Nishanth Kumar
Dvara Research
Anupama Kumar
Dvara Research
State of Working India, May 2021, Background Paper 3
JEL Codes:
JEL code(s) not specified.
● Incomes and coping strategies among informal sector workers
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In this paper, we examine the composition of the labour market in India after the immediate impact of COVID-19. Using the data from the Consumer Pyramids Household Survey (CPHS) conducted by the Centre for Monitoring the Indian Economy (CMIE), we identify that there is a large-scale transition toward informal sector employment. Over 40 per cent of households employed in the formal sector in July 2019 had transitioned to informal employment in July 2020 and have consequently suffered a significant loss in wages which highlights the potential instability in the recovery in unemployment rates in recent months. We show the relative volatility of cashflows of the households in the informal sector and highlight the lack of risk protection for informal leading to the use of negative coping strategies by households employed in the informal sector. We also examine the policy landscape of wages and social protection in and address gaps in policy that, if filled, can provide access to adequate coping mechanisms to help battle the inherent volatility in incomes and vulnerability to shocks.

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