Urban workers who lost their jobs during India’s first lockdown have been unemployed for six months on average, according to a new survey from the London School of Economics and Political Science (LSE).
The study finds that only 33 per cent of those surveyed had worked for more than 40 weeks in the previous 12 months – compared with 85 per cent who did so before the pandemic.
The research report – City of Dreams No More, A Year On: Worklessness and Active Labour Market Policies in Urban India– is published by the LSE’s Centre for Economic Performance (CEP) and the International Growth Centre, based at LSE and run in partnership with the University of Oxford.
It follows an earlier report published in September 2020, which revealed that 52 per cent of urban workers went at least a month without work, pay or any financial assistance in India’s first lockdown which began in March 2020.
The new survey recontacted more than 3,200 of the first survey respondents and also expanded coverage to 1,500 people who had lost work since the pandemic. The survey was carried out from January to March 2021.
Today’s report shows that the pandemic has pushed urban workers towards a trajectory of longer-term unemployment and livelihood loss:
- Of the recontacted individuals, 8 per cent were unemployed and 8 per cent had worked zero hours in the week before the survey. Another 24 per cent said they had not had any earnings in 2021 – meaning around 40 per cent of individuals, who were all employed before the pandemic, had no work or no pay in 2021.
- Younger lower-income individuals are doing worse, with a higher share (47 per cent) having no work or no pay.
- Two per cent of those contacted had dropped out of the labour force and were no longer looking for work.
- India already runs the world’s largest jobs programme, guaranteeing 100 days of work to rural households. When asked whether they would prefer a job guarantee or a cash transfer from government: 84.5 per cent of those surveyed preferred a job guarantee.
- Social safety nets continue to be out of the reach of informal workers in low-income urban areas. Only 12 individuals (out of 4,763) had an account with the Employees’ State Insurance Corporation (ESIC) or the Employees’ Provide Fund Organisation (EPFO).
Co-author of the report Swati Dhingra said: “Young workers, who are over-represented in informal employment, are particularly at risk of long-term worklessness. This can have life-long scarring impacts on their employment and earning prospects as well as their mental health, and is detrimental to the overall wellbeing of their communities.
“Lockdowns are necessary to save lives from the pandemic. Following up with active labour market policies is also imperative to save livelihoods in the aftermath. A national-level commitment to provide job opportunities would help prevent a lost generation of young workers from falling into long-term unemployment and the ills that accompany it.”
Co-author Fjolla Kondirolli added: “The vast majority of individuals would like a job guarantee, and most of them prefer it over a cash transfer because it would directly address the lack of work and livelihood insecurity. Other reasons include certainty of government payments, local work opportunities and more days of work.
“The Government of India has made paltry increases in wages under the rural job guarantee, and there have also been concerns over job rationing. This seems to be reflected in some individuals preferring cash transfers due to the low earning potential of job guarantees from low wages and rationing.”
The full report can be read here: City of Dreams No More, A Year On: worklessness and active labour market policies in urban India.
The previous report can be read here: City of Dreams No More: the impact of Covid-19 on urban workers in India