Covid-19’s Impact on Employment

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Recently, Azim Premji University’s Centre for Sustainable Employment, Bengaluru has released its annual report titled ‘State of Working India 2021: One Year of Covid-19’ for 2021.

About the Report

• It is based on data sourced from the Consumer Pyramids Household Survey of the Centre for Monitoring the Indian Economy (CMIE), the Azim Premji University Covid-19 Livelihoods Phone Survey (CLIPS), and the India Working Survey (IWS), besides other surveys by various civil society organisations.
• It covered the period of March to December in 2020 and highlights the impact of one year of Covid-19 on employment, incomes, inequality and poverty.
• The pandemic has substantially increased informality in employment, leading to a decline in earnings for the majority of workers and consequent increase in poverty in the country.

Key Findings of the Report

• Employment
  • 100 million jobs were lost nationwide during the April-May 2020 lockdowns.
  • Though most of these workers had found employment by June 2020, about 15 million remained out of work.
• Incomes
  • For an average household of 4 members, the monthly per capita income in October 2020 (Rs. 4,979) was still below its level in January 2020 (Rs. 5,989).
  • Monthly earnings of workers fell on an average by 17 per cent during the pandemic, with self-employed and informal salaried workers facing the highest loss of earnings.
  • Of the decline in income, 90 per cent was due to reduction in earnings, while 10 per cent was due to loss of employment. This means that even though most workers were able to go back to work, they had to settle for lower earnings.
  • While the poorest 20 percent of households lost their entire incomes in April-May 2020, the richer households suffered losses of less than a quarter of their pre-pandemic incomes.
• Inequality
  • During the lockdown and in the post-lockdown months, only 19 per cent women remained employed while 47 percent suffered a permanent job loss.
    • On the other hand, 61 per cent of working men remained employed while 7 per cent lost their job and did not return to work.
  • For women who remained employed, the burden of domestic work increased, without any corresponding relief in the hours spent in employment.
  • About 33 per cent of young workers (in the 15-24 years age group) had failed to regain some form of employment even by December 2020. The corresponding figure for those in the 25-44 years category was 6 per cent.
• Poverty
  • With 230 million falling below the national minimum wage threshold of Rs. 375 per day during the pandemic, poverty rate has increased by 15 percentage points in rural and nearly 20 percentage points in urban areas.
  • Households coped with the loss of income by decreasing their food intake, selling assets and borrowing informally from friends, relatives and money-lenders.
  • The report notes that 20 percent of those surveyed said that their food intake had not improved even six months after the lockdown.

• Informalization
  • Post-lockdown, nearly half of salaried workers had moved into informal work, either as self-employed (30 per cent), casual wage (10 per cent) or informal salaried (9 per cent).
  • The fallback option varied by caste and religion as the General category workers and Hindus were more likely to move into self-employment while marginalised caste workers and Muslims moved into daily wage work.
  • Education, health and professional services saw the highest exodus of workers into other sectors, with agriculture, construction and petty trade emerging as the top fallback options.

Measures to Improve

• In the wake of the virulent second wave of Covid-19 and possible lockdowns, the government needs to strengthen the inclusive social welfare architecture.
• The government should try to extend cash transfers of Rs. 5,000 for three months vulnerable households using the existing digital infrastructure.
• Free rations under the Public Distribution System (PDS) of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) should be ensured till the end of 2021.
• The Mahatma National Gandhi Employment Guarantee Act (MGNREGA) entitlement should be expanded to 150 days from the current 100 days.
• A Covid hardship allowance of Rs. 30,000 (Rs. 5,000 per month for six months) should be rolled out for the 2.5 million Anganwadi and ASHA workers.

Source: TH