For any crisis that is exponentially spreading in a rapid timeframe across the borders of all nations with source of its transmission in humans, it is difficult to predict the economic nature of its impact in any definite way.
Covid-19 is such an unforeseen shock of such magnitude to the global economic landscape, that this has no historical precedent in recent memory so that one can have a preexisting narrative to estimate its impact (and for framing an appropriate response). It’s all hands-ondeck now for most of the countries that see a rise in infected cases (and deaths) with each passing day.
How workers suffer
One can look into the past for an exercise in studying the economic history of pandemics/epidemics for reference, but it is hard to imagine for anyone, how in this digital age when humans made leaps of advances in medicine, grew more obsessed in studying the role and impact of technologies of the future-artificial intelligence, robotics, humanity would underestimate the very ‘fragile’ nature of its own biophysical existence, now vulnerable to the contagious spread of a viral flu.
A lesser emphasised aspect of the Covid-19 shock’s economic impact remains concerned with the extent to which: a massive disruption surfacing from a social behaviour demonstrating panic, along with the advised government shutdowns, travel bans etc., is likely to have on a largely vulnerable, contractualised employment worker landscape across nations, that lack basic tenets of social protection and have no provisions for paid sick leaves.
In one of the most financially powerful nations such as the United States, most American restaurants, retailers still do not offer sick paid leaves. The choice for workers is simple: Work and get paid or stay home and get no pay. The Centre for Disease Control and Prevention (CDC) reported in 2014 how more than 20 per cent of food service workers had come to work at least once with “sickness and serious vomiting or diarrhea”. Low-wage workers across small and medium retail enterprises including restaurants, construction work, security guards, etc. will see a massive dip in nominal and real incomes, when everything shuts down.
Even if there is a one-time accommodative change to ensure paid leave for contractual workers during an emergency, the structural issue of workers having no social safety net (health insurance, unemployment insurance, having paid sick leaves etc.) remains. In a country like India, where more than 90 per cent of the workforce is employed in the unorganised, informal segment, the situation is far worse.
No safety net
The share of contract workers in total employment, as per recent studies, has seen an increase from 15.5 per cent in 2000-01 to 27.9 per cent in 2015-16, while the share of directly hired workers fell from 61.2 per cent to 50.4 per cent over the same period. The rise in the use of contract workers- who are not employed directly by employers, but by an intermediary or contractor on short-term contracts, indicates significant informalisation of the organised workforce. Most contract workers have no social safety net or those with limited social support have no provision for paid sick leaves.
In a previously conducted field-analysis of low wage female-contract gardeners working at a private university in Haryana, I explained how the entrenched nature of systemic inequities present in worker contracts across working groups make most women have no provision of paid-sick leaves, hindering them access to basic healthcare -including for basic reproductive healthcare treatment. Most women interviewed during the study cited volatile financial conditions as a hindrance to getting regular medical care or treatment.
The gig economy
With low income, limited benefits and a high household expenditure, private healthcare is not an option for these low wage contract workers in a largely privatised Indian healthcare system. Affording independent health insurance is a challenge for all low wage workers. Most insurance companies follow the deductible – deducing insurance premium from salaries – method; in the deductible method, consultancy costs, diagnostics, testing and other essential services for doctor treatment are not covered.
It is important to realise how most employment created (and sustained) today, remains largely visible in form of contractual jobs in the app-based “gig economy” segment (Uber, Ola, Swiggy, Uber-Eats etc.). And a pandemic crisis, renders many of these workers jobless too, who have no other alternative source of income in hand. Covid-19, as a simultaneously functioning demand and supply side shock, is therefore likely to exacerbate India’s already worsening unemployment problem. What demonetisation did after its announcement, to the unorganised segment Covid-19 is likely to have a similar unforeseen impact with much far reaching long term effects on both organised and unorganised worker segments.
If vulnerable workers lose jobs (as most people consume less and remain at homes to self-quarantine) not only their incomes are likely to fall that worsens the aggregate demand problem (already aiding the crisis), but also makes it extremely difficult for them to get back in employment (even once the virus is contained). Thus, in addition to contingent medical response and accruing enough funds for a response to the virus spread, the Indian government- like others, must urgently prioritise to institute protective measures for vulnerable contract workers.
(Courtesy of Mail Today)