Effect of COVID-19 Pandemic on Employment and Earning in Urban India during the First Three Months of Pandemic Period: An Analysis with Unit-Level Data of Periodic Labour Force Survey

The Indian Journal of Labour Economics https://doi.org/10.1007/s41027-023-00428-7 ARTICLE Effect of COVID‑19 Pandemic on Employment and Earning in Urban India during the First Three Months of Pandemic Period: An Analysis with Unit‑Level Data of Periodic Labour Force Survey Anindita Sengupta1 Accepted: 5 January 2023 © The Author(s), under exclusive licence to Indian Society of Labour Economics 2023 Abstract Urbanisation has accelerated the pace of development throughout the world. Big cities provide employment and livelihood for workers because of which workers have always migrated from rural areas to cities. However, in India, most of the migrant workers are absorbed in the low-paid and low-skilled jobs in the widespread informal sector. With the outbreak of COVID-19, lockdown was declared suddenly without any notice in India during the last week of March 2019 and most of the urban informal sector workers suddenly lost their jobs, and since they had no protection, they were pushed into poverty. Detailed analysis of such losses is of utmost importance so that perfectly appropriate remedial measures can be taken by the government. Periodic Labour Force Survey (PLFS) report of 2019-20 has analysed the situation of labour market in India for four quarters from July 2019 to June 2020. Therefore, the last quarter of the data will give us the valuable information about the urban labour market during the first three months of the COVID-19 pandemic period. This study analyses the possible reasons behind decline in monthly earnings and labour market participation of urban people in India during the period of outbreak of COVID-19 pandemic, i.e. during the period from April 2020 to June 2020, using the data of fourth quarter from each of the PLFSs of 2017-18, 2018-19 and 2019-20 since they have identical seasonal conditions. We have used cross-tabulation method to find out employment and unemployment rates of people in urban areas according to gender and type of employment for the period, from July to June, for the years 2018, 2019 and 2020. We have also tried to find the reasons behind the decline in income of workers during the first three months of the pandemic period, i.e. during the fourth quarter of 2019-20, compared to the fourth quarter of 201718 and that of 2018-19 using the Mincerian wage equation. Our empirical results have shown that urban workers in India have lost jobs and suffered from significant decline in income during the first three months of the COVID-19 pandemic period in almost all types of employment. Extended author information available on the last page of the article 13 Vol.:(0123456789) ISLE The Indian Journal of Labour Economics Keywords COVID-19 pandemic · Urban workers · India · Informal sector JEL Classification E24 · J31 · P25 · J46 1 Introduction Urbanisation has accelerated the pace of development throughout the world. Big cities provide employment and livelihood for workers because of which workers have always migrated from rural areas to cities. Regular wage/salaried employees make up nearly half of the urban workforce (48.8% in 2019-20), and the rest are in a hinterland of casual work, temporary contracts and self-employment. Even among regular employees, only 33.2% have a written employment contract while 49.0% have access to paid leave and 48.9% some social security benefits (provident funds, sick pay, health insurance) through the government or their employer (Source: PLFS 2019–20). Majority of urban workers, including those who migrate from rural areas, are absorbed in the low-paid and low-skilled jobs in the widespread informal sector. Most of these urban informal sector jobs lack written contracts, paid leave and social securities. Migrant workers usually live in the urban slum areas and earn very low level of income which barely covers their subsistence level of living. However, availability of informal sector jobs throughout the year attracts workers in urban areas. With the outbreak of COVID-19, lockdown was declared suddenly without any notice in India during the last week of March 2020; and most of the urban informal sector workers suddenly lost their jobs and since they had no protection, they had been pushed into poverty. India witnessed large-scale return migration of these helpless and vulnerable workers back to the rural areas. This return migration was in the news headlines for a long time and this tragedy has long been widely discussed throughout the world. Due to the dearth of reliable data of loss of employment and drastic decline in earning of urban workers during the outbreak of COVID-19 pandemic and declaration of lockdown, it has been difficult for the researchers to measure the extent of such loss. Periodic Labour Force Survey (PLFS) report of 2019-20 has analysed the situation of labour market in India for four quarters from July 2019 to June 2020. Therefore, it is evident that the last quarter of the data would give us the valuable information about the urban labour market during the first three months of the COVID-19 pandemic period. According to the PLFS Report, 11.49% of total male labour force was unemployed during the months of April to June of 2018; although the percentage share declined to 10.14% during the same months of 2019, it increased to 19.15% during the same months of 2020, i.e. during the initial three months of pandemic. During April to June of 2018, mean urban earning was Rs. 27,913.15, which increased to Rs. 33,375.44 during the same months of 2019; however, it once again 13 ISLE The Indian Journal of Labour Economics declined to Rs. 28,595.15 during the same months of 2020 at constant 2012 prices (Base: 2012 = 100 for CPI for urban areas).1 From these overall figures, it is quite clear that urban workers in India suffered from huge loss of employment and earning in the first three months after the outbreak of COVID-19 pandemic. However, detailed analysis of such losses is of utmost importance so that a perfectly appropriate remedial measure can be taken by the government. A few researchers and columnists have tried to measure the extent of loss of the pandemic affected urban labour market of India. Bhalotia et al. (2020) have discussed about the impact of COVID-19 on urban workers in India using the LSE-CEP Survey. They have discussed about COVID-19 and the Urban Poor in www.orfon line.org. Kumar and Srivastava (2021) have discussed about impact of COVID-19 on employment in urban areas using the PLFS 2019-20 data in a blog in www.prsin dia.org. IANS (2021) has come up with an article on unemployment, COVID-19 and top most worries for urban Indians using Ipsos ‘What Worries the World’ global monthly survey. However, there is no detailed empirical analysis regarding the job loss and reduction in income of urban workers in India during the commencement of the lockdown in 2020. Against this backdrop, this paper tries to analyse the decline in employment rate and average monthly income (...truncated)