The Covid-19 pandemic and lockdowns have upended India's informal job market. But are there positives from the crisis?
Women, who form a large chunk of the informal economy, make masks during the lockdown in Chennai
Image: P. Ravikumar / Reuters
As the Covid-19 pandemic unfolds in India, and large sections of industries and businesses remain closed, the changing realities for the informal sector workforce are becoming apparent. With uncertainty writ large about what post-Covid-19 workplaces will look like, opportunities for employment appear equally unsure. Adding to this uncertainty is the exodus of lakhs of skilled and unskilled workers from urban centres and manufacturing hubs to their native towns and villages, raising questions about livelihood opportunities for them once they are back home.
“Every sector has been affected,” says Nalini Kaushal, founder of SetuWorks, a Mumbai-based organisation that works towards scalable and sustainable social interventions. “The construction and automobile sectors have been hit hard, as have transport, logistics and hospitality; travel and tourism, retail, beauty and wellness... the impact is across the board.”
According to the International Labour Organization (ILO), with limited employment creation in India’s formal economy, the informal economy accounts for more than 80 percent of non-agricultural employment. The United Nations agency adds that the growing level of informal employment within the formal sector is mainly because of the growing use of contract labour and outsourcing of production. The ILO says while women are somewhat more likely to be engaged in the informal economy, they are significantly more likely than men to be informal workers in the formal sector.
A 2019 International Monetary Fund paper titled ‘Measuring Informal Economy in India: Indian Experience’ by SV Ramana Murthy, says an ‘informal worker’ is defined as a worker with no written contract, paid leave, health benefits or social security. “There are 92.4 percent informal workers in the economy. There are also 9.8 percent informal workers in the organised sectors, indicating the level of outsourcing,” the paper says.
“There were signs of the pandemic and subsequent lockdowns affecting labour markets since March,” says, co-founder and executive vice president of TeamLease, a human resource company. “Micro, small and medium enterprises (MSMEs) and startups employ a lot of casual workers. Sectors that depend on discretionary consumption—such as sports, entertainment, aviation and tourism—are badly hit, and they will not make a quick recovery. This is because the emotional contagion around the virus will continue.” The fear of infections, along with shrinking disposable incomes—stemming from insecurities over jobs and wages—will delay the recovery of these sectors, she adds.
(This story appears in the 19 June, 2020 issue of Forbes India. To visit our Archives, click here.)