Informal workers and labour market risk during COVID-19 in India

Informal work, such as through casual, temporary, and contract work, is a defining feature of labour markets in many developing countries and more recently in developed countries. India has one of the highest shares of informal work in the world, estimated to be between 75-90 percent of all workers. It typifies the current concerns over informal workers suffering substantial economic losses from the COVID-19 pandemic. While medical and economic packages have been put forward to provide immediate relief, measures that are needed to prevent the health crisis from becoming an imminent and permanent deterioration in living standards are still under debate.

The main research question of our proposed project is to examine which economic policies are likely to be most effective in mitigating the imminent loss in living standards for the vast majority of informal workers who are facing livelihood insecurity due to the pandemic. The pandemic has led to sharp deterioration in work outcomes, especially in urban areas. While agriculture has provided some respite in village economies, urban labour markets continue to be in crisis and the policy levers needed to address it are not well understood. The proposed project conducts primary surveys of individuals to get a bottom up understanding of the value that these individuals place on various policy options.

The primary survey builds on baseline surveys of working-age individuals that were conducted by the Centre for Economic Performance to examine the nature of informal work in India in 2018 and in 2020. New surveys provide fresh information on how individual valuations of job support programmes have changed since the crisis unfolded. Although the focus is on India, the findings are expected to be relevant more broadly because they provide a bottom-up view of labour market policies supported by urban workers.

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