Job and Wage Losses in Informal Sector due to the COVID-19 Lockdown Measures in India

Abstract

This paper estimates the job and wage losses of workers, using the lens of informality, due to lockdown measures undertaken by the Government of India to tackle the spread of COVID-19. It focuses on the first two lockdowns when containment measures in India were most stringent in the world. We estimate that 104 million and 69.4 million informally employed workers were at risk of job loss in Lockdown 1.0 and Lockdown 2.0 respectively. Informal workers lost more wages, 22.6 percent, than formal workers, 3.6 percent. Workers informally employed in unorganised sector suffered a wage loss, amounting to Rs. 635.53 billion, which is almost equivalent to annual union budget allotted for employment guarantee scheme MGNERGA in 2020-2021. The prevalence of informal labour markets calls for a larger change in the social protection framework to deal with the uncertain economic situation like the one we are facing today.

Keywords: COVID-19 Pandemic, Remote Labour Index, Informal economy, Informality, Job loss, Wage loss

JEL Classification: E01, J21, J22, J31, J46, J48