Official data corroborates deepening of livelihood crisis in urban areas during the 2020 nationwide lockdown
On account of the COVID-19 pandemic induced nationwide lockdown, which was implemented hurriedly without providing adequate social security support to the informal and migrant workers, urban livelihoods were greatly affected during April-June last year. The unemployment rate for males, females and all persons in the age group '15-29 years', age group '15 years and above', and age cohort 'all ages' became the highest in April-June 2020 in comparison to the unemployment rates prevailing in the previous eight quarters i.e. since April-June 2018. Please click the Play/ Pause > button of the interactive chart-1.
Although the unemployment rate for persons in the age group 15 years and above came down from 20.8 percent to 13.2 percent between April-June 2020 and July-September 2020, the unemployment rate in July-September 2020 was still higher than the unemployment rate (of 8.3 percent) in the corresponding period in 2019. This trend was observed not just for males and females in the age group 15 years and above, but also for males, females and all persons belonging to the other two age cohorts.
A review of literature about the impact of COVID-19 pandemic on job losses by Jean Drèze and Anmol Somanchi reveals that urban households were worst hit in comparison to rural households during the period of nationwide lockdown in 2020 in terms of job losses and decline in income. They state that large-scale unemployment/ joblessness and massive income losses were witnessed not only during the period of nationwide lockdown but throughout the rest of last year. They draw the conclusion from their review of literature that income and employment did not recover to attain their pre-lockdown levels even before the second wave of the COVID-19 pandemic swept India in early 2021.
According to the PLFS bulletin, the unemployment rate is defined as the percentage of unemployed persons in the labour force. The estimates of unemployed in CWS give an average picture of unemployment in a short period of 7 days during the survey period. According to the CWS approach, a person was considered as unemployed in a week if s/he did not work even for 1 hour on any day during the reference week but sought or was available for work at least for 1 hour on any day during the reference week.
Noted labour economist Santosh Mehrotra has recently said that memory recall is much better in case of CWS in comparison to the usual status (US). Kindly note that when the activity status is determined on the basis of the reference period of the last 365 days preceding the date of survey, it is known as the usual activity status of the person. The CWS approach is much closer to the norm followed by the Centre for Monitoring Indian Economy (CMIE) as well as many international organisations to estimate unemployment and job related indicators. Many experts think that the CWS is a better method to measure unemployment rate because it focuses on the employment situation at present rather than in the past.
However, experts differ on whether CWS unemployment is a better indicator of joblessness. Prof. Prabhat Patnaik had earlier illustrated in an article published on Newsclick.in that under certain circumstances, it would not be wise for economists to use CWS based unemployment. He wrote: "Suppose for instance a person was getting 10 hours of work per week. Then by the CWS he would be considered employed. But suppose because of the vast numbers of new entrants to the job market, the number of hours of work that the person gets is reduced to say 5 hours. Even then, by the definition of CWS unemployment, he would still be considered employed. Work-sharing in other words, which is typically the form that unemployment takes in the Indian economy, does not get captured by the above unemployment measures." As said earlier, if a person is working, or available for work, even for merely one hour during the week preceding the survey, then that person would be considered to be in the labour force as per the CWS. But if the same person is unable to obtain at least one hour of work during the entire week, then s/he is considered unemployed on CWS basis. In the article titled The Dramatic Increase in the Unemployment Rate, Prof. Patnaik had proposed a concept like “income unemployment”, where a person would be considered unemployed if s/he receives a monthly income, which is lower than a certain “benchmark” level that defines employment.
Worker Population Ratio
Due to the restrictions imposed on various economic activities (please click here and here to access), besides physical movement of people during the 2020 nationwide lockdown, urban livelihoods in both organised and unorganised sectors were affected. A newly released Parliamentary Standing Committee on Labour report says that "[t]he informal workers both in rural and urban areas who have been hit the most due to Covid-19 pandemic comprise the migrants, agriculture workers, casual/ contract labours, building and construction workers, domestic workers, gig/ platform workers and self-employed workers like plumbers, carpenters, painters, street vendors, etc."
In urban areas, the Worker Population Ratio (WPR) i.e. the percentage of employed persons in the population fell to their lowest levels for males, females and persons across all age groups (barring females in the age cohort 15-29 years) during April-June 2020 in comparison to WPR prevailing in the previous eight quarters i.e. since April-June 2018. Although the WPR for persons in the age group 15 years and above went up from 36.4 percent to 40.9 percent between April-June 2020 and July-September 2020, the WPR in July-September 2020 was still lower than the WPR (of 43.4 percent) in the corresponding period of 2019. This trend was noticed not just for males and females in the age group 15 years and above, but also for males, females and persons belonging to the other two age groups. Kindly consult chart-2.
Chart-2 shows that the WPRs for males were around 3-4 times higher than that of WPRs of females in various quarters across the 3 age groups – 15-29 years, 15 years and above, and all ages.
Labour Force Participation Rate
Although a key indicator like Labour Force Participation Rate (LFPR) indicates the percentage of the working-age population who are either employed or are looking for work or available for work i.e. unemployed, it fails to consider the proportion of the working-age population who are performing unpaid work (i.e. not gainfully employed) in the households or in the community. Feminist economists and scholars have long argued that the unpaid work or chores done by females in the households are often considered as duties and not counted as 'work'. Hence, much of the work performed by women is 'invisible' in nature.
In an article published in The Hindu dated 9th February, 2019, Mahesh Vyas of the Centre for Monitoring Indian Economy (CMIE) had said that if the unemployed (i.e. unemployed persons who were willing to work and actively looking for a job earlier) decide to leave the labour force due to dearth of employment opportunities (something that happened after demonetisation), then both labour force participation rate and the unemployment rate will go down.
The male LFPRs fell to their lowest levels, across all age groups during April-June 2020 in comparison to LFPRs prevailing in the previous eight quarters i.e. since April-June 2018. In the age group 15-29 years, the female LFPR had reached rock bottom in January-March 2019 (i.e. 16.0 percent). In the age group 15 years and above, the female LFPR had hit the bottom in April-June 2018 (i.e. 18.8 percent). Similarly, in the all ages group, the female LFPR had touched the lowest level in April-June 2018 (i.e. 14.6 percent). Though female LFPRs (across all the age groups) went down in April-June 2020 (i.e. the period coinciding with the countrywide lockdown) in comparison to the previous quarter (i.e. January-March 2020), the female LFPRs (across all age groups) in April-June 2020 were still higher than the levels attained in April-June 2019. The male LFPRs (across all age groups) fell in April-June 2020 in comparison to January-March 2020. The male LFPRs (across all age cohorts) in April-June 2020 were lower than the levels that existed in April-June 2019. Therefore, there is a difference in the way the lockdown impacted LFPRs of males and females across the age groups. Please check chart-3.
In the period immediately after the lockdown i.e. July-September 2020, both female and male LFPRs (across all age categories) recovered in comparison to the levels prevailing during April-June 2020. For males (in age group 15-29 years and age group 15 years and above), the LFPRs in July-September 2020 were lower than the levels in July-September 2019. For females (in age group 15-29 years and age group all ages), the LFPRs in July-September 2020 were higher than the levels in July-September 2019. So, there is a difference in the way LFPRs recovered for males and females (across various age groups) in July-September 2020 vis-à-vis the corresponding period in 2019.
Types of workers as per employment status
According to the quarterly bulletin on PLFS, the workers in CWS were classified into three broad categories as per their status in employment. These broad categories are: (i) self-employed; (ii) regular wage/ salaried employee; and (iii) casual labour. Within the category of self-employed, two sub-categories are made i.e. own account worker and employer combined together, and unpaid helper in household enterprises. In chart-4, the distribution of workers of age 15 years and above in CWS by status in employment are presented. Self-employed persons who did not work either due to sickness or due to other reasons though they had self-employment work are included under the category 'self-employed (male/ female/ person)'. Thus, the estimates given under the category 'self-employed (male/ female/ person)' may be more than the sum of the estimates under the categories 'own account worker, employer' and 'helper in household enterprise'.
In urban areas, most male workers and female workers (15 years and above) were regular wage/ salaried employees, followed by self-employed and casual labour. Although the share of female regular wage/ salaried employees increased to its peak level of 61.2 percent in April-June 2020 (in comparison to the previous eight quarters), the share of female casual labourers shrunk to reach its lowest level (i.e. 4.8 percent) in the same period (as compared to the previous eight quarters). While the share of female self-employed fell from 34.8 percent to 34.0 percent between January-March 2020 and April-June 2020, the level reached during the lockdown period was still higher than the shares of female self-employed prevailing in July-September 2018, October-December 2018, January-March 2019 and April-June 2019. Kindly see chart-4.
In the post lockdown period i.e. July-September 2020, the share of female self-employed and female casual labourers saw a jump in comparison to April-June 2020. However, the share of female regular wage/ salaried employees came down between April-June 2020 and July-September 2020. At 57.0 percent, the share of female regular wage/ salaried employees in July-September 2020 was a bit lower than what had prevailed in the corresponding period of 2019. At 10.7 percent, the share of female unpaid helpers in household enterprises was the highest in July-September 2020 in comparison to the previous nine quarters. Chart-4 clearly shows that as compared to the female regular wage/ salaried employees, female workers (including unpaid helpers) in self-employment and casual labour suffered more job losses during the period of lockdown i.e. April-June 2020.
The male workers in casual labour faced more job losses in urban areas vis-à-vis the male workers in self-employment and regular wage/ salaried employment during the countrywide lockdown period i.e. April-June 2020. The share of male own account worker/ employer as well as the share of male unpaid helpers in household enterprises too reached their lowest levels in April-June 2020 in comparison to the previous eight quarters. However, the decline in these shares during the nationwide lockdown is not getting reflected in the share of male self-employed. It is because of the inclusion of self-employed persons who did not work either due to sickness or due to other reasons though they had self-employment work under the 'self-employed (male)' category.
The share of male casual labourers increased between April-June 2020 and July-September 2020, whereas the share of male regular wage/ salaried employees and the share of male self-employed fell between those two time-periods.
Need for an Urban Employment Guarantee Programme
Since the last one year or so, economists such as Jean Drèze have been asking the Government of India to launch an urban employment guarantee programme in order to address the issue of livelihood crisis in urban areas, especially that of needy and poor women. Job opportunities in urban areas were dwindling even before the pandemic had struck. In the wake of the pandemic induced lockdown, the livelihood crisis in urban areas became grimmer and more visible.
It should be noted that the State Government of Kerala already has a demand driven urban employment programme for the urban poor, which is called Ayyankali Urban Employment Guarantee Scheme (AUEGS). Similarly, the State Government of Himachal Pradesh launched the Mukhya Mantri Shahri Ajeevika Guarantee Yojana (MMSAGY) in 2020 with the objective of enhancing livelihood security in urban areas by providing 120 days of guaranteed wage employment to every household at the minimum wages prevailing in the financial year 2020-21.
Among other things, the Parliamentary Standing Committee on Labour in its report presented to the Lok Sabha on 3rd August, 2021, has observed that "the plight of urban poor has not got much attention of the Government." In the report, it has been mentioned that there is an urgent "need for putting in place an Employment Guarantee Programme for the urban workforce in line with MGNREGA." It has suggested that urban employment can be generated through projects/ programmes that focus on construction of schools, hospitals, water works, connecting internal roads along with reforestation, soil reclamation, etc.
In order to reduce poverty and vulnerability of the urban poor households by enabling them to access gainful self-employment and skilled wage employment opportunities, the report by the Parliamentary Standing Committee on Labour has called upon the Government to pay adequate attention for building strong grassroots level institutions for the urban poor, provide shelters equipped with all essential services to the urban homeless and facilitate access to suitable business spaces, institutional credit, cash grant at difficult times and above all social security so as to ensure improvement in their livelihoods on a substantial basis.
The Parliamentary Standing Committee on Labour has urged the Government of India to explore ways and means in order to submit money in the bank accounts of the informal workers during adverse conditions like the COVID-19 pandemic. It has asked the Government to strengthen the social security system so that the informal workers and the migrant workers could be covered under it.
In consonance to the advisory guidelines, which were issued on 24th March, 2020, the Standing Committee on Labour has asked the Ministry of Labour and Employment to pursue the matter with the respective BOCW (i.e. Building and Other Construction Workers) Welfare Boards to arrange urgent transfer of adequate funds pertaining to the second wave in the bank account of the construction workers through DBT (i.e. direct benefit transfer) mode from the cess funds collected by the State Governments/ UTs.
Titled ‘Impact of COVID-19 on rising unemployment and loss of jobs/ livelihoods in organised and unorganised sectors,’ the report by the Standing Committee on Labour states that "[i]n view of the critical role played by BOCW Cess Funds in providing badly required relief to the construction workers during the pandemic, the Committee would like the Government to explore the feasibility of establishing similar Cess Funds for other unorganised sector workers including auto/ two-wheeler mechanics/ workers, taxi/ lorry drivers, gig/ platform workers, etc. who have also been severely affected during the pandemic induced lockdowns."
The Parliamentary Standing Committee on Labour has also expressed its concerns about the inordinate delay in the development of a comprehensive National Database for the Unorganised Workers (NDUW). Commenting on the plight of the migrant workers during the nationwide lockdown, the Parliamentary Standing Committee on Labour report says that "[w]hen the entire nation was witnessing a heart-rending sight of lakhs of migrant workers walking back to their native places helplessly without anything to fall back on, the Committee find it surprising that the [Labour & Employment] Ministry waited for as long as two months i.e. until June 2020 to write to the State Governments and that too after goaded by the Supreme Court, to collect the much needed detailed data of the migrant workers."
The report further notes that "the total number of migrant workers who returned to their home States during the first wave of Covid-19 lockdown was 1,14,30,968 as per the data received from the States/ UTs by the Ministry. During the second wave lockdown, 5,15,363 migrant workers returned to their home States. During the first wave, the maximum number of migrants who returned to their home States belong to Uttar Pradesh (32,49,638), followed by Bihar (15,00,612); West Bengal (13,84,693); Rajasthan (13,08,130); Odisha (8,53,777); Madhya Pradesh (7,53,581); Jharkhand (5,30,047); Chhattisgarh (5,26,900); Punjab (5,15,642); and all other States/ UTs, including Jammu & Kashmir and Ladakh."
Quarterly Bulletin, PLFS, July-September 2020, released on 2nd August, 2021, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access
Quarterly Bulletin, PLFS, October-December 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access
Quarterly Bulletin, PLFS, January-March 2019, released in November 2019, National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), please click here to access
Parliamentary Standing Committee on Labour Report: Impact of COVID-19 on rising unemployment and loss of jobs/ livelihoods in organised and unorganised sectors, Twenty Fifth Report, Ministry of Labour & Employment, Presented to the Lok Sabha on 03rd August, 2021, Laid in the Rajya Sabha on 3rd August, 2021, Lok Sabha Secretariat, Seventeenth Lok Sabha, please click here to access
Addendum to Guidelines by the Ministry of Home Affairs Guidelines dated 25th March 2020, please click here to access
Guidelines by the Ministry of Home Affairs dated 24th March, 2020, please click here to access
News alert: Several studies but one conclusion -- poorly planned COVID-19 induced national lockdown hurt the poor the most, published on 7 July, 2021, Inclusive Media for Change, please click here to access
An urban jobs safety net -Rajneesh, The Hindu, 12 August, 2021, please click here to read more
An urban job guarantee scheme is the need of the hour -CP Chandrashekhar and Jayati Ghosh, The Hindu Business Line, 9 August, 2021, please click here to access
A disconcerting picture behind the headline numbers -Ishan Anand, The Hindu, 3 August, 2021, please click here to access
Labour pangs, The Telegraph, 2 August, 2021, please click here to access
How the pandemic and lockdown disrupted labour markets -Abhishek Jha and Roshan Kishore, Hindustan Times, 27 July, 2021, please click here to access
ExplainSpeaking: The curious case of India’s falling unemployment rate in 2019-20 -Udit Misra, The Indian Express, 26 July, 2021, please click here to access
CNBC-TV18 programme on NSO's PLFS data, please click here to access
A ‘duet’ for India’s urban women -Jean Drèze, The Hindu, 8 December, 2020, please click here to access
DUET: A proposal for an urban work programme -Jean Drèze, Ideas for India, 9 September, 2020, please click here to access
The Dramatic Increase in the Unemployment Rate -Prabhat Patnaik, Newsclick.in, 14 June, 2019, please click here to access
Kerala Model of Urban Employment Guarantee -Surajit Das, Newsclick.in, 23 March, 2019, please click here to access
Surveying India’s unemployment numbers -Mahesh Vyas, The Hindu, 9 February, 2019, please click here to access
Image Courtesy: Inclusive Media for Change/ Shambhu Ghatak
Tagged with: Casual Labour Casual Labourers CMIE Current Weekly Status Female LFPR Labour Force Participation Rate Male LFPR Periodic Labour Force Survey PLFS Regular Wage Salaried Workers Self Employed Self Employment Unemployment Rate Usual Status Worker Population Ratio WPR