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In April 2020, the International Labour Organisation (ILO) estimated that nearly 2.5 crore jobs could be lost worldwide due to the COVID-19 pandemic in 2020.  Further, it observed that more than 40 crore informal workers in India may get pushed into deeper poverty due to the pandemic.  In this blog post, we discuss the effect of COVID-19 on unemployment in urban areas as per the quarterly Periodic Labour Force Survey (PLFS) report released last week, and highlight some of the measures taken by the central government with regard to unemployment.

Methodology for estimating unemployment in PLFS reports

The National Statistics Office (NSO) released its latest quarterly PLFS report for the October-December 2020 quarter.  The PLFS reports give estimates of labour force indicators including Labour Force Participation Rate (LFPR), Unemployment Rate, and distribution of workers across industries.  The reports are released on a quarterly as well as annual basis.  The quarterly reports cover only urban areas whereas the annual report covers both urban and rural areas.  The latest annual report is available for the July 2019-June 2020 period.

The quarterly PLFS reports provide estimates based on the Current Weekly Activity Status (CWS).  The CWS of a person is the activity status obtained during a reference period of seven days preceding the date of the survey.  As per CWS status, a person is considered as unemployed in a week if he did not work even for at least one hour on any day during the reference week but sought or was available for work.  In contrast, the headline numbers on employment-unemployment in the annual PLFS reports are reported based on the usual activity status.  Usual activity status relates to the activity status of a person during the reference period of the last 365 days preceding the date of the survey.

Unemployment rate remains notably higher than the pre-COVID period 

To contain the spread of COVID-19, a nationwide lockdown was imposed from late March till May 2020.   During the lockdown, severe restrictions were placed on the movement of individuals and economic activities were significantly halted barring the activities related to essential goods and services.  Unemployment rate in urban areas rose to 20.9% during the April-June quarter of 2020, more than double the unemployment rate in the same quarter the previous year (8.9%).  Unemployment rate refers to the percentage of unemployed persons in the labour force.  Labour force includes persons who are either employed or unemployed but seeking work.  The lockdown restrictions were gradually relaxed during the subsequent months.   Unemployment rate also saw a decrease as compared to the levels seen in the April-June quarter of 2020.  During the October-December quarter of 2020 (latest data available), unemployment rate had reduced to 10.3%.  However, it was notably higher than the unemployment rate in the same quarter last year (7.9%).

Figure 1: Unemployment rate in urban areas across all age groups as per current weekly activity status (Figures in %)

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Note: PLFS includes data for transgenders among males.
Sources: Quarterly Periodic Labour Force Survey Reports, Ministry of Statistics and Program Implementation; PRS.

Recovery post-national lockdown uneven in case of females

Pre-COVID-19 trends suggest that the female unemployment rate has generally been higher than the male unemployment rate in the country (7.3% vs 9.8% during the October-December quarter of 2019, respectively).  Since the onset of the COVID-19 pandemic, this gap seems to have widened.   During the October-December quarter of 2020, the unemployment rate for females was 13.1%, as compared to 9.5% for males.

The Standing Committee on Labour (April 2021) also noted that the pandemic led to large-scale unemployment for female workers, in both organised and unorganised sectors.  It recommended: (i) increasing government procurement from women-led enterprises, (ii) training women in new technologies, (iii) providing women with access to capital, and (iv) investing in childcare and linked infrastructure.

Labour force participation

Persons dropping in and out of the labour force may also influence the unemployment rate.  At a given point of time, there may be persons who are below the legal working age or may drop out of the labour force due to various socio-economic reasons, for instance, to pursue education.  At the same time, there may also be discouraged workers who, while willing and able to be employed, have ceased to seek work.  Labour Force Participation Rate (LFPR) is the indicator that denotes the percentage of the population which is part of the labour force.  The LFPR saw only marginal changes throughout 2019 and 2020.  During the April-June quarter (where COVID-19 restrictions were the most stringent), the LFPR was 35.9%, which was lower than same in the corresponding quarter in 2019 (36.2%).  Note that female LFPR in India is significantly lower than male LFPR (16.6% and 56.7%, respectively, in the October-December quarter of 2019).

Figure 2: LFPR in urban areas across all groups as per current weekly activity status (Figures in %)

image

Note: PLFS includes data for transgenders among males.
Sources: Quarterly Periodic Labour Force Survey Reports, Ministry of Statistics and Program Implementation; PRS.

Measures taken by the government for workers

The Standing Committee on Labour in its report released in August 2021 noted that 90% of workers in India are from the informal sector.  These workers include: (i) migrant workers, (ii) contract labourers, (iii) construction workers, and (iv) street vendors.  The Committee observed that these workers were worst impacted by the pandemic due to seasonality of employment and lack of employer-employee relationship in unorganised sectors.  The Committee recommended central and state governments to: (i) encourage entrepreneurial opportunities, (ii) attract investment in traditional manufacturing sectors and developing industrial clusters, (iii) strengthen social security measures, (iv) maintain a database of workers in the informal sector, and (v) promote vocational training.  It took note of the various steps taken by the central government to support workers and address the challenges and threats posed by the COVID-19 pandemic (applicable to urban areas): 

  • Under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), the central government contributed both 12% employer’s share and 12% employee’s share under Employees Provident Fund (EPF).  Between March and August 2020, a total of Rs 2,567 crore was credited in EPF accounts of 38.85 lakhs eligible employees through 2.63 lakh establishments.
     
  • The Aatmanirbhar Bharat Rozgar Yojna (ABRY) Scheme was launched with effect from October 2020 to incentivise employers for the creation of new employment along with social security benefits and restoration of loss of employment during the COVID-19 pandemic.  Further, statutory provident fund contribution of both employers and employees was reduced to 10% each from the existing 12% for all establishments covered by EPF Organisation for three months.  As of June 30, 2021, an amount of Rs 950 crore has been disbursed under ABRY to around 22 lakh beneficiaries.
     
  • The unemployment benefit under the Atal Beemit Vyakti Kalyan Yojana (launched in July 2018) was enhanced from 25% to 50% of the average earning for insured workers who have lost employment due to COVID-19.
     
  • Under the Prime Minister’s Street Vendor’s Aatma Nirbhar Nidhi (PM SVANidhi) scheme, the central government provided an initial working capital of up to Rs 10,000 to street vendors.  As of June 28, 2021, 25 lakh loan applications have been sanctioned and Rs 2,130 crore disbursed to 21.57 lakh beneficiaries.

The central and state governments have also taken various other measures, such as increasing spending on infrastructure creation and enabling access to cheaper lending for businesses, to sustain economic activity and boost employment generation.

Compulsory voting at elections to local bodies in Gujarat Last week, the Gujarat Local Authorities Laws (Amendment) Act, 2009 received the Governor’s assent.  The Act introduces an ‘obligation to vote’ at the municipal corporation, municipality and Panchayat levels in the state of Gujarat.  To this end, the Act amends three laws related to administration at the local bodies- the Bombay Provincial Municipal Corporation Act, 1949; the Gujarat Municipalities Act, 1963 and; the Gujarat Panchayats Act, 1993. Following the amendments, it shall now be the duty of a qualified voter to cast his vote at elections to each of these bodies.  This includes the right to exercise the NOTA option.  The Act empowers an election officer to serve a voter notice on the grounds that he appears to have failed to vote at the election.  The voter is then required to provide sufficient reasons within a period of one month, failing which he is declared as a “defaulter voter” by an order. The defaulter voter has the option of challenging this order before a designated appellate officer, whose decision will be final. At this stage, it is unclear what the consequences for being a default voter may be, as the penalties for the same are to be prescribed in the Rules.  Typically, any disadvantage or penalty to be suffered by an individual for violating a provision of law is prescribed in the parent act itself, and not left to delegated legislation.  The Act carves out exemptions for certain individuals from voting if (i) he is rendered physically incapable due to illness etc.; (ii) he is not present in the state of Gujarat on the date of election; or (iii) for any other reasons to be laid down in the Rules. The previous Governor had withheld her assent on the Bill for several reasons.  The Governor had stated that compulsory voting violated Article 21 of the Constitution and the principles of individual liberty that permits an individual not to vote.  She had also pointed out that the Bill was silent on the government’s duty to create an enabling environment for the voter to cast his vote.  This included updating of electoral rolls, timely distribution of voter ID cards to all individuals and ensuring easy access to polling stations. Right to vote in India Many democratic governments consider participating in national elections a right of citizenship.  In India, the right to vote is provided by the Constitution and the Representation of People’s Act, 1951, subject to certain disqualifications.  Article 326 of the Constitution guarantees the right to vote to every citizen above the age of 18.  Further, Section 62 of the Representation of Peoples Act (RoPA), 1951 states that every person who is in the electoral roll of that constituency will be entitled to vote.  Thus, the Constitution and the RoPA make it clear that every individual above the age of 18, whose name is in the electoral rolls, and does not attract any of the disqualifications under the Act, may cast his vote.  This is a non discriminatory, voluntary system of voting. In1951, during the discussion on the People’s Representation Bill in Parliament, the idea of including compulsory voting was mooted by a Member.  However, it was rejected by Dr. B.R. Ambedkar on account of practical difficulties.  Over the decades, of the various committees that have discussed electoral reforms, the Dinesh Goswami Committee (1990) briefly examined the issue of compulsory voting.  One of the members of the committee had suggested that the only effective remedy for low voter turn outs was introducing the system of compulsory voting.  This idea was rejected on the grounds that there were practical difficulties involved in its implementation. In July 2004, the Compulsory Voting Bill, 2004 was introduced as a Private Member Bill by Mr. Bachi Singh Rawat, a Member of Parliament in the Lok Sabha.  The Bill proposed to make it compulsory for every eligible voter to vote and provided for exemption only in certain cases, like that of illness etc.  Arguments mooted against the Bill included that of remoteness of polling booths, difficulties faced by certain classes of people like daily wage labourers, nomadic groups, disabled, pregnant women etc. in casting their vote.  The Bill did not receive the support of the House and was not passed. Another Private Member Bill related to Compulsory Voting was introduced by Mr. JP Agarwal, Member of Parliament, in 2009.  Besides making voting mandatory, this Bill also cast the duty upon the state to ensure large number of polling booths at convenient places, and special arrangements for senior citizens, persons with physical disability and pregnant women.  The then Law Minister, Mr. Moily argued that if compulsory voting was introduced, Parliament would reflect, more accurately, the will of the electorate.  However, he also stated that active participation in a democratic set up must be voluntary, and not coerced. Compulsory voting in other countries A number of countries around the world make it mandatory for citizens to vote.  For example, Australia mandates compulsory voting at the national level.  The penalty for violation includes an explanation for not voting and a fine.  It may be noted that the voter turnout in Australia has usually been above 90%, since 1924.  Several countries in South America including Brazil, Argentina and Bolivia also have a provision for compulsory voting.  Certain other countries like The Netherlands in 1970 and Austria more recently, repealed such legal requirements after they had been in force for decades.  Other democracies like the UK, USA, Germany, Italy and France have a system of voluntary voting.  Typically, over the last few elections, Italy has had a voter turnout of over 80%, while the USA has a voter turnout of about 50%. What compulsory voting would mean Those in favour of compulsory voting assert that a high turnout is important for a proper democratic mandate and the functioning of democracy.  They also argue that people who know they will have to vote will take politics more seriously and start to take a more active role.  Further, citizens who live in a democratic state have a duty to vote, which is an essential part of that democracy. However, some others have argued that compulsory voting may be in violation of the fundamental rights of liberty and expression that are guaranteed to citizens in a democratic state.  In this context, it has been stated that every individual should be able to choose whether or not he or she wants to vote.  It is unclear whether the constitutional right to vote may be interpreted to include the right to not vote.  If challenged, it will up to the superior courts to examine whether compulsory voting violates the Constitution. [A version of this post appeared in the Sakal Times on November 16, 2014]