Loss, recovery and the long road ahead

Paaritosh Nath, Nelson Mandela S and Aishwarya Gawali track India’s informal workers through the COVID-19 pandemic and examine the livelihood impact of the pandemic.

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Drawing on results from a panel of 2,778 workers interviewed during and after the 68-day hard lockdown imposed in India, the following study examines the livelihood impact of the pandemic and the extent of subsequent recovery or lack thereof. 

Focussing specifically on workers located in the informal economy, the study is a useful addition to the burgeoning body of work on the economic impacts of COVID-19 by providing an insight into the employment and earnings recovery of those located at the margins. 

These findings are spliced across socio-economic groups to showcase the differential impact of the pandemic on different demographics within the informal sector.

Our results show that six months after the hard lockdown, one out five persons were still out of work. Conditioned on being employed prior to the lockdown and having lost work during the lockdown, we find that urban respondents, women, workers above sixty and graduates were significantly less likely to recover from the shock. 

A similar exercise carried out for women workers showed that middle-aged women, never married women and women who were not-literate women or educated up until primary and middle school were significantly more likely to recover from job loss. 

Older women, those located in urban areas and Muslim women were on the other hand significantly less likely to recover from the job loss. Earnings on the whole were half of what they used to be prior to the pandemic. Some better off workers shifted to more precarious types of employment. 

Given the fall in earnings poorer worker households were forced to borrow and the
amount of loan taken was multiple times their average monthly income. In the context of loss in employment and reverse migration, the survey results show a substantial unmet demand for work under the MGNREGA programme even after the lockdown was lifted.

The researchers conclude that despite a partial recovery in the subsequent period, the pandemic induced lockdown has undermined the material conditions for subsistence for a large segment within the informal economy. 

Moreover, any attempts made to re-imagine what a social protection programme for the informal economy should look like must take into account the segments most
susceptible to an economic shock on their livelihoods.

Read working paper