Long Term Impact of COVID19 Pandemic on the Economy and the Labour Market

Theme 3. Long Term Impact of COVID19 Pandemic on the Economy and the Labour Market

The impact of the Covid19 pandemic on the Indian economy and society has been studied by many scholars. It is over two years since the first wave of the pandemic struck India and total lockdown was imposed in March 2020. The economy has begun to recover, but the sectors hit most by the first lockdown and workers and enterprises in the informal economy are still struggling to recover their losses. The differential gendered economic impact and that on various social groups has been discussed, but little is known about how have they fared in the last two years. The future of the students who lost nearly two years of education when schools and colleges were either closed or classes went online is in jeopardy. The long-term impact of the Covid19 pandemic still lingers over us and needs careful consideration. Under this theme on the long-term impact of Covid19, subthemes and issues that can be studied within them are highlighted below.

Long term impact of Covid19 on the Economy and Labour Market

A lot has been written on the impact of Covid19 and the restriction placed on economic activity on employment and incomes. While the economy has revived to some extent in the two years after the pandemic hit, many sectors are still reeling under the long-term impact. What is the impact on output and employment at a macro level? Which sectors and segments of the economy are faring well or still grappling to survive? What factors have helped sectors to recover? How have the industry segments and workers within the informal economy fared? How have self-employed enterprises in the informal economy

sustained themselves? How have industrial associations, chambers of commerce, trade union, NGOs and the government helped in the revival of the various industrial sectors?

Gendered impact of Covid19 on Employment and Care Work

Many studies have noted a gendered impact of Covid19 with women facing the brunt of employment losses and reduction in wages and incomes. Women were also less likely to return to work or regain their earlier employment status. Women have performed the social reproduction function in society and continue to do so. But during the pandemic the double burden of work increased many folds. This was due to the fact that children, whose schools and colleges were closed, and other members, who faced closure of their places of work, remained at home. What has been the long-term impact on the labour market? Has the intra-household burden of care work changed within the household in the long term based on experiences during the pandemic?

Who were the losers and gainers in this period of crisis by occupations, status, social and other groups?

What has been the impact of Covid19 on inequality more generally - which groups have been able to protect themselves and which were more vulnerable? Did SCs fare better or worse than STs and OBCs, and much worse than higher castes? Did white collar workers do better than production workers, non-agricultural workers do better than agricultural workers and casual workers better than regular workers? Were the wealthy and those with better social networks better able to tide over and maybe even profit from the crisis situation? All these are hypotheses that require empirical verification.

The long-term effects of the pandemic on businesses

It has been observed that business in certain industry groups were hit more severely during the pandemic. Largely the ‘touch industries’ where face to face interaction was a necessity were negatively impacted more than other sectors. This included the hospitality industry, like hotels and restaurants, travel and tourism, beauty and gymnasiums and face to face retail trade of non-essential goods and services. While precipitating a large short-term decline in economic activity, the COVID-19 pandemic also brought about changes in the way businesses operate. Businesses that were able to shift to online mode were able to tide over the crisis more smoothly. There was also a change in consumer behaviour, some of which may continue after the crisis. These changes will make an impact on output, GDP, employment and prices, and their relationship in the long term. What is the longer-term impact on employment if firms go out of business? What are the long-term effects, on business organisation or the markets that businesses operate in? How will it affect the sales, employment, prices and profits in the long-term? Remote working and an acceleration of digitalisation were the most frequently cited long-term supply-side effects of the pandemic. Would business become more efficient and more resilient following the pandemic? Will firms reduce working hours or wages or simply fire workers? What are the chances of business adopting more flexible norms of work, including work from home? Which sectors of industry will be better able to adapt to these changes in the long term?

Covid19 pandemic and Domestic Migration

The crisis facing migrant workers during the lockdown was revealed to us very dramatically by the media. There was an exodus of migrants who walked long distances to their homes when their places of work shutdown abruptly. Circular migration is a phenomenon in India. To what extent did these workers return to their places of work? Were they able to get back their previous jobs or were they successful in finding new ones? A large number of migrants in the informal sector set up their own small enterprises. Most of these enterprises were badly hit during the pandemic. What has been the long-term impact of this loss of jobs and incomes on the migrants? Households in some states are heavily dependent on remittances from the migrant workers. How has domestic remittances been affected by the pandemic?

Covid19 Pandemic Impact on International Migration and Remittances

International migration was affected during the pandemic and many of the countries across the world requested the immigrants to leave the country. This was mainly because of closure of business, fear of infection and the limited capacity to attend to the health crisis within the country. International migration occurs from all states of India, but states like Kerala, Gujarat and Punjab are known for its NRI population. Remittances from these migrants form the major source of income of a large proportion of households. In Kerala it is estimated that remittances form nearly one-third of its State Domestic Product. Remittances have helped to alleviate poverty as well as sustain growth. But the pandemic created a dramatic reversal affecting poor families and the states which were dependent on it. Has this situation improved? Have immigrants been able to return or find other sources of livelihood? How have the households coped and how has the state responded to this crisis?

Long Term Impact of Covid19 on Education and Learning Outcomes and Consequently on Employment Opportunities

While the impact of Covid19 on employment has been studied, its long-term impact on level of education and learning outcomes are less known. The impact of the closure of schools and colleges as well as the move to online learning has caused loss of learning in the short term. However, the more dangerous aspect of this loss is the possible diminishing economic opportunities for the cohort of students who suffered. While some schools and colleges moved to online learning, the great digital divide ensured that the economically weaker section of students were left out. ASER reports on learning outcome were showing a slow improvement over the years prior to the pandemic. However, there was a large decline in language and arithmetic learning outcomes in 2020. Will the students ever be able to catch up? What is the long-term impact of this loss of learning? The need for affordable high-quality broadband and smartphones had become most evident during this crisis. Has online learning been able to compensate for the loss of physical classrooms, the guidance of teachers and learning from peers? Do employers perceive a loss of skills and if so, would this affect their hiring choices?

Mitigation Policies

With the onslaught of the COVID-19 pandemic, governments have introduced many measures and policy, broadly to mitigate the effect on employment and incomes. What were the policies introduced to mainly substituted for loss of employment and income? What are some of the measures that have been particularly successful in mitigating the economic hardships? Some of these measures such as food and income support were withdrawn in a couple of months. How did this impact the households?

Were the mitigation policies gendered and did it work to exacerbate gender inequalities? Did the design of the mitigation policy take account of the different constraints faced by women and men in the market and the domestic space? The critical role of the care economy and the role of women in it was brought out by the pandemic. Did mitigation policies take into consideration the critical role of the care work of women? Has the criticality of care work during the pandemic helped to change the social norms related to who and how care work is distributed in the household? Did it help to generate an awareness among governments and private enterprises about the role of care work?

Macroeconomics Policies for Revival

Governments have also introduced policies to revive the economy. What is the role of, and constraints on, macroeconomic policies as a consequence of Covid-19? What industrial support policies were introduced for recovery of output? What was the nature and timing of these policies? What were the medium-term macro policies, programmes or strategies designed/or that can be designed to revitalise the economy? What are the implications for public expenditure on treatment and vaccinations, the need for and costs of strengthening a weak public health care system?

Implications Of the Pandemic for The Future of Work

For a large segment of the population the pandemic was a reminder of the precarious nature of employment and work contracts. The issue of the future of work in the context of artificial intelligence was in the forefront prior to the pandemic. However, the pandemic brought out in a starker fashion the importance of digitalisation in many jobs and industries. What are the possible long-term impacts of the pandemic on the future of work? How would the hours of work and possibility of work from home affect employment and incomes? How would the concept of the place of work change in the long term? Would companies opt for hiring common work spaces for employees to meet and work rather than locating them in permanent office structures? What could be the implication for the real estate sector and employment in it?

These subthemes and questions are only examples of issues that can be studied under the broad theme of long-term impact of Covid19. We also encourage papers that draw on international experiences, perhaps comparing India's experience with some other countries. Participants are welcome to expand the ideas and present on other related issues as well.