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Covid impact: Avg. monthly income for workers drops


According to ‘State of Working India 2021: One Year of Covid-19’, a report brought out annually by Azim Premji University’s Centre for Sustainable Employment, Bengaluru – the COVID-19 pandemic has substantially increased informality in employment, leading to a decline in earnings for the majority of workers, and consequent increase in poverty in the country.


GS-III: Indian Economy (Growth and Development of Indian Economy, Mobilization of Resources)

Dimensions of the Article:

  1. Findings of the Report
  2. The Covid-connect

Findings of the Report

  • Regarding employment, the report notes that 100 million jobs were lost nationwide during the April-May 2020 lockdown.
  • Though most of these workers had found employment by June 2020, about 15 million remained out of work.
  • As for income, for an average household of four members, the monthly per capita income in Oct 2020 (less than 500 Rs.) was still below its level in Jan 2020 (less than 6000 Rs).

Exodus into informal sector

  • The study found that post-lockdown, nearly half of salaried workers had moved into informal work, either as self-employed (30%), casual wage (10%) or informal salaried (9%).
  • The fallback option varied by caste and religion. “General category workers and Hindus were more likely to move into self-employment while marginalised caste workers and Muslims moved into daily wage work”.
  • Education, health and professional services saw the highest exodus of workers into other sectors, with agriculture, construction and petty trade emerging as the top fallback options.
  • For Hindus, agriculture was the major fallback sector, absorbing 10-20% of workers from other sectors, while for Muslims, it was trade, absorbing 20-35% of workers from other sectors.
  • Due to the employment and income losses, the labour share of the GDP fell by 5 percentage points, from 32.5% in the second quarter of 2019-20 to 27% in the second quarter of 2020-21.
  • Of the decline in income, 90% was due to reduction in earnings, while 10% was due to loss of employment. This means that even though most workers were able to go back to work, they had to settle for lower earnings. Though incomes fell across the board, poor households were hit the hardest. While the poorest 20% of households lost their entire incomes in April-May 2020.

The Covid-connect

  • Significantly, the study has found a clear correlation between job losses and the COVID-19 case load, with States showing higher case load, such as Uttar Pradesh, Maharashtra, Tamil Nadu, Kerala, and Delhi, “contributing disproportionately to the job losses”.
  • There was also a correlation between lockdown-related mobility restrictions and losses in earnings. A 10% decline in mobility was associated with 7.5% decline in income.
  • Women and younger workers were more affected by the pandemic-related measures. During the lockdown and in the post-lockdown months, 61% of working men remained employed while 7% lost their job and did not return to work. But in the case of women, only 19% remained employed while 47% suffered a permanent job loss.
  • Besides women, younger workers were impacted more by the lockdown. About 33% of workers in the 15-24 years age group had failed to regain some form of employment even by December 2020. The corresponding figure for those in the 25-44 years category was 6%.

-Source: The Hindu

February 2024