How the livelihood crisis was aggravated by Covid

Around 46 per cent of lower income group people have resorted to borrowing money to run their households. The economy is gradually opening up, but the picture still remains grim for the many unemployed people

How the livelihood crisis was aggravated by Covid

While India had serious unemployment and livelihood protection problems even earlier, the Covid crisis accentuated these problems in unprecedented ways for some weeks, also leaving behind longerterm serious impacts. A report by Oxfam on Covid-time inequalities has highlighted this aspect of the crisis and recommended shorter- as well as longer-term measures to provide relief and recovery on the livelihood front. Drawing on a wide range of studies and research papers, the Oxfam report says that the economic fallout of the pandemic manifested in job losses and salary cuts for both the informal and formal sector. The labour force participation rate fell to an all-time low from 43 to 35 per cent from January to April 2020 and unemployment rose sharply after March 2020. Eight in ten households saw decline in income during the lockdown.

The job loss for low-income households with no alternative earnings and no social security has been the most troubling and they will find it extremely difficult to cope with and recover from the slowdown. Around 46 per cent of lower income group people have resorted to borrowing money to run their households. The economy is gradually opening up, but the picture still remains grim for the many unemployed people. There are concerns that the impact would be beyond the temporary earning losses for unemployed work.

This report emphasizes that the pandemic had a staggering impact on India’s informal workers and small businesses. Out of a total 122 million who lost their jobs, 75 per cent accounting for 92 million jobs were lost in the informal sector. These workers are engaged in small businesses and as casual labour and are at high risk of being pushed into poverty. Informal workers also have relatively fewer opportunities to work from home and have suffered more job losses compared to the formal sector.


The plight of informal workers as a result of the lockdown and loss of income got reflected in the panic exodus of migrant workers in their desperate attempt to get back to their homes in the hope of getting food and work in the harvesting season. India has about 40-50 million seasonal migrant workers working in construction sites, factories and services activities.

According to a Stranded Workers Action Network (SWAN) report in April 2020, 50 per cent of the respondents had no rations left even for a single day while 96 per cent had not received rations, 70 per cent had not received cooked food from the government and 78 per cent had less than Rs 300 left.

With transportation shut down, many had to walk hundreds of miles. Many migrant workers died due to the lockdown, with reasons ranging from starvation, suicide, exhaustion, road and rail accidents, police atrocity and denial of timely medical care. The Oxfam report says that they were exposed to inhuman conditions turning the pandemic into a humanitarian crisis. The National Human Rights Commission recorded over 2,582 cases of human rights violation as early as in the month of April 2020.

It has been discussed that women are likely to bear the brunt of job losses the most because much of their work is invisible, and they are more likely to work in informal work arrangements. The Oxfam report says that as many as 17 million women lost their jobs in April 2020. Unemployment for women rose by 15 per cent from a pre-lockdown level of 18 per cent. This increase in unemployment of women can result in a loss to India’s GDP of about 8 per cent or $218 billion. Women who were employed before the lockdown are also 23.5 percentage points less likely to be re-employed compared to men in the post-lockdown phase.

A survey by the Institute of Social Studies Trust found that among those who could retain their jobs, around 83 per cent of women workers faced severe income drop. Sixty-six percent of the respondents also experienced an increase in unpaid care work and 36 per cent reported an increased burden of child and elderly care work during this period. Frontline health workers such as ASHA workers experienced a big increase in their work but were not given adequate remuneration for this. The report presents estimates that if India’s top 11 billionaires are taxed at just 1 per cent of their wealth, the government can pay the average wage of the nine lakh ASHA workers in the country for 5 years.

As many as ten states passed ordinances and regulations that would dilute existing labour laws and their application. Changes have been brought in national labour laws, mainly in the Factories Act, 1948, The Industrial Disputes Act, 1947, and The Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988.

The Oxfam report says that these changes in the labour laws violate the established standards of the International Labour Organisation and led to the filing of several Public Interest Litigations. For instance, working hours were increased from eight to twelve hours in a day. The PILs eventually pressurised the Uttar Pradesh government to withdraw the 12-hour work shift. Many other states, however, have continued with the 12- hour work shift, six days a week which has transgressed the mandated 48-hour week as per global standards.

Many state governments have also brought changes that would allow workers to be hired at lower wages. There has also been evidence of workers being partially paid or not being paid at all. According to the Mobile Vaani survey, around 57 per cent reported having pending wages and 20 per cent had not received any support from their employers in the informal sector.

As such, blue-collar workers who are mostly informal and daily wagers have to work longer hours with low wages in premises that will lack clean drinking water, toilet, medical and other occupational safety measures in the light of industrial inspection being suspended. India has 170 million blue-collar workers. Trade unions fear that 70 per cent of factories will fall outside the purview of labour laws exposing workers to exploitation with no legal safeguards while large private corporates gain from the dilution of labour laws.

Drawing on a wide range of evidence, the Oxfam report argues that despite the adverse impact that the lockdown has had on informal, migrant workers and the economy, studies show that the relief packages have been miniscule. Additional expenditure of the government in the first relief package announced was only 0.5 per cent of GDP and the total additional public spending promised by all the relief measures announced by the end of May 2020 amounted to only around 1 per cent of the GDP. Much of it has not reached the intended beneficiaries.

Keeping in view the deepening livelihood and unemployment crisis, this report makes a strong case for a recovery path led by reduction of inequalities and special concern for the needs of weaker sections.

The writers are, respectively, a journalist and author and a teacher of Economics at the Lawrence School, Sanawar.