Covid Impact On Employment In Unorganized Sector

How grave is the situation of unemployment for the unorganized sector?

Urban Unorganized Sector

It’s important to note that 90% of the 400 Mio plus Indian workforce is in the unorganized sector. The unorganized sector is also characterized by migrants moving into India’s large cities and state capitals. Pre-COVID, though this unorganized migrant workforce had access to work and a means of livelihood,   the issue of low wages and lack of social security coverage was prevalent. COVID19 and the resultant lockdown only has compounded this issue further pushing this sector to the brink.  Apart from the shutdown and loss off work, this workforce has also been forced to undertake reverse migrate under duress and in a mode that has not been seen or known before.

Rural Agriculture Workforce

With the displacement of the urban unorganized on one hand, we have another unsettling situation in India’s Agriculture sector. Powered entirely by self-employed farmers and unorganized farm labor, this sector’s income depends on a timely sale and disbursal of their produce. The joy of a positive bumper harvest experienced this season, has been flushed out by the freeze in the logistics sector causing stagnation of farm produce. Lockdown of state borders and shutdown of retail markets has multiplied the pains of this sector, that can only now expect a faster rollout of MSP (Minimum support price).

Construction & Infrastructure

Indian Construction and Infrastructure sector that was tottering last year with project delays, funding issues, low offtake & occupancy and resultant NPA issues, was still absorbing most of the non-farm unorganized employment. COVID Lockdown has further handicapped this sector with a tools down and shutdown of material movement and logistics. This sector and its workforce are bracing for a Deep freeze for the near term that could run into a quarter and more.

Indian MSME

MSMEs are the heartbeat of Indian economy with over 60 Million skilled workforce employed across the country. The sector that was looking forward to a slow recovery from the aftershocks of GST and a credit squeeze post failure of some NBFCs, has now slid into a deeper existential crisis. The crisis is driven primarily by the drying up of cash flow that’s essential to keep the movement of material and running of machinery. The unorganised workers in this sector now face a threat of salary and job loss due to loss of cash flow and working capital across the sector  and the business owners in this space are known to not have deep pockets to operate with.

Large Enterprises

Large Indian enterprises like Automobiles, that feed the last mile employment, have a huge inventory build-up and production floors have come to a grinding halt. Despite the size and age of this industry, it is also one that’s highly inventory sensitive and a glut, even temporary, is known to cause far and wide challenges.

Self-Employed

The India Self-employed comprising of  street hawkers, drivers, handymen,  daily wagers etc. are a critical piece in the economic puzzle and this lot has literally been hit by a lightning now. Given the new social distance norm and lockdown scenario, this sector is currently grappling with the emerging new realities and operating norms. It is expected to be a long way to recovery and waking up to all new working condition for this lot. Overall they have been the worst affected and their movement to their home towns will delay the economy recovery when things improve, as they will take time to come back after this displacement.

 What has the govt done until now is it sufficient? What is the future looking like?

The GOI has announced a USD 22 Bn package for the economy and one has to wait to see the bifurcation of the same to the suffering sectors and workforces listed above. Given the size of the issue on hand, it would also be a wait and see game to know if the announced package would heal all the injuries in the system.

The PDS (Public Distribution System) is providing Rations and DBT (Direct Benefits Transfer) has been activated, all thanks to the digital inclusion and digital platform build over the last few years. 

As a relief to the corporate sector, GOI has announced acceptance of delayed compliance filing for the year. This will put time and resources in the hands of the enterprises to deal with the closure processes.

This is a great beginning, but more is definitely expected and required especially for healing the unorganised sector. MSMEs need more liquidity to recover and that would mean more credit needs to flow in for them to employ and pay people.

Globally looking, the Oil price crash will bring windfalls to India and that should be utilised to lift the unorganised sector.

What would this mean for the Socio-economics of the country? Rising inequality, more poverty?

In the near term its undoubtedly challenging times for all and the shock is too big to absorb instantly. Millions of workers have been displaced from their very economic life and it would take time and logistics remobilize them and reactivate the system.

Despite the shade of their collars, both Airline Pilots & Loading Assistants on ground are now on the same page. The size and glamor of this sector stood no chance to hold its people with the ground of the entire Airline sector and now its each to his or her own managing the crisis with their own abilities.

 ILO estimates that over 1.25 Bn livelihoods will be impacted globally due to the shutdown of the travel and tourism industry and its associated sectors like street vending, light industrials, shops, retail and energy.

What does the global data on unemployment reflects in terms of socio-economic impact?

The ILO note on COVID provides a very grim picture of global workers, with 4/5 of unorganized workers being put at risk of loss of livelihood. These numbers well underscore the depth of the crisis already in hand and emerging further. Africa will be among the hard hit zones and the Arab world and APAC economies are not far behind either.

As has rightly highlighted by ILO DG, Mr. Guy Ryder — we are between Survival & Collapse!!!