Covid-19 and the crisis in India’s informal labor markets

Sohel Sarkar and Deepti Bharthur


The appalling work conditions of platform workers in this pandemic is reflective of a deeper malaise in India’s labor markets. Even before the advent of platform-mediated gig work, informal work has always been a ‘gig’ of sorts.

What platform-mediated gig work has done is to  recast informality in different ways. Insecure and unprotected, platform work is almost always decoupled from basic labor protections like fair remuneration and social protection measures.

This spiral of informalization and casualization is likely to accelerate in a post-Covid future of work unless we push for greater accountability from platforms towards workers, stronger social security measures and better labor regulations for all.

The new normal is shelter in place. It’s endless Zoom calls, traffic free roads, gloriously breathable air and blue skies empty of planes. It’s 20-second hand wash routines that have become viral memes.

The new normal is also silence. The silence of a world whose wheels have come to a grinding halt. The quiet anxiety that surrounds the suspension of life as we know it. The lack of human and, by extension, economic activity.

As we wait for one crisis to end, the new normal is waiting for the other to begin.

The global Covid-19 pandemic has perhaps created a first of a kind—a universal teachable moment for humanity, exposing the fault lines of our societal and economic structures and institutions and how they serve us in a moment of acute crisis. In India, the nationwide lockdown and the social distancing measures that were put in place beginning March 24 to combat the novel coronavirus has affected different sections of society differently. The mandate to self-isolate, limit external interactions, and work from home has meant that only those with access to uninterrupted internet and digital technologies—primarily white collar workers with steady pay and benefits—have been able to navigate this crisis relatively unscathed, both financially and health wise.

For the vast majority of India’s informal labor force, though, the lockdown resulted in an immediate loss of income and livelihoods. Six weeks in, the repercussions of imposing a countrywide lockdown in a country of 1.38 billion people with barely four hours’ notice have been widely felt and discussed. For daily wage and migrant workers, the lockdown represents a crisis within a crisis. With markets shut, work halted, and public and private transport disallowed, they have been among the hardest hit. For the few who managed to scramble their way back home amid the largest wave of distress emigration in independent India, there is the reality of an already failing rural economy. Those who couldn’t find a way out have been left to admirable, but ultimately inadequate, acts of private charity.

Impact on Platform-Mediated Gig Work

For India’s floating base of gig workers, working for digital platforms offering ride-hailing, food delivery and other on-demand services, the impact has played out in complex ways. For some, livelihoods were immediately suspended as particular categories of platform jobs simply disappeared once normal life came to a grinding halt in the aftermath of Covid-19. Ride-hailing drivers and other on-demand service providers were left without access to work, and thereby a source of income, as demand slumped and platforms began to suspend operations even before the official lockdown.

Delivery workers, however, found themselves at the frontlines of the crisis as demand for home deliveries spiked after e-commerce services—which covers app-based food and grocery delivery services—were declared an essential service. In the days that followed, e-tailers and hyperlocal businesses including grocery delivery platforms registered a 45-50 percent growth, although food delivery took a hit. Both major food delivery platforms, Zomato and Swiggy have since expanded operations and pivoted full-scale to new services—such as delivery of FMCG products—albeit this was always an intended expansion strategy. Further, delivery platforms across verticals began to datafy new health and sanitation metrics to ensure and retain customer confidence through promises of temperature checks, zero-contact delivery, contactless payments, hygiene ratings for restaurants and so on.

In this way, platforms have ensured that while we wait for the chain of infection to break, the chain of network effect remains largely unbroken (if only a little weakened). Business has spiked for many delivery platforms across the country as they launch new verticals and expand their workforce to meet rising demand. India’s largest online grocer BigBasket and rival Grofers together plan to hire an additional 12,000 workers. Uber has partnered with Big Basket and Flipkart to provide last-mile essential deliveries.

Even before the advent of platform-mediated gig work, informal work in most of the Global South has always been a ‘gig’ of sorts. What platform-mediated gig work has done, in these contexts, is to  recast informality in different ways.

Meanwhile, for the country’s contingent of low-paid delivery workers who service these platforms a catch-22 of sorts has emerged. With no recourse to savings or other safety nets, not showing up to work is not an option if they want to put food on the table and keep a job that, while precarious and low paying, is still a source of earning in a landscape where those are fast disappearing. But showing up to work is also fraught with personal and social risks. In late March, immediately after the first phase of the lockdown was initiated, reports emerged of police cracking down on delivery personnel and inefficiencies in the e-pass system. Very few companies seemed equipped to ensure workers’ safety. Often, delivery workers had to resort to buying their own masks, gloves, and sanitizers while doing the daily rounds of work as platforms failed to set up effective distribution systems of even the basic protective gear. Some adopted ad hoc measures such as tying handkerchiefs to faces to avoid the risk of infection.

Meanwhile, for the country’s contingent of low-paid delivery workers who service these platforms a catch-22 of sorts has emerged. With no recourse to savings or other safety nets, not showing up to work is not an option if they want to put food on the table and keep a job that, while precarious and low paying, is still a source of earning in a landscape where those are fast disappearing. But showing up to work is also fraught with personal and social risks. In late March, immediately after the first phase of the lockdown was initiated, reports emerged of police cracking down on delivery personnel and inefficiencies in the e-pass system. Very few companies seemed equipped to ensure workers’ safety. Often, delivery workers had to resort to buying their own masks, gloves, and sanitizers while doing the daily rounds of work as platforms failed to set up effective distribution systems of even the basic protective gear. Some adopted ad hoc measures such as tying handkerchiefs to faces to avoid the risk of infection.

Since the lockdown started, the Indian government has announced a Rs 1.7 lakh crore ($22.6 billion) financial relief package for the country’s most marginalized workers. This includes some direct cash transfers and food security through the state’s public distribution system as well as insurance cover for medical workers. Economists, however, have repeatedly pointed out that the size of the package is hardly enough to combat the economic fallout of a pandemic of this proportion. Individual state governments too have announced similar measures. But in any case, such relief packages mean precious little to those engaged in gig work, embedded as they are within India’s informal economy and out of the reckoning for these benefits.

Platforms are trying to raise funds from users to provide some financial assistance to workers. Shopping platform Flipkart announced double pay for temporary workers. Ride-hailing platforms Uber and Ola introduced financial relief packages or insurance covers for their employees, but the fineprint is yet to be fully sketched out. Zomato and Swiggy are also considering insurance for their delivery partners but the extent of coverage remains unclear. For workers who are diagnosed with the virus, UrbanCompany has a policy in place to help with payments on health insurance or health savings schemes. This insurance is meant to include workers’ hospital expenses and a daily stipend for a fixed period but does not include the cost of getting tested. In fact, the high costs and difficulty of obtaining a test is an additional burden that platform workers have to bear themselves.

 

It is nothing short of a “tragicomedy” that platform companies with multimillion dollar valuations, which have all along denied workers their rights or worse yet denied workers the dignity of definition, are now appealing to their users to raise money, in a perverse “socialization of business obligations.

Such half measures are inadequate to provide any meaningful protection or support—and are probably meant for the benefit of customers and users, rather than workers themselves—leaving those engaged in platform-mediated gig work to fall through the cracks.

Platform companies with multimillion dollar valuations, which have all along denied workers their rights or worse yet denied workers the dignity of definition, are now appealing to their users to raise money, in a perverse “socialization of business obligations”.

Moreover, some measures undertaken by platforms to ostensibly protect workers and consumers point to forms of intensified surveillance and loss of autonomy for the worker. Zomato has made it mandatory for its delivery workers to download the controversial Aarogya Setu app – the contact-tracing app introduced by the Indian government to trace the spread of coronavirus cases. Rebel Foods has introduced a live body temperature tracker on its app which provides customers with a live feed of body temperatures of those handling their orders, including the cook, the kitchen executive, and the delivery person. To be sure, such surveillance measures are already deeply inscribed into labor practices in the digital economy and have only been reconfigured in the aftermath of Covid without any public outrage to counter.

Of course, the gig economy is not a separate silo of labor injustice, but rather an extension of the broader phenomena of casualization and informalization of work and non-standard forms of employment. The appalling work conditions of platform workers in this pandemic is reflective of a deeper malaise in India’s labor markets.

Even before the advent of platform-mediated gig work, informal work in most of the Global South has always been a ‘gig’ of sorts. What platform-mediated gig work has done, in these contexts, is to recast informality in different ways. Insecure and unprotected, platform work is almost always decoupled from basic labor protections like fair remuneration and social protection measures. As such, it is yet another manifestation of a vast and expanding informal economy.

In large part, the precarity of platform-mediated gig work is built on existing neoliberal processes which, over time, have chipped away at formal, permanent work towards contract-based (and often home-based) flexible work. And what the Covid crisis has foregrounded, once again, is our historic and systemic failure to accord social and employment protections to the most vulnerable workers.

Beyond Gig Work

Besides on-demand platform workers, who are large in absolute numbers, but only a small section of India’s workforce, the vast contingent of domestic workers, street vendors, home-based workers, agricultural laborers, construction workers, artisans, factory workers, autorickshaw drivers, etc. also find themselves in a bind. Cooperative federations like Self-Employed Women’s Association (SEWA) say they have been pushing employers to give their service sector employees such as domestic workers paid leave. Pending that, the federation may have to dip into its own savings and make payouts to workers who have been getting their work through the cooperative, Salonie Hiriyur, senior coordinator at SEWA Federation told Bot Populi.

Workers associated with SEWA find their livelihoods impacted in various ways. Among the worst hit are the likes of street vendors and small-scale artisans who were producing goods for export markets in Europe. Even when the lock down ends, the recession in these kinds of industries is expected to be longer and harsher. Sectors like food and healthcare which have been declared essential services in this lockdown are faring better than others, but are certainly not unaffected. With the state agricultural markets (APMCs) shut or operating skeletally, inter-state trading halted, and supply chains disrupted, farmers who could earlier sell in cities are now forced to either sell to agents for a commission, or in local markets where prices are lower.

And while financial services activity continues, SEWA’s financial agents whose only source of income is commissions from the savings and loan collection activity, have seen their incomes completely destroyed due to the dip in loan collections, added Nitya Nangalia, project lead at SEWA who oversees the federation’s credit and thrift cooperatives.

SEWA’s credit cooperatives, which offer small loans of up to Rs 50,000 to women entrepreneurs, street vendors, and so on, are seeing an extreme liquidity crunch and will be unable to extend more loans. With the government’s moratorium on loan repayments, the federation expects about 40 percent of its loan book to be written off in the aftermath of this crisis, Nangalia said. She expects a sudden surge in loan demand once the lockdown lifts but says SEWA is unlikely to be able to finance it, even after the lockdown lifts, “The credit cooperative itself is also going to face some form of a crash crunch. Because fixed expenses are going up, we are not sure if we'll be able to meet that level of demand.” While the cooperatives are trying to pull through with few resources at their disposal, their work is also hampered by the fact that credit and thrift cooperatives are a state subject, and states are often less responsive and lag behind in coming up with relief packages, Nangalia said. This situation exposes the gaps left behind by top down crisis response measures that effectively end up limiting a critical role localized social financial solutions could offer to self-employed workers.

The Gendered Impact

While the lockdown has affected different sectors and categories of workers differently, the economic costs may be ultimately borne disproportionately by women. According to the International Labor Organization (ILO), 81 percent of Indian women work in the informal economy. Most street vendors, small traders, and artisans in India are women, and the current lockdown and social distancing norms mean that their livelihoods stand disrupted.

Even before the pandemic, women have already been working in low-paid, precarious jobs with no sick pay and security, and prone to different forms of abuse, Lan Mercado, the regional director for Oxfam in Asia, pointed out, “In Bangladesh, 80 percent of garment workers who have been laid off are women. That's around 800,000 of a million garment workers. And we think that post the pandemic, joblessness will continue to have a greater impact on women, especially if you combine that with their (unpaid) care work and other responsibilities in the home,” she added.

Both Mercado and SEWA’s Hiriyur point out that women are disproportionately present in the healthcare sector, making them more vulnerable to the infection itself. About 70 percent of frontline healthcare workers are women, who, therefore, have a much greater exposure to the virus, Mercado noted, adding that, “While both men and women can potentially be infected, the vulnerabilities for women are higher.” Paid care work jobs outside of public healthcare are also predominantly done by women and these have been the first to be hit because of social distancing norms, Hiriyur pointed out.

Even in essential sectors like agriculture which have always been the fallback option for India’s rural poor, women find themselves sidelined due to non-availability of transport to arrive at trading centres.

Even in essential sectors like agriculture which have always been the fallback option for India’s rural poor, women find themselves sidelined due to non-availability of transport to arrive at trading centres. “The men could just go to the district office and get a pass, whereas women were dependent on some form of public transport to do it,” Nangalia said.

The digital divide along gender lines exacerbates the problem. Last year, SEWA had begun training women on connecting via phones. The problem, Nangalia explained, “is that most women don't own a phone. If there is a phone in the household, the men will own it, it can be the brother or the husband or the son, but it's always them. At best, the women may have a feature phone.” SEWA’s reliance on a female workforce means that “this kind of lack of access to digital assets became a very big problem,” she added. The ability to get women working again and help them build literacies for remote working tools and platforms, and leverage e-commerce opportunities becomes harder.

As the crisis worsens India’s unemployment problem, women may also be the first to let go. “As good jobs become in even more short supply, women who are already relegated to poor quality, low value-added jobs, paid poor wages, and confront all kinds of exploitation, are going to see their prospects deteriorate even further. If this happens, at some point, the trade-off between staying at home, or losing a meagre wage in an unproductive, sometimes exploitative, job stops being worth it,” Sabina Dewan, the president and executive director of the JustJobs Network said in an interview to Bot Populi. Conversely, the economic downturn may also result in a “reversal of the middle income effect” as household incomes decline and women enter the labor market to help families make ends meet, she added. Of course, even in this scenario, women are likely to still be relegated to low-paid jobs like domestic work etc. Automation’s onward march is only likely to be hastened through the pandemic, shrinking employment opportunities for women who are often occupied in value chain segments that lend themselves to this process easily.

What Does the Future Hold?

According to ILO estimates, global GDP growth may decline anywhere between 2 percent and 8 percent based on the pandemic’s reach and life. Global unemployment may increase between 5.3 million and 24.7 million. Oxfam estimates that a two-month lockdown would result in a 20 percent loss in income, globally.

In order to counter what is likely to be a protracted economic downturn, Oxfam is pushing for ‘responsible bailout’ of small and medium enterprises, instead of big corporations which are likely to rush for bailouts despite being better placed to withstand the disruptions wrought by the pandemic. Small businesses “contribute significantly to the economy and employ a lot of people. Unless we're able to also provide them protections and enough of a lifeline to sustain their businesses post the pandemic, we will most likely see a rise in joblessness and unemployment,” Mercado warns.

SEWA too is exploring alternative, possibly digital, livelihoods for its service sector cooperatives such as domestic workers, cleaners, catering workers, videographers, etc. who are unlikely to survive a protracted slowdown. The federation is also trying to access payroll subsidies and building a corpus for micro-entrepreneurs, which can be used to buy raw materials for cloth mask production, purchase of seeds etc, in the immediate short term.

Dewan expects both the uptake of digital technologies as well as gig work to expand in the aftermath of this crisis. Recovery for location-based gig work however, will depend on how consumption behavior and patterns change, she points out.

Platform workers though are unlikely to get a better deal. Dewan does not anticipate any major changes in labor regulations that will make it mandatory for platform intermediaries to provide more and better protections for workers, and adds that it will be up to governments to step in with a much broader safety net for all workers, including informal and formal, self-employed, contractual, especially the most vulnerable workers. In the best case scenario, businesses, including digital intermediaries, could be mandated to contribute to such a system, either through a tax system or some form of cess. Especially, in the post-Covid world of shrinking jobs and disrupted livelihoods, few governments will have the necessary bargaining power to impose stricter regulations.

Gig work—and all forms of informal work, for that matter—has always involved asymmetrical power relations between the worker and the platform, with the worker left in a state of extreme vulnerability. This higher risk burden of the worker has been reinforced yet again by the Covid-19 pandemic as workers either lose incomes and face the prospect of long-term unemployment, or face the risk of infections while providing essential services for societies in lockdown.

Even before this crisis was upon us, the global economy was already facing the prospect of a slowdown. In India and most other countries, unemployment was soaring and economic inequalities were unacceptably high. Decades of neoliberalism had slowly weakened public education, public health and public social infrastructure in both the developed and developing worlds. Digitization, automation, and platformization exacerbated resultant inequalities and intensified our overwhelming dependence on private (and increasingly digital) corporations, leaving workers even more vulnerable than before. A post-Covid future of work is likely to accelerate this downward spiral unless labor rights activism can push for greater accountability from platforms towards workers, stronger social security measures and better labor regulations for all. This also calls for an expansion of the traditional definition of a worker to include gig workers, self-employed and contractual workers, and others engaged in various informal arrangements in India’s labor markets.

 


This article is part of our Labor in the Digital Economy series.