economy, about 400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis.”

On the wider subject of the vulnerability of informal sector workers, the report says, “Around 2 billion people work informally, most of them in emerging and developing countries. The informal economy contributes to jobs, incomes and livelihoods, and in many low- and middle-income countries it plays a major economic role. However, informal economy workers lack the basic protection that formal jobs usually provide, including social protection coverage. They are also disadvantaged in access to health-care services and have no income replacement if they stop working in case of sickness.” It adds, “Informal workers in urban areas also tend to work in economic sectors that not only carry a high risk of virus infection but are also directly impacted by lockdown measures; this concerns waste recyclers, street vendors and food servers, construction workers, transport workers and domestic workers.”

“Workers and businesses are facing catastrophe, in both developed and developing economies,” says ILO Director-General Guy Ryder. “We have to move fast, decisively, and together. The right, urgent, measures, could make the difference between survival and collapse,” he warns.

The entire ILO report may be read here:

It is these unorganized sector workers who form the backbone of the economy, and who are now bearing a disproportionately heavier burden in wake of the nationwide lockdown. The economy is also built on the backs of independent professionals and service providers like electricians, plumbers, handymen, barbers, beauticians, masseurs, domestic service professionals like cooks, cleaners, washer-men and women, people who iron clothes, cobblers, key makers, knife sharpeners. All of them possess valuable skills, and are yet somehow never compensated on par with white collar workers. Even they have had their livelihoods put on hold.

Breakdown of the ‘farm to fork’ supply chain

India’s agricultural sector banks heavily on the services of a variety of informal sector workers. For example, the summer crop cannot be harvested without agricultural labourers, and if they can’t return to the fields in time, the result will be widespread food shortages.

Then there are the lower level workers, some organized, some informal, some permanent, others casual labourers, who work in a variety of roles along the entire supply chain from farm to fork; packers, loaders, transporters, drivers, warehouse staff, refrigeration facility staff for storage of perishables, the wholesalers and the retailers. Not to mention the gunny sack manufacturers, fuel station operators, vehicle repairmen and mechanics.

A farmer from Madhya Pradesh who is currently harvesting a crop of wheat and peas shares his challenges with Sabrang India saying, “There is labour needed, specially for the next season's sowing. Local labour is not enough. Will the labour from other states come now?” He adds, “It is not as simple as saying farming is going on. The harvest has to be packed in gunny sacks to be taken to the ‘Mandi’. Where do those sacks come from? Who prints the information on the sack? If the machines that harvest break down, we need the mechanic, who in turn has to buy wires and other equipment required for repairs etc.”

Already the lockdown and its impact on the livelihoods of these critically important supply chain workers has impacted the availability of dairy products, fruit and vegetables in the market.

“We only have potatoes and onions. Now that the lockdown has been extended, there will be no vegetables for the next three days. We ran out of fruits two days ago. We have no bread. Also, butter is running out and only tetra-pack milk is available,” says Dimple who is managing her father Kanjibhai’s grocery store in his absence. Turns out Kanjibhai is out trying to ensure a steady stream of supplies to his shop in an upmarket Mumbai neighbourhood. He has pressed five tempos into service, sourcing goods from as far as Navi Mumbai, and has yet to achieve any success.

Bhaaji nahi hai. Sab kal khatam ho gaya. Pata nahi kab ayega (There are no vegetables. The supplies ran out yesterday. I don’t know when I will get more),” says Mangal, who runs a vegetable stall just a stone’s throw from Kanjibhai’s shop. The meat and fish vendor's shop next to his stall, has been shut for a week.

The other ignored faces of the economy

Then there are people who either own, operate or work in sole proprietorships and micro and small enterprises. These include street-side food stalls (including the pakora sellers), tiffin services, stand-alone cafes, small restaurants and dive bars, florists, opticians, photographers, tailors, embroidery workers, printing and photocopying shops, pay phone booths, ice cream parlours, handi-craft and non-precious jewellery vendors, property brokers, etc.

Also, not all white-collar workers can perform their duties while working from home. These include receptionists, secretaries, telephone operators, interns, assistants, and many others. The option of working from home is, more often than not, a privilege. Advisories by labour commissions notwithstanding, in wake of a long drawn out economic recovery, retrenchment and lay-offs are a possibility for many of these people. 

India may beat Covid-19, but will it recover from the unemployment spiral?

CMIE, ILO paint bleak future particularly for unorganized or informal sector workers

unemployement

It is no secret that unemployment is at an all-time high in wake of the nationwide lockdown brought about to curb the spread of the Coronavirus. However, given how informal sector workers, who are the backbone of the Indian economy, are the worst affected, there are grave concerns about economic recovery.

Unemployment and vulnerability of informal sector workers

According to the Center for Monitoring the Indian Economy (CMIE), unemployment stood at 7.16 percent in January 2020. However, by the last week of March 2020, the figure had jumped to a whopping 23 percent! Before this the highest spike in the last 12 months was recorded at 8.2 percent in August 2019. 

Unorganised and informal sector workers are bearing a disproportionately higher burden of the lockdown, and their lives and livelihoods have been impacted in a manner that will take a long time to recover from, if recovery is even possible.

The International Labour Organisation (ILO) in a recent report titled ILO Monitor 2nd edition: COVID-19 and the world of work, says, “In India, with a share of almost 90 per cent of people working in the informal economy, about 400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis.”

On the wider subject of the vulnerability of informal sector workers, the report says, “Around 2 billion people work informally, most of them in emerging and developing countries. The informal economy contributes to jobs, incomes and livelihoods, and in many low- and middle-income countries it plays a major economic role. However, informal economy workers lack the basic protection that formal jobs usually provide, including social protection coverage. They are also disadvantaged in access to health-care services and have no income replacement if they stop working in case of sickness.” It adds, “Informal workers in urban areas also tend to work in economic sectors that not only carry a high risk of virus infection but are also directly impacted by lockdown measures; this concerns waste recyclers, street vendors and food servers, construction workers, transport workers and domestic workers.”

“Workers and businesses are facing catastrophe, in both developed and developing economies,” says ILO Director-General Guy Ryder. “We have to move fast, decisively, and together. The right, urgent, measures, could make the difference between survival and collapse,” he warns.

The entire ILO report may be read here:

It is these unorganized sector workers who form the backbone of the economy, and who are now bearing a disproportionately heavier burden in wake of the nationwide lockdown. The economy is also built on the backs of independent professionals and service providers like electricians, plumbers, handymen, barbers, beauticians, masseurs, domestic service professionals like cooks, cleaners, washer-men and women, people who iron clothes, cobblers, key makers, knife sharpeners. All of them possess valuable skills, and are yet somehow never compensated on par with white collar workers. Even they have had their livelihoods put on hold.

Breakdown of the ‘farm to fork’ supply chain

India’s agricultural sector banks heavily on the services of a variety of informal sector workers. For example, the summer crop cannot be harvested without agricultural labourers, and if they can’t return to the fields in time, the result will be widespread food shortages.

Then there are the lower level workers, some organized, some informal, some permanent, others casual labourers, who work in a variety of roles along the entire supply chain from farm to fork; packers, loaders, transporters, drivers, warehouse staff, refrigeration facility staff for storage of perishables, the wholesalers and the retailers. Not to mention the gunny sack manufacturers, fuel station operators, vehicle repairmen and mechanics.

A farmer from Madhya Pradesh who is currently harvesting a crop of wheat and peas shares his challenges with Sabrang India saying, “There is labour needed, specially for the next season's sowing. Local labour is not enough. Will the labour from other states come now?” He adds, “It is not as simple as saying farming is going on. The harvest has to be packed in gunny sacks to be taken to the ‘Mandi’. Where do those sacks come from? Who prints the information on the sack? If the machines that harvest break down, we need the mechanic, who in turn has to buy wires and other equipment required for repairs etc.”

Already the lockdown and its impact on the livelihoods of these critically important supply chain workers has impacted the availability of dairy products, fruit and vegetables in the market.

“We only have potatoes and onions. Now that the lockdown has been extended, there will be no vegetables for the next three days. We ran out of fruits two days ago. We have no bread. Also, butter is running out and only tetra-pack milk is available,” says Dimple who is managing her father Kanjibhai’s grocery store in his absence. Turns out Kanjibhai is out trying to ensure a steady stream of supplies to his shop in an upmarket Mumbai neighbourhood. He has pressed five tempos into service, sourcing goods from as far as Navi Mumbai, and has yet to achieve any success.

Bhaaji nahi hai. Sab kal khatam ho gaya. Pata nahi kab ayega (There are no vegetables. The supplies ran out yesterday. I don’t know when I will get more),” says Mangal, who runs a vegetable stall just a stone’s throw from Kanjibhai’s shop. The meat and fish vendor's shop next to his stall, has been shut for a week.

The other ignored faces of the economy

Then there are people who either own, operate or work in sole proprietorships and micro and small enterprises. These include street-side food stalls (including the pakora sellers), tiffin services, stand-alone cafes, small restaurants and dive bars, florists, opticians, photographers, tailors, embroidery workers, printing and photocopying shops, pay phone booths, ice cream parlours, handi-craft and non-precious jewellery vendors, property brokers, etc.

Also, not all white-collar workers can perform their duties while working from home. These include receptionists, secretaries, telephone operators, interns, assistants, and many others. The option of working from home is, more often than not, a privilege. Advisories by labour commissions notwithstanding, in wake of a long drawn out economic recovery, retrenchment and lay-offs are a possibility for many of these people. 

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