Informal workers in India as an economic shock absorber in the era of COVID-19: A study on policies and practices

1Introduction

The global virus pandemic has disrupted the world in unprecedented ways. The aggregated impacts of COVID-19 on social and economic setbacks over the world are beyond imagination [1]. Its imminent and looming impact has created havoc in human civilization, governments, economies, health systems, social structures, and the very resilience of the world as one united civilization. To mitigate the virus spread, the nationwide first lockdown in India was imposed on 24th March 2020 [2] as a fast-giving remedial strategy to break the chain which resulted in mandatory closures of workplaces, internal movements of the population, blocking of the transport movements, shutting down of the formal & informal activities throughout the nation. The sudden health emergency in a large population battered the Indian economy by deepening the condition of relative & absolute poverty [3] and shrinking the employment rate drastically with one crore Indians becoming jobless and further declining income of 97% of households [4, 5]. With greater uncertainties and economic divides in Indian formal and Informal economies; the lockdown in its unprecedented ways severely knocked the crucial vulnerabilities of majorly the informal sector of the economy which constitutes 90% of the 500 million working population in India [6, 7] due to its deep structural flaws. It further sharpened the worries for informal workers more adversely in the COVID-19-led lockdown as they were a highly unregulated, insecure and disadvantaged population where many were out of the formal records of the government and hence the resilience to reach out to them initially declined.

The informal sector employs around 90% of India’s labor, and there is neither a minimum wage nor any type of societal security [50]. Most of them are living in or near poverty, and others are in extremely poor conditions. The informal sector, which is defined by low productivity and few opportunities to escape poverty, absorbs the bulk of workers and commuters [51]. The lack of an accommodating governed primarily and policy regime to accommodate their unique needs and concerns is lamented in many international and local reviews looking at the issues facing India’s informal workers. Only the informal sectors in which a clear worker or working relationship may be seen are subject to the current worker regulations that address the work, working conditions, and welfare of the workers [31]. A sizable portion of the workforce is self-employed, and a large spectrum of legal and informal economic activities conceal the worker relationship. Other than the unorganized Workers Social Security Act, 2008 (Ghosh, 2013), benefits are largely not received by the workers due to the informality of the contracts and lack of knowledge about social security provisions like those in the Employees’ Compensation Act (1923), Employees State Insurance Act (1948), Employees Provident Fund Act (1951), or the Maternity Benefit Act (1961) [52, 53], informal workers are not protected by worker protections. The Government of India has developed a National Policy for Domestic Workers, but it has not yet been implemented. This policy was intended to explicitly guarantee the rights and welfare security of the workers by legislative measures. More than ten jobs per week ended up quitting around 80% of the domestic workers were practically jobless, and half of those reported having trouble getting medical treatment throughout the pandemic [54].

The informal sector was broken into multi-faceted layers with its precarious and undervalued work and the non-availability of social protection & safety nets for them [8, 9]. The government-financial package during the lockdown just provided supplementary credit reliefs for MSMEs (Micro, Small & Medium Enterprises) [10, 11] while leaving the workers grime for employment when the demand for work was hammered and various enterprises were shutting down. The unavailability of reliable data and registered informal population for procuring social schemes like the public distribution system (PDS) and for largest livelihood scheme- MGNREGA (“Mahatma Gandhi National Rural Employment Guarantee”) made it more difficult for the informal workers to sustain their daily employment and gain immediate interventions. The closures of worksites and fall in demand for daily waged employment especially at construction sites, in household works, unregistered firms, street vending and other cumulative works in unorganized sectors were left in dilemma to fight the virus or die of hunger with no or insignificant savings.

The shutdown in India was undoubtedly a successful pandemic control measure, but it was implemented hastily and without adequate planning. Workers in the unregulated sector could experience an abrupt income decline [55]. People from the informal sector, who are typically from low-income, marginalized groups, typically have restricted access to healthcare. There is evidence that Covid-19 effects on workers and residents are influenced by socioeconomic factors. Following the lockdown, these workers faced immediate problems with food, shelter, lost earnings, worry of contracting an infection, and anxiety. Poorness and being far from home are two problems that informal workers must deal with. Because of a lack of identification and residency documents, many programs intended for the informal sectors or workers do not reach them. The fact that immigrants’ financial, societal, and political rights are not being fully upheld, despite the fact that they are legally considered citizens, is a severe problem [56]. As a result, thousands of them began fleeing to their hometowns from various cities. Many workers died as a result of stress on the job, hunger, an accident, comorbid conditions, or even suicide [57]. Many had to go hundreds of kilometers on foot because there was no public transportation to get to their home communities. Those who returned to their hometowns were mistreated by the authorities and the villagers because they were viewed as carriers of the virus.

Migrant workers’ crises were much evidence of how even Urban India was highly dependent on those informal rural workforces which were highly undocumented [11]. For them, it was more about existential rights; ‘Right to live’, ‘Right to Food’, and ‘Right to security. The two-prolonged crises for informal workers were observed during the lockdown i.e., no production of work to no consumption of food. India being home to 90% of the entire workforce as informal (Employment Policy Department, 2019 working paper no.254, international labor organization) disproportionally dealt with social tensions, mental distresses, starvation, social negligence and survival. The lockdown has been also harsh to manufacturing units that are labor-intensive and where low-skilled women are more engaged. The ISST (Institute of Social Studies Trust) Survey, 2020 depicted that the lockdown highly immolated the earnings of women informal workers with around 83% of respondents of the survey observing severe income fall to the loss of jobs. It exposed the preexisting gender-based inequalities within the unacknowledged & invisible employment for women in the labor market especially women in poor households where they are more likely to work in most vulnerable categories such as self-employed domestic work, street vending, workers as waste pickers and others. Hence, with India’s multiple handicaps of large informal employment with gender biased-gaps; there is a daunting need to evaluate and assess the exacerbation of the vulnerabilities of the informal sectors firmly with not just articulating economic fallout but rather addressing the multi-layer magnitude of the unprepared structural collapse during the nation-wide lockdown leading to measuring the precariat informal working population’s varied impacts (social, psychological, economical and healthcare disruptions). The following are the research questions offered for this study based on this discussion:

The following research objectives are framed to obtain solutions to these research questions:

This study examined how migrants and informal workers suffered during the epidemic in order to develop a plan for reducing the societal and economic effects of Covid-19. Additionally, it is necessary to integrate interventions including the federal, state, local, and civil service entities in order to design strategies at the macro and micro levels to address the covid problem of informal workers. The following structure of this study has been followed. In the next section, the literature review has been outlined including the design of a research model and the development of the theoretical framework and research hypotheses. Further, it examines the research technique utilized, defines the sample and data sources, and explains how the variables included in the study were measured. Following that, the acquired results are given and discussed, followed by the study’s key implications, conclusions, and limits for future research.

2Literature review

2.2Lockdown and the condition of informal workers

The lockdown has widened the deep-rooted unequal informalities in the informal Indian market with poor development indicators. Amongst the heterogeneous factors of the lockdown crises-the dimension of employment loss was the biggest one. Likewise, the Centre for Monitoring Indian Economy (CMIE), in April 2020, evaluated that the Indian economy lost overall 121.5 million jobs out of which 91.2 million were informal jobs such as daily wage laborers, domestic household keepers, street vendors, small traders, self-employed workers etc. The length and impacts of this epidemic are still unknown, as is whether further waves may return in the months and years ahead. Many organizations will likely close or reduce their operations as a result of its influence, and their development will be severely hampered for many years. The incomes of many people heavily crashed pertaining to no market demand and total supply disruption during the lockdown [15, 16]. Many daily household workers especially women working in daily chorus activities were restricted from entering societies by their resident welfare associations resulting in partial or complete loss of their daily sources of income. The studies like [17] and SKOCH Group in collaboration with the Federation of Indian Micro, Small and Medium Enterprises revealed that mostly informal laborers working in MSMEs suffered from 25–30 million job losses due to the firm closures and the ‘wait and see behavioral-approach [18] of many small and medium enterprises in India. The large exodus of migrant workers who migrated from their workstations to their native places barefoot to sustain themselves was unimaginable due to the complete loss of earning options during the lockdown. The announcement of the fiscal stimulus was related to loan reliefs and giving certain guarantees and transferring relief funds by direct bank transfers (DBTs). On the contrary, there were no emergency grants provided directly to the informal workers in India because of the persisting factor that they were missing from the government data.

Fig. 1

Theoretical framework.

The low-paid workers were on the extreme edge to acquire daily meals for their families as unemployment had led to the exhaustion of their wages with no saving alternatives. India ranked 94th out of 107 countries in the Global Hunger Index in 2020 and the pandemic has doubled the number of food-insecure people in India [19]; which is an indicator of how the lockdown-led food and habitat crises and structural incompetence in dealings of even local-level emergencies [20] have worsened their existing horrible situations. Not to forget India’s undernutrition and malnutrition co-existing problems in rural areas and urban slums adding to doubling the effects satisfaction level due to the interrupted food supply chains in government schemes like mid-day meals, Take-Home Ration (THR) under ICDS especially for low wage-earners ‘children during the lockdown [21–23]. Lytras and Tsiodras [24] mentioned that the condition of the small contracted, non-permanent homes available for the informal workers which were mostly rented especially in slum areas with no isolation possibility made it impossible to secure their homes due to the loss of jobs or themselves from the virus [25].

3Research methodology

During the Period of Lockdown, the impact of COVID-19 was measured on the informal worker and economic hardships having the support of government and non-government support. Many variables are measured. The study was conducted across the Indian population such as informal workers mainly migrant workers, and daily wage workers who have suffered from the bad impact of COVID-19 and the lockdown. To measure the levels of each variable, we used a five-point Likert scale (1-strongly disagree, 2-disagree, 3-neutral, 4-agree, 5-strongly agree). This empirical investigation has been conducted online and the questionnaire was sent using google Forms after an executed preliminary study was conducted successfully. In the next stage, this questionnaire was pre-tested with 30 respondents who agreed to participate. To confirm the measures’ reliability and validity, a preliminary reliability test was done using SPSS. After their suggestions, the improved and modified questionnaire was considered as the final questionnaire and it was sent to 890 respondents but received only 705 responses.

The data collection process was conducted during the COVID-19 outbreak from June 2020 to October 2020. During data cleaning, we found 58 responses were missing so it was deleted and a 647 sample size is considered for final analysis with a response rate of 72 percent. This sample size based on the survey is satisfactory [34–38]. Further, to avoid biasness, no direct questions were asked, thus the performance and personal growth will not be affected by any kind of biasness. The items/questionnaire, measured on a five-point Likert scale were considered [39–42]. The sampling technique led to a designated sample size to avoid the biasedness of the sampling [40]. Thus, we checked and examined the method biases and then make a decision [41, 42]. The online data-gathering survey employed a structured questionnaire. The questionnaire comprised two sections as demographic details of the respondents, define and measure the variables. Table 1 summarises the demographic details of the respondents.

4Data analysis and results

5Discussion

In the present study, it has been found that the informal workers were significantly affected by the Covid-19 measures taken by the governments in form of various restrictions specifically nationwide lockdowns. The informal workers are the most vulnerable to any economic disasters which take place in any developing country like India. Interestingly, India has the highest number of informal workers working in different sectors and unorganized industries. In the study, it is found that the nation-wide lockdown has impacted the informal workers. This particular hypothesis was also supported in a previous study [47]. The informal workers have suffered the most due to a lack of work on a daily basis. Similarly, the study based on the results found that in context to gender parameter women-informal workers has been also affected by the lockdown because of Covid-19. Informal women workers specifically those who were earning the livelihood for the entire family were more impacted by the lockdowns in India. The results of the study on the gender parameter especially women informal workers were found to support the study conducted in the Indian labor market during the lockdown [48]. The condition of women informal workers was found poor. It was because of the closure of the unorganized sectors such as small schools and restrictions from landlords towards household work, baby care jobs and many other areas of work where women informal workers were in demand. The families led by women informal workers got suffered badly for months.

The present study also found a positive relationship between the lockdown and varied effects across different spheres. These different spheres are job status, reduction of the level of employment, lack of money, alternate plans to arrange food, problems faced procuring food through government support, and aggregate household expenditure simultaneously. The literature in support of the hypothesis can be verified in the published study based on the informal workers in India [49]. In the present study, it has been also verified that the level of satisfaction across the gender categories with government and non-government organizations in supporting informal workers was found positive. In this case, it suggests that gender categories majorly both (male and female) and their level of satisfaction with government support and non-government support got affected.

The results suggest that government measures have impacted more to the informal workers more as compared to non-governmental support. A previous study highlights the task of the government organizations that supported food vendors in South Africa and India. Another example is the waste pickers who were also supported by the government in India and Brazil. Not only the government but, also non-governmental bodies such as private business houses, civil societies and other cooperatives were taking care of these informal workers in terms of relief measures, food, and safety precautions for waste picking [49]. In this case, hypothesis four is also supported by the previous study. The next argument studied in the article is about the level of government support to support informal workers’ day-to-day life which is also found statistically significant. This means that the government in India was able to deal with the day-to-day challenges of life with the help of food and other essential support during the time of Covid-19. Moreover, the level of economic hardship to support informal workers’ day-to-day life was also found significant in the study. It suggests that the higher level of economic hardship is more challenging in dealing with the problems of informal workers and vice-versa. The relationship between the satisfaction level with respect to government support for economic hardship was also found significant and positive. That means that a higher satisfaction level with respect to government support reduced the economic hardship of the informal workers and vice-versa. The hypothesis result is given in Table 19.

The study closely highlights the role of the government system towards non-government organizations those who played a crucial role in the welfare of the informal workers. The most affected group of people in the Covid-19 lockdown are the informal workers who were working on daily wages for their bread and butter. But, because of the lockdown and several other restrictions, the entire structure of the unorganized workforce got collapsed. In India majority of the workers are working in the informal sectors and hence it is also one of the major causes of poverty specifically during the time of crisis in the country. The social exclusion and inequalities faced by informal workers during the Covid-19 pandemic are a very desperate part of it. These exclusions and inequalities were well taken care of by the non-governmental organizations. Several non-government organizations (NGOs) came up front and support this section of society. The government endeavor was also found significant in supporting the informal workers. But it is true that there is a lot more was left undone and emergency migration took place among the informal workers. In this migration process, certain casualties among the informal workers were also seen. These incidents question why there are still many reforms that are still required for the welfare of the informal workers in India. The informal workers working in the unorganized sectors were also not on record that perhaps also increasing chaos in the government system and which also made the delay in providing the appropriate solutions to the problems of the informal workers during the time of lockdowns. These issues and the government’s sudden action on the nationwide lockdown made the problem even worst for the workers. These issues led to forcefully migrating the workers from the urban areas to their native lands. The entire initial migration process was not led by the government systems and it was not even supported by any means by the government. The quick decisions of the government confused the rest of the systems including transportation and this even created more load on the informal workers.

6Conclusions, limitations, and future scope

The entire study revolves around the nationwide lockdown in India because of the acceleration of the covid-19 cases. Another aspect covered in the study is the most important economic pillar of our economy i.e., informal workers. These informal workers are the highest in size among the entire workforce in India and hence they are imperative for social inclusion and equality. The economy of India is very much supported by informal workers. Therefore, the present study is imperative to be presented in the knowledge base. The focal point of the study was the involvement of the government and non-government organizations in mitigating the problems of the informal workers. The covid-19 lockdown has impacted badly the informal workers despite their gender and specifically, the results suggest that the women workers were more affected. The role of the government organization was found better in comparison to the non-government organizations. It is because of the present policies of the government and their methodology. But, at the ground level, informal workers have faced big problems especially migrating to their homelands. The lessons learn from this pandemic to the government and non-government organizations are a lot more. These experiences and lessons are significant in not repeating and leaving the loopholes while serving the significant economic pillars of the country. There should be more specific policies toward informal workers’ inclusion and authorities should realize the significance of informal workers. The study presents the gender parameter status of women workers in the informal sector. It suggests the government and other corporations pay specific attention to the workforce, facilities and pay structure of informal women workers. This study can be used to show the condition of female workers in India and bring a change in social thinking and perception of people towards women.

The study is limited to the Indian Informal sector and focused on women informal workers more hence, the conclusion can’t be the same for all the sectors and countries. The result may differ for various sectors and geographical boundaries.