Covid-19: 400 mn workers in India may fall into poverty

The International Labour Organization (ILO), a United Nation agency, has warned that around 400 million workers from the informal sector in India may fall into poverty owing to the ongoing Coronavirus outbreak that has already infected more than 5,000 people in the country.

The ongoing nationwide lockdown, which began on March 25 and is aimed at containing the spread of the virus, has stalled major economic activities in the country, has further pushed these informal sector workers to the brink.

In its report titled, ‘COVID-19 and the world of work’, ILO said that the current crisis could wipe out 195 million full-time jobs or 6.7% of hours clocked globally in the second quarter of this year.

ILO said the number of workers in the informal sector affected by the lockdown and other containment measures is substantial in India, Nigeria, and Brazil.

“Covid-19 is already affecting tens of millions of informal workers. In India, with a share of almost 90% of people working in the informal economy, about 400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis,” the report said.

“Full or partial lockdown measures are now affecting almost 2.7 billion workers, representing around 81% of the world’s workforce,” it added.

ILO says that while millions of workers are vulnerable to income loss and layoffs, the impact on income-generating activities is especially harsh for unprotected workers and the most vulnerable groups in the informal economy. “In the current situation, businesses across a range of economic sectors are facing catastrophic losses, which threaten their operations and solvency, especially among smaller enterprises,” the report said.

ILO said that the current lockdown measures in India, which are at the high end of the University of Oxford’s COVID-19 Government Response Stringency Index, have impacted these workers significantly, forcing many of them to return to rural areas.

According to ILO, countries experiencing fragility, protracted conflict, recurrent natural disasters, or forced displacement will face multiple burdens due to the pandemic. This includes India as well.

“They are less equipped to prepare for and respond to Covid-19 as access to basic services, especially health and sanitation, is limited; decent work, social protection, and safety at work are not a given; their institutions are weak; and social dialogue is impaired or absent,” the report said.

ILO suggests that immediate support for most-affected sectors and population groups, particularly for enterprises and workers operating in the informal economy is the need of the hour. “Specific and targeted measures are needed in countries with high levels of informality, including cash transfers to support those who are most affected by the lockdown and repurposing production to provide alternative employment (e.g. for PPE kits),” it said.

ILO further adds that along with supporting those in the informal economy, efforts are needed to support formal workers and enterprises to ensure that they do not fall back into informality as a result of the crisis and erode gains made in recent years. It said that a relevant mix of economy-wide and targeted measures needs to consider national circumstances, including the structure of the economy, existing inequality trends, and labour market institutions that can best deliver policies.

The body calls its outlook “highly uncertain”, saying that such rapid and wide-reaching developments bring us into uncharted territory in terms of assessing the labour market and economic impacts and in forecasting the length and severity of the shock. “The current outlook is characterised by an extraordinarily high uncertainty regarding both the magnitude of the current shock to economies, the duration of the shock, and the long-term impacts on businesses and labour market prospects. For this reason, real-time monitoring and updating of policy responses are critical for all governments,” the report said.