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Livelihood of 1.6 billion informal workers worldwide at risk: ILO

  • Category
    Economy
  • Published
    5th May, 2020

Context

Approximately 1.6 billion workers in the informal economy, nearly half of the global workforce, are in immediate danger of having their livelihoods destroyed because of the novel coronavirus disease (COVID-19) pandemic, the International Labour Organization (ILO) has warned in its report

Background:

  • As the world grapples with the consequences of the COVID-19 pandemic, vulnerable workers in the informal sector at global level have been hit hard.
  • As vendors working in close quarters and or as frontline care-workers in households, many are particularly vulnerable to contracting the virus.
  • Countries that had full lockdown measures primarily enforced three measures on social distancing, according to the ILO report:
    • Mandatory workplace closure
    • Mandatory internal travel controls
    • Mandatory shutdown of public transport
  • Partial lockdown measures, according to the report, meant that at least one of the above three measures were mandatory.
  • While necessary phases of lockdown are threatening livelihoods in the informal economy, government relief efforts are frequently only reaching formal workers and businesses.

Analysis

How will it impact the informal economy?

  • The latest ILO data on the labour market impact of the COVID-19 pandemic reveals the devastating effect on workers in the informal economy and on hundreds of millions of enterprises worldwide.
  • According to the ILO Monitor third edition: COVID-19 and the world of work, the drop in working hours in the current (second) quarter of 2020 is expected to be significantly worse than previously estimated.
  • Of the total global working population of 3.3 billion, about 2 billion work in the “informal economy”, often on short-term contracts or self-employment, and suffered a 60% collapse in their wages in the first month of the crisis.
  • Of these, 1.6 billion face losing their livelihoods.
  • Close to 1.1 billion workers lived and worked in countries that were in a total lockdown situation, with an additional 304 million in countries that had partial lockdown measures.
  • These workers together represent 67 percent of informal employment across the world.
  • Asia and Africa both account for nearly 916 million workers from the informal economy, with an additional 178 million in countries that are in partial lockdown.
  • There are 772 million informal workers under complete lockdown in the Asia Pacific region alone, according to ILO estimates, with 77 million in countries with partial lockdown measures.
  • The number of workers from Africa stuck under complete lockdown measures numbered close to 164 million, while close to 101 million informal workers were under partial lockdown measures.
  • Without alternative income sources, these workers and their families will have no means to survive.

Impact on enterprises:

  • Worldwide, more than 436 million enterprises face high risks of serious disruption.
  • These enterprises are operating in the hardest-hit economic sectors, including some 232 million in wholesale and retail, 111 million in manufacturing, 51 million in accommodation and food services, and 42 million in real estate and other business activities.

The situation in India:

  • The unemployment rate fell to 21.1 percent in the week ended April 26, lowest during the coronavirus lockdown period, according to the Centre for Monitoring Indian Economy.
  • The rate of unemployment was 26.2 percent rate in the preceding week of the month.
  • While the unemployment rate declined, the labour participation rate further plunged in the period.
  • The labour participation rate has dropped from 42.6 percent in the week of March 22 which was just before the national lockdown to 35.4 percent in the latest week ended April 26 i.e. a 7.2 percentage point fall, implying that 7.2 percent of the working age population have quit the labour markets during this lockdown
  • The national lockdown did not just throw 72 million out of the labour force but it also drove another 85 million to some kind of desperation to look for jobs in the midst of a national lockdown when none were available.
  • This desperation suggests that people were highly vulnerable to a loss of livelihood caused by the national lockdown.

What is needed at the moment?

  • The ILO calls for urgent, targeted and flexible measures to support workers and businesses, particularly smaller enterprises, those in the informal economy and others who are vulnerable.
  • Measures for economic reactivation should follow a job-rich approach, backed by stronger employment policies and institutions, better-resourced and comprehensive social protection systems.
  • International co-ordination on stimulus packages and debt relief measures will also be critical to making recovery effective and sustainable.
  • International labour standards, which already enjoy tripartite consensus, can provide a framework.

About ILO:

  • The only tripartite U.N. agency, since 1919 the International Labour Organization (ILO) brings together governments, employers and workers of 187 member States , to set labour standards, develop policies and devise programmes promoting decent work for all women and men.
  • The ILO was founded in 1919, in the wake of a destructive war, to pursue a vision based on the premise that universal, lasting peace can be established only if it is based on social justice.
  • Headquartered in Geneva, Switzerland, the ILO became the first specialized agency of the UN in 1946.
  • India, a Founding Member of the ILO, has been a permanent member of the ILO Governing Body since 1922.

Conclusion:

 As the Coronavirus and the employment crisis is evolving at a fast rate, the need to protect the most vulnerable becomes even more urgent. For millions of workers, no income means no food, no security and no future. Millions of businesses around the world are barely breathing. These are the real faces of the world of work. It’s time to support both workers and business, particularly smaller enterprises and those in the informal economy.

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