In a paper that attempts to understand the effect of the Covid-19 shock on the labour market in India by examining the vulnerabilities of the workforce using data from the Periodic Labour Force Survey (2018-19), the think tank said a disproportionately large share of the workforce is likely to face job and income losses as a consequence of the dual shock of the pandemic and lockdown.

“Further, we expect to see widening disparity in the labour market between the relatively less educated workers who predominantly work in informal work arrangements in sectors such as agriculture, manufacturing, construction, trade, hotels & restaurants which have been most vulnerable to the first wave effects of the pandemic and lockdown, on the one hand, and the small proportion of better educated who have regular formal jobs in sectors that are more amenable to remote work,” said Radhicka Kapoor, author of the paper.

While direct income support is the principal means of providing immediate support to the vulnerable and displaced, there is also a need to provide wage support to enterprises to prevent further job losses, the paper said.

Given that the Covid-19 crisis comes on the back of pre-existing high unemployment and underemployment, there is a need to put in place a clear and comprehensive plan of productive employment generation. Creating well paying good jobs is not just an end in itself but is also a means of boosting aggregate demand and enabling economic recovery.

“The strengthening and expansion of employment guarantee programmes and adoption of an industrial policy which focuses on construction and labour intensive manufacturing are important elements of such a strategy. Concomitantly, there is a need to extend social security to informal workers to make labour markets more secure,” it said.