Reducing the vulnerabilities of urban employment

Source- The Hindu

Syllabus- GS 3- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Context- The contraction of the economy raises concern on the employment situation as the shrinking sectors are those that create the maximum new jobs in India.

What are impacts of COVID-19 on the economy?

1. GDP contraction– India’s economy shrank nearly 25 percent in last quarter, the most drastic fall in decades.
2. Public administration– higher government spending was in the form of transfer payments rather than spending on goods and services, which resulted in a negative growth number.
3. Manufacturing and Services– The sector has been in the negative zone (–39%) across the board due to the national lockdown since end of March.
4. Industries which have been hit harder—

• Travel or Entertainment (–47%)– will still be in a gradual normalization process, and probably won’t rebound completely until a vaccine is available.
• Real estate (–50%)– The present stress on home loans can hinder a revival in residential real estate.

What is the impact of lockdown on low-end informal jobs in India?

The pandemic and associated policy responses have exposed the severe vulnerabilities of urban low-end informal jobs; the share of vulnerable employment is higher in India as compare to the world.

Vulnerable employment- It characterized by inadequate earnings, low productivity and difficult conditions of work that undermine the basic rights of workers.

• GDP contraction and lack of demand in the economy, which results a significant dip in urban employment generation.
• In India, capital and labour are moving from low value-added activities in a sector to another sector, but not to higher value-added activities. This leads to a situation where a large proportion of the jobs being created is of poor quality (and is expected to remain so).

What are the possible solutions in securing the livelihoods of workers in urban areas?

1. Generate more jobs-

• The focus on urban employment generation programmes should be in coordination with local governments.
• A major local initiative would be to design and implement employment-intensive investment policies.
• Private investments need to be facilitated by conducive contractual relations between labour and capital.
• Small and micro enterprises, the fulcrum of industrialization, need extra support to balance the interests between labour and capital as neither have collective bargaining powers.
• Needs to launch of an urban employment scheme oriented toward building large-scale medical, health and sanitation infrastructure in cities and towns across India.

2. To reduce vulnerabilities by proving decent wage and some form of job security-

• It is important that MGNREGA be expanded by both increasing the budgetary allocations and the guaranteed minimum number of days of work.

3. Prioritize urban infrastructure-

• Infrastructure investments would spur employment, generate earnings and contribute to small enterprise formation.
• Construction of low-cost housing is another activity that can be carried out using labour-intensive methods, while yielding substantial collateral benefits for urban dwellers’.

Way forward-

Given the structure of the economy and demographic profile, Government needs to focus on reducing the vulnerabilities of urban informal jobs in the long run.