A sustainable recovery may look different from a revert to earlier economic activities for sectors such as sustainable tourism, prioritising clean tech, rethinking medical tourism, etc.
By Purnamita Dasgupta & Oindrila De
Covid-19 is unlike any financial or economic meltdown. Economic functioning has become entangled with health of citizens and balance in nature. Prescriptions analogous to war recovery are at best partial as countries and states seek to cooperate, stakeholders coordinate, and massive information flows occur across borders. There is no enemy outside the borders; we are trying to clean our own junkyard with the help of each other. How different we would like the future to be from where we were before the pandemic? The answer lies in first recognising and then prioritising the links that economic recovery has with what people value more than ever before—inclusivity, equity, job security, clean air and water, to name a few. A sustainable recovery may look different from a revert to earlier economic activities for sectors such as sustainable tourism, prioritising clean tech, rethinking medical tourism, etc.
Jobs play a critical role in the transition to a sustainable economic recovery as they provide earnings and livelihoods (basic to life, humanitarian), enable social cohesion (dignity and self-respect) and contribute to increase in output (GDP). Employment data from NSSO’s latest large-scale sample survey (usual status employment, Periodic Labour Force Survey, NSSO, 2019) indicates that as per the National Industrial Classification (NIC-2008), over 20 crore workers are employed in 20 non-farm sectors. The five largest employers are manufacturing (12.13%), construction (11.67%), wholesale and retail trade, repair of motor vehicles (10.09%), transport & storage (4.93%) and education (3.78%).
MHA guidelines for managing the pandemic evolved from initially complete bans (hospitality, construction) and specific exemptions (food processing, petroleum and pharma products) to partial exemptions (freight movement, equipment for agriculture) to a gradual lifting of restrictions by April 20 (construction, forestry) and easing thereafter. Public administration, defence, social sectors (healthcare) were open while others were directed to work from home. Physical distancing had implications for both the scale of operations and workforce employability. Sectors that are opening up have to reckon with the disruptions that have taken place in labour and raw material sourcing, in movement of workers, and various requirements for physical distancing at the workplace.
An end-of-the-year scenario could assume that 50% of the workforce can be back in employment in those sectors where restrictions have been eased (mining, construction), 100% where capacity reduction is easiest to avoid (wholesale and retail trade of essential products like food and medicine, information and communication), and 0-33% for those where opening up soon is unlikely (malls, accommodation and food services, tourism). Adding up across these 20 non-farm sectors, such a scenario implies that up to 75% of the workforce that had been previously employed for up to 365 days in a year may now lie idle. This is not hard to understand as different sectors have varying employment potential and conditions for employment (83.7% of casual labourers are employed in the construction sector; 71.1% of regular/salaried workers in non-agricultural sector had no formal job contract; 54.2% were not eligible for any paid leave; 49.6% had no social security benefits in 2017-18). Adding casual labourers to salaried employees with no benefits implies that a large pool of workers (8.25 crore) works under very flexible terms and conditions.
It is clear that businesses that prioritise—or due to existing advantages have sectors that have the potential to recover faster than others—will gain relatively. For instance, ramping up IT and IT-enabled sectors could be our strength, with remote work options. Today, only a fraction of jobs can be performed at home in India, whereas estimates suggest that in the US up to 37% of jobs can be done from home. Investment in high-speed internet can overcome the digital divide and enhance work from home for several sectors.
For the majority, though, getting the labour force in place is essential to avoid further shocks and ensure jobs and wage losses do not lead to a spiralling effect on demand, as well as to prevent supply disruptions leading to bankruptcies. Now is the time to build up the labour force, including the most visibly affected, with adequate job security and skills.
Moving beyond the first imperative of direct support programmes (cash transfers, deferring loan payments, MGNREGA), the role of non-farm sectors in contributing to the dream of a resilient economy through the labour force needs attention. Resources need to be directed towards encouraging enterprises that can ramp up employment capacity and hand-hold these through incentives.
Dasgupta is professor and De is assistant professor, Institute of Economic Growth, Delhi