{"id":139102,"date":"2021-10-04T20:37:34","date_gmt":"2021-10-04T15:07:34","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=139102"},"modified":"2021-10-12T15:41:40","modified_gmt":"2021-10-12T10:11:40","slug":"what-the-continued-distress-in-informal-labour-market-says","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/what-the-continued-distress-in-informal-labour-market-says\/","title":{"rendered":"What the continued distress in informal labour market says"},"content":{"rendered":"\n

Synopsis: <\/span><\/b>Status of informal sector in India, distress faced by them mainly during the Covid-19 pandemic and various impacts of the sustained divergence between the formal and the informal labour force.<\/span>\u00a0<\/span><\/p>\n

Introduction<\/span><\/b><\/h5>\n

Recently released economic data suggests that the Indian economy has emerged from the second wave of the pandemic better than expected. Two broad points emerge.\u00a0<\/span>\u00a0<\/span><\/p>\n

First<\/b><\/em>,\u00a0the second wave was far more\u00a0severe. Still,\u00a0the impact of the\u00a0localized\u00a0restrictions imposed during this period on economic activity was less damaging than observed last year.\u00a0<\/span>\u00a0<\/span><\/p>\n

Second<\/b><\/em>, in the weeks and months thereafter, large parts of the economy are almost back to pre-Covid levels.\u00a0But distress is lasting\u00a0in large parts of the informal economy.<\/span>\u00a0<\/span><\/p>\n

What is the status of the informal sector in India?<\/span><\/b>\u00a0<\/span><\/h5>\n

The informal\/unorganised\u00a0sector in India accounts for roughly half of the total value added in the economy (52.4 per cent in 2017-18). It\u00a0employs around 90 per cent of the\u00a0labour\u00a0force.\u00a0<\/span><\/p>\n

The distress faced by this sector can be estimated\u00a0from the state of the informal\u00a0labour\u00a0force.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

What does the various data represent?<\/span><\/b>\u00a0<\/span><\/p>\n

First<\/span><\/b>,\u00a0In the first quarter of the ongoing financial year, the number of households demanding work under MGNREGA\u00a0was lower than last year.\u00a0But it was higher than pre-covid levels.\u00a0There could be two possible explanations for this.\u00a0<\/span>\u00a0<\/span><\/p>\n

– <\/strong>The extent of distress in the labour market last year was of a much higher magnitude. <\/span>\u00a0<\/span><\/p>\n

– <\/strong>The spread of the pandemic in rural areas this year curtailed the registration of households demanding work under MGNREGA.<\/span>\u00a0<\/span><\/p>\n

Second<\/span><\/b>,\u00a0In the second quarter, however, the number of households demanding work this year was not only around the same level as last year, but was also significantly higher than the pre-Covid level (2019-20). This signals two possibilities.<\/span>\u00a0<\/span><\/p>\n

– <\/strong>sections of the informal labour force in rural areas and the migrant households who have not returned to urban areas, were unable to find non-farm employment. They had to rely on MGNREGA. This implies that large parts of the informal economy (manufacturing, construction, trade and transport) were operating well below their pre-Covid levels in the second quarter as well.<\/span>\u00a0<\/span><\/p>\n

– <\/b>A\u00a0section of the informal\u00a0labour\u00a0force simply opted for whatever work was available at depressed wage rates\u00a0wherever employment opportunity was available. They\u00a0supplemented\u00a0its income by seeking work under MGNREGA.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span>What does the\u00a0level of sustained distress in the informal labour market represent?<\/span><\/b>\u00a0<\/span><\/p>\n

This level of sustained distress in the informal labour market points towards a continuing gap in the fortunes of the formal and informal parts of the economy.\u00a0<\/strong><\/span><\/p>\n

Data also revealed that the bigger companies flourished, the smaller ones continued to be in distress.<\/span>\u00a0<\/span><\/p>\n

What\u00a0are\u00a0the outcomes\u00a0of the\u00a0sustained divergence between the formal and the informal labour force?<\/span><\/b>\u00a0<\/span><\/h5>\n

First<\/b><\/em>,\u00a0worsening of the income distribution.\u00a0<\/span>\u00a0<\/span><\/p>\n

Second<\/b><\/em>,\u00a0loss in purchasing power of the lower half of the distribution chain would translate to the aggregate household consumption basket shifting towards that of the relatively\u00a0wealthy\u00a0households. This would raise demand for the less\u00a0labour-intensive\u00a0services and high-end\/imported manufactured products and reinforce the current labour market trends.<\/span>\u00a0<\/span><\/p>\n

Third<\/em>,<\/span><\/b>\u00a0this distressed labour market\u00a0has broader implications for aggregate consumption and investment, and indicates subdued medium-term growth prospects.<\/span>\u00a0<\/span><\/p>\n

Source<\/span><\/b>:\u00a0This post is based on the article “<\/span>\u00a0What the continued distress in informal\u00a0labour\u00a0market says<\/span><\/b>\u00a0” published in\u00a0<\/span>The\u00a0Indian Express\u00a0<\/span><\/b>on\u00a0<\/span>4th Oct 2021.<\/span><\/b>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Synopsis: Status of informal sector in India, distress faced by them mainly during the Covid-19 pandemic and various impacts of the sustained divergence between the formal and the informal labour force.\u00a0 Introduction Recently released economic data suggests that the Indian economy has emerged from the second wave of the pandemic better than expected. Two broad… Continue reading What the continued distress in informal labour market says<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[312,10170,216,1720,3138],"class_list":["post-139102","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-employment","tag-government-policies-and-intervantions","tag-gs-paper-3","tag-informal-sector","tag-unemployment","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704798527},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/139102","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=139102"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/139102\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=139102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=139102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=139102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}