The article is written by Akarsh Tripathi, a BBA LLB student of Symbiosis Law School Noida. Through this article, the author explains the impact of COVID-19 on the unorganised sector in India.
Table of Contents
Introduction
The COVID-19 pandemic and its unprecedented catastrophe have forced the entire world to announce nation-wide lockdown, closing of factories, industries, etc. On one hand, we have our medical experts, police officials, staff, and the government authorities working round the clock to save the lives of the people, and contain the spread of this contagious virus.
On the other hand, there are migrant labourers, factory workers and other people who belong to the unorganised sector, and are now struggling to make their ends meet.. The reason being the nationwide lockdown, and temporary shut down of the industrial sector, whose time period also seems uncertain. This article aims to address the impact of COVID-19 on the unorganised sector and dwell on the challenges which they are currently facing and will face once the dust settles.
Meaning of Unorganised Sector
According to the September 2007 “Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector” by the National Commission for Enterprises in the Unorganised Sector (NCEUS), “The unorganised sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers”. The term “unorganised sector” and “informal sector” is used interchangeably.
In simpler words, the term unorganised sector refers to the self-employed worker or workers who work on wages rather than fixed salaries. These people don’t have any union, the reason being the scattered location of enterprises and their nature of employment. Also, the sector involves people with low-income groups where they don’t have any protection of their employment terms. The existence of the vast majority of this unorganised (also called as informal) sector of employment forms a characteristic part of the existence of our Indian Economy. The report in appendix A1.1 shows that India has a total of 457.5 million of the workforce, and 13.7 % of it belongs to the organised sector, whereas the rest of 86.3% belongs to the unorganised industries sector.
Start of the Disruption
The migrant labours were unaware of the sudden announcement of the lockdown, and abrupt closing of the public transport system. This left them with no choice but to reverse migrate to the place where they came from in search of employment, and the lack of information, the spread of rumours and overburdening of information, a large chunk of them decided to cover the distance by foot.
Some of them were not even allowed to enter into their states or leave the state from where they were coming from. This put them in a “stateless condition” surrounded by the disarray created by the lockdown. Not only the migrant labourers, but the workforce in general of the country has shrunken. As per the recent CMIE (Centre for Monitoring Indian Economy) data, the unemployment rate as on March 8, 2020, was 7.77% which rose to 24.57% as on May 6, 2020. The data is self-explanatory and shows a clear image of the disruption faced by the workforce sector of our country.
Impact of COVID on Unorganised Sector in India
To understand the impact of COVID-19 on the unorganised sector in India, it is reasonable for us to do the analyses by observing how the people belonging to the different workforce areas of the country will be affected, both during the lockdown situation and after the normalisation of the COVID-19 crisis.
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Agriculture
90% of the workforce in the agricultural sector involves people from the unorganised sector. The impact of COVID-19 on the agricultural sector and those who work as agricultural wage labourers are complex and vary among different regions. Although there are a lot of issues, pointing each and every one of them won’t be feasible. However, there are primarily two-three aspects worth noticing here. These are:
- Lack of Labour Availability /Manual Labour.
- The inability to access the market because of lack of transportation system and supply chain disruption.
- Increase of Loan debts and Liability.
The parts of agriculture where the luxury of developed technology is used for activities like harvesting will be less affected as they do not majorly depend on manual labours. Another important problem for those belonging to the agricultural sector will be the repayment of due crop loans borrowed from the banking sector. These loans are usually repaid in the months of April and May and a fresh loan is again taken on the onset of the new season. The recent price collapse which has resulted in farmers to face huge losses means that they will be unlikely to repay their loans.
The failure to repay such loans will leave them with no other choice but to rely on the informal sector for loans at a higher rate of interest. Now the question which you might be thinking of is “how will these disparities get resolved?” The government is one of the major stakeholders in this, will be advised to reschedule the loans, provide relaxations to the farmers, and aim at reducing their liability. Otherwise, there is a high possibility that people from this unorganised sector will fall into the vicious cycle of debt, and will worsen the crisis. In other words, it is correct to say that the end of the lockdown and the containment of coronavirus will not mean the end of the problems.
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Daily Wage Labourers
The Manufacturing sector of India accounts for 29.73% to the GVA(Gross Value Added) of the economy and approximately 16% of the global GDP as of 2018. The same goes for the Construction work going across the country. Being a significant part of the economy, it becomes important to understand the impact of COVID-19 impact on the workforce which is involved in the sectors of manufacturing, construction and other workplaces using daily wage labourers as their workforce.
There will be a shortage of workers especially the daily wage labourers as they have migrated back to their home states. Industries like the automobile, textile and engineering have a major dependency on their manufacturing plants and the majority of the workforce has daily wage labourers working in their companies. Considering the lack of support which was provided by the companies to these migrant workers, many of them won’t turn up to work once the lockdown ends, and industries are made functional.
Considering the chaos which was created on March 25 and the subsequent exodus, it is unlikely that there will be adequate transportation facilities available for these workers to return back to their workplace, which will also be a reason behind the increase in unemployment and lack of workforce at the manufacturing industries. Also, an important question is “These migrant workers who have travelled from native places to cities, will they be welcomed by their landlords? Or their industrial workplaces?” The fear will be there preventing employers from recruiting these daily wage labourers immediately once they come back.
As rightly pointed out by Mahindra, the pandemic has shown us that these workers are a key element of our ecosystem, however, we never really paid much attention to them and that it is time we respect these people who belong to the unorganised sector and act as support pillars of our economy.
But is there a solution? Of course, there is a solution to every problem. This crisis might seem big and the truth is, it is. But, there are ways through which the government can ensure the protection of interests of these migrant workers who work in factories and manufacturing industries. According to the suggestions of the industry body, issuing e-pass, making proper arrangements for transportation of migrant workers and also providing these workers COIVD-19 insurance covers could bring relief to the situation and help those who belong to this informal sector of our economy.
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The fate of Sanitation workers
The cleaning staff and those involved in the process of disposal and treatment of biomedical waste are also the ones exposed to the vulnerabilities of COVID-19 crisis. These people also belong to the unorganised sector and jobs like waste-picking, cleaning, etc are their responsibilities. The outbreak has thrown them into an uncertain future where they have problems at both the ends.
Firstly, the risk associated with their jobs which might result in health repercussions due to close contact with the waste (especially the biomedical waste being generated). Secondly, these workers are staring at the facilities which they deserve to be provided while working. These facilities include both the financial assistance and the insurance coverage they need to seek to ensure their safety, survival and interest of livelihood.
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Household workers
The lockdown and social distancing norms seem to be the best possible way to stop the spread of this contagious virus. However, it also renders thousands of household workers jobless where they fight with coronavirus and hunger at the same time. These workers are on a daily, weekly or monthly job basis. They are in a dismal state because they also face problems like domestic violence at their homes, where they are forced to be quarantined. Recent studies also show that there has been a rise in cases of domestic violence across the country, and still a lot of cases go unreported since women are not able to leave their homes.
People who used to work in private households, be it on a temporary basis, fixed-hour basis or ‘live-in’ basis, all are forced to quit their jobs due to the fear that exists in the minds of their employers. Thus, they are at a major risk of unemployment with no other source of income to survive in this pandemic. Domestic workers and Household labours account for a significant part in the informal sector. As per government data, we have a total of 40 lakh domestic workers in India and 65% of them are female. Matters like these must be taken with utmost urgency and the government needs to ensure that the rights of these individuals are not being violated.
Challenges Ahead
One of the major challenges which shall be faced post the lockdown and normalisation of COVID-19 crisis will be the lack of data or details which are available as of now, to observe the problems faced by people belonging to the unorganised sector. Lack of statistics will further result in the improper implementation of policies since the policymakers won’t be having a clear image as to how many people belonging to the unorganised sector can benefit from their relief policies.
Also, another hurdle is that even after the facilities and resources provided by the government, a large chunk of the daily wage labourers is not able to avail them. For instance, most of these daily wage labourers are unable to access the ration being provided by the govt. As they do not have white ration cards since they usually migrate from one place to another.
Conclusion
Through this article, we have seen the impact on the unorganised sector by taking into consideration the major areas where there is the involvement of such a workforce. By doing so we can predict the future implications which they are likely to face, and what the authorities need to do at this stage. Also, Fighting against the odds of coronavirus needs a two-fold approach where the policies need to ensure the sustainability of the economy and the survival of people belonging to the unorganised sector of the country.
It is impossible to ignore this section, as it will have a more detrimental impact on the industries and will further affect the organised sector. Unorganised sector people have unstable sources of income, but they still contribute to the national income in a very substantial manner, in comparison to that of the organised sector of the economy.
References
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Hey,
Today not only the unorganized sector is facing problems all sector are facing issues due to Covid-19 I hope this pandemic end soon.