Unequal Impact: COVID-19 Will Hit Youth Harder

By Basit Abdullah and Kashif Mansoor

COVID-19 may not be discriminatory in who it strikes but the social and economic impact of it is not non-discriminatory. The vulnerability approach suggests that the group which is relatively vulnerable in the labour market will get affected more than the rest during this pandemic. The pandemic has already dealt a serious blow to labour markets across the world reflected by massive layoffs, wage cuts and a sharp rise in unemployment. According to ILO estimates, 81% of the world’s workforce is affected by full or partial lockdown measures. Youth (age-group 15-24) were three times more likely to be unemployed than adults before the pandemic. They are likely to be among those that are hit harder by it in terms of job loss, reduced work hours, low pay, and even barriers in finding jobs during/ or after the pandemic. Since a disproportionate share of new job-seekers is young people, firms during an economic crisis like the one we are in right now, will stop or reduce new recruitment, thus, increasing the already high youth unemployment in India.

The past economic crises like the Great Depression of 1929s and the 2008 Global Financial Crisis had exposed the vulnerability of youth in the labour market. An early sign of unequal effects of the current pandemic on the labour market has already come from a research study at the University of Cambridge, UK. The research shows that 69% of young workers reported working fewer hours than usual, while 58% reported earning less, compared to 49% and 36% of workers aged 40-55, respectively.

Youth lack skills and experience compared to adult workers. In an economic downturn like this, consequent upon a fall in demand, firms/employers deciding to cut down its production costs will most likely lay off the young workers first. Moreover, youth tend to work more likely in part-time, seasonal, and insecure jobs with no or relatively less job protection. They are already overrepresented in sectors ravaged by the pandemic.

High youth unemployment in India before COVID-19

Before the outbreak of COVID-19, India already faced significantly high youth unemployment rates, the bad situation is going to be only compounded by the loss of existing employment and halt in the growth of new employment opportunities due to lockdown. In 2017-18, according to Periodic Labour Force Survey (PLFS), India’s youth (15-29) unemployment stood at 17.8% as compared to an overall unemployment rate of 6.1%. Unemployment among youth was higher in urban areas (20.6%) than rural areas (16.6%). The rising youth unemployment is the fallout of the job-loss growth regime during 2012 and 2018 as some have argued when total employment declined by 9.1 million, and youth employment decreased by a whopping 21.9 million.

Job losses or reduction in earnings are likely to have occurred in most affected sectors due to COVID-19. Let us take a look at the latest pre-pandemic data available with us to analyse the sectoral distribution of youth employment in India.

Youth are disproportionately concentrated in the sectors that have been staggeringly impacted by the pandemic and the subsequent lockdown. In times of nation-wide lockdowns, when manufacturing industries are almost shut, construction stopped and transport come to a standstill, India’s youth are feeling the brunt of the economic downturn. Manufacturing and construction alone accounted for more than 46% of the youth workforce in the non-agriculture sector in 2017-18 (figure 1). These sectors are badly hit during the lockdown. Hotels and restaurants, transport and storage and other services sectors like wholesale and retail, real estate and business are almost shut by the stay-at-home and social distancing orders, thereby, affecting the livelihoods of millions of workers, including the youth.

Barely two months into the lockdown, according to CMIE’s Consumer Pyramids Household Survey, 27 million youth in age-group of 20-30 years, lost their jobs in April 2020 as a result of the nation-wide lockdown to combat the spread of COVID-19 in India. With time as the COVID19 crisis starts subsiding, the economic fallout on the youth will become more evident.

Lack of social security and low education levels put youth at greater risk

Between 2012 and 2018, those with less than the secondary level of education lost jobs, while those at secondary and higher level gained jobs. The current pandemic will likely sharpen these differences in job outcomes by education level. Of the youth workers in India, more than 50% have less than the secondary level of education in 2017-18. Only 15% have a Bachelor’s degree or above. Without credentials, these youth are likely to see lay-offs and reduced earnings.

Although an overwhelmingly high proportion of youth are still working in casual and self-employment category, the share of youth working as ‘regular salaried’ is higher than among older workers. However, that does not translate into higher wages and better provisions of social security benefits. More than 65% of youth (15-29 years) working in regular salaried employment had no social security benefit in 2017-18. More than 64% of regular salaried working youth had no paid leave and 80.3% had no job contract according to PLFS 2017-18. For adults (30-65 years) workforce in regular salaried employment, 67.2% had no job contract, 48.3% had no social security and 49.5% were not eligible for paid leave according to Usual Principal Status. This again puts young workers at a relatively higher risk even in regular salaried work where otherwise employees were less likely to suffer job losses or have no benefits as compared to alternative work arrangements.

Proportion of below-minimum-wage workers higher among youth

An Azim Premji University survey which estimated that 67% of workers in India lost jobs due to COVID-19 pandemic, found that the average earnings of those who were still working have fallen drastically. According to PLFS 2017-18, regular salaried youth reported earning INR 316 and INR 426 respectively in rural and urban areas, compared to INR 483 and INR 665 by older workers. Of the 115.7 million workers, 31 million engage in casual work (29.16% as compared to 26.66% of older workers); their vulnerabilities are further aggravated by the fact that they are paid lower than the others. Their casual wages were as meagre as INR 245 and INR 286 per day in rural and urban areas respectively.

The challenges facing youth in the labour market become severer due to payment of wages/salaries below the threshold of a nationally recommended minimum wage of INR 375, proposed by a committee formed under the Government of India in 2019. The proportions of below-minimum wage youth workers were 85.5% in casual work, 56% in regular salaried, and 84.6% in self-employment, compared to 84%, 48% and 74.3% among older workers, respectively. We expect lower wages and earnings for employees once the economic activities resume in order for the firms to compensate for the losses incurred during the pandemic. The impact in terms of wage cuts and loss in earnings is thus, going to be more acute and severe on young workers than others.

Young migrants have relatively higher vulnerability

According to World Bank Report ‘COVID-19 Crisis through a Migration Lens’, nation-wide lockdown in India has impacted nearly 40 million internal migrants. Youth belonging to the age-group 15-29 years, constitute one-third of the total internal migrants in India. Migrants, overall, are predominantly engaged in the low-paying, seasonal, informal and gig economy jobs in the sectors most affected by COVID-19 such as construction, hotels, manufacturing, transport, etc. Young migrants are already at a disadvantageous position and face many challenges particular to their age in terms of labour market outcomes.  Given the disproportionate share of youth in migrant workers and their concentration in highly vulnerable sectors and jobs, they are likely to be affected even more severely. With no work and lack of social protection, the migrants desperately wanting to return to their homes during lockdown has emerged as a big crisis in India.

Policy Response

Analysing the distribution of impacts of COVID-19 crisis is necessary for the targeted policy intervention to help the most affected and more vulnerable sections of the population. Providing income support to workers and enterprises is an immediate policy concern. The current pandemic, once more, underscores the requirement of the universal basic income to have a safety net for the vulnerable section of the population. Social protection measures like unemployment benefits for youth through active fiscal policy will be a relief for millions of youth affected. The government should ensure the retention of employees by providing further incentives like financial support and tax relief to companies/firms against retaining their workers.

It is important that the youth are not long-term unemployed since it affects their future career prospect and earning potential. Massive short-term training and skill development programs for youth along with social protection expansions will increase the chances of them finding employment in growing sectors post the pandemic. This will help limit the long-term effects of the pandemic on the youth labour market.  Moreover, the extent of job losses, and the likelihood of a protracted economic recession, call for a massive employment program, possibly an extension of MGNREGA in urban areas as well. An integrated approach that includes macroeconomic and sectoral policies for job creation along with redistributive policies would be an effective way of promoting growth.

AUTHORS
Basit Abdullah and Kashif Mansoor are research scholars at Centre For Development Studies, Trivandrum, Kerala

Disclaimer: The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the official policy or position of Azim Premji University or Foundation.