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APD | Economic consequences weigh on millions of Indian migrants



By APD writer Alice

The COVID-19 crisis has shrunk the job market in India significantly, leaving a huge surplus of labor and putting great pressure on the salary and bonus regimes as well as working conditions. Millions of migrant workers who left cities as they lost their jobs due to a nationwide lockdown have now returned but are facing countless difficulties.


Seema Kumar, a young beauty salon worker, just returned to Hyderabad after eight months working in the fields at home. She is among an estimated 121 million people in India who lost their jobs after the government imposed the nationwide lockdown in March to control the spread of the pandemic.

But unlike the difficulties she often faced in the city like finding a boarding house or negotiating working hours, this time her worries are different. Kumar returned to work at the same beauty salon that had hired her for the past three years with no commitment to a fixed salary.


Instead of the usual salary of 8,500 rupees (nearly 120 USD) per month, Kumar will only be paid for effective working days such as weekends, festivals or other days with many customers. Despite her worries, Kumar knows that she was one of eight female employees working at the salon before closing, and is now lucky to be one of the only two "senior" employees called back to work.

Kumar's story is no exception. A new survey of more than 1,600 large-scale manufacturing and service employers conducted by non-profit Pratham shows job vacancies with attractive remuneration to attract migrant workers back does not reflect the whole story. In contrast, in the post-pandemic period, workers are even more vulnerable.


Workers in India are accustomed to not having a regular source of income. Less than 20% of the country's workforce of more than 500 million is counted as salaried workers, while the rest work in the informal sector. In early August 2020, an estimated two-thirds of migrant workers wanted to return to cities, when jobs in rural areas became scarce and agricultural incomes were not stable, pushing many people into debt. But ironically, when they returned to cities and towns, chances for them have changed.

In the healthcare sector, after a lull in April and May, private facilities recruited staff again. For low-level employees (less than 2 years of experience), the salary is almost unchanged, about 7,500 rupees (102 USD) in hospitals and 10,000 rupees (137 USD) in family care facilities. Wages have not risen, welfare benefits, including housing and transportation, have improved marginally, but working hours have skyrocketed, plus increasing occupational risks.


 Meanwhile, the service industry takes a long time to recover. In terms of tourism, out of 1,176 hotels surveyed, only 45% are still operating while many others have closed. Furthermore, only 5% of all surveyed hotels have started hiring employees, but most operate at a significantly reduced capacity.


The beauty care sector in India has also seen a similar impact on job opportunities, with only 28% of employers surveyed wanting to recruit employees but the majority having much lower demand than in previous years. Not surprisingly, this sector has had a markedly falling salary offerings. The average salary for new comers has dropped from 5,860 rupees to 4,800 rupees - a 15 percent decrease from pre-pandemic levels.


Although the production facilities have yet to reach the same production capacity as before, they have resumed recruitment. 51% of the 156 questioned employers said they are recruiting at an increased scale from the pre-lockdown level, and 29% are recruiting at a scale similar to the pre-pandemic level.


Many places have applied an average monthly bonus of 500 rupees, while some manufacturing centers such as Pune and Noida, which are in a severe shortage of workers, offer higher bonuses, about 1,000 rupees per month. Furthermore, businesses have also started to slightly increase subsidies on travel and accommodation.


However, employers only seem to want to provide these benefits informally (not under contract) or through short-term contracts. This signals that these may be only temporary changes. 

In terms of health, COVID-19 has the strongest impact on the elderly population, but economically, the pandemic affects the young most severely. When the economy reopened, two distinct changes could be identified.


First, the experienced workers are prioritized more than the young, inexperienced ones. Second, as the job market shrinks, labor surplus puts pressure on reducing wages and working conditions, making employment more informal and workers more vulnerable.


This is unlikely to be a good sign for a country with the largest young workforce in the world like India.


The Indian government has quickly announced skills development initiatives for migrant workers. However, if the multifaceted uncertainty caused by the lack of social security benefits, comprehensive financing and practical skills is not addressed, the economic consequences will continue to weigh on the shoulders of millions of migrants and threaten the prospects of economic recovery in India in the post-pandemic era.


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