Covid-19 and the global stagnation:

Labour migration, economic recession and its implications

Authors:
Dr. Vinod K. Bhardwaj Dr. Lalita Yadav
Associate Professor, Geography Associate Professor, Economics
Dept. of College Edu. Govt. of Rajasthan LBS Govt. PG College, Kotputli, Jaipur
e-mail: drvkb.25@gmail.com e-mail: lbsfavi@gmail.com
Abstract

Covid-19 has affected the global economy in such a way that the Indian government is only
concerned with saving the lives of is people while no emphasis is being laid on replenishing the
economic resources and condition of this country. The distorted situation that has arisen due to
the migration of crores of people from one state to another and the loss of employment of many a
people is one of the darkest periods in the history of mankind. The lockdown system has taught
people to be precautious and self-reliant by adopting the preventive distancing strategy while
equally alarming issue such as stagnant industries and businesses isn’t being attended to. The so
called assurances of relief packages is merely a ‘mirage-in-desert’ for the poor ; without proper
implementation, such promises are only sugar-coated words which seek to secure the vote of
these devastated and underprivileged people. The lockdown was declared in haste, followed by
an abrupt shut down of the industries shut down. With zero production activities, it seems
impractical how the government seeks to ensure minimum wages to all the people it has thrust in
mouth-widening chaos. Briefly stating, multifold planning is required to extend desired help to
the hands who contribute in production, manufacturing and distribution. Besides, equal
considerations for health and hygiene, employment, industrial development and market
sustainability are expected to assure holistic development and economic growth.

Keywords: Coronavirus, Covid-19, labour migration, unemployment credit, lockdown, self-reliant India,
economic recession,

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Background:

Corona pandemic- 2019 has acutely affected the world. There are spatial variations in its effects- from its
origin in China to mushrooming in all 197 countries- it has large implications for human survival. Crises
of food, shelter, and safety have down the entire world to great loss and uncertainty. Global lockdown,
shutting down of all production-manufacturing units, retail market, and lapse of the self-employed and
daily-wage sector has pushed a large number of people deep into existential crisis. A worldwide migration
has been recorded, both international and domestic which aims to save the lives of the natives and prevent
the community spread of the virus. However, it has been affecting the industrial production,
manufacturing, market, and various other services gravely. It is a mayhem where millions of people in
India itself, en route to their homes are anxiously waiting alongside state borders to get a pass. Besides,
those who have managed to return, are suffering from hunger, lack of resources, and the threat to the
survival of their families. Therefore insecurity has clouded their minds which will ultimately prohibit
them to resume working. Thus, depletion in labor resources is bound to strike India, as well as other
countries. Almost similar trend of slash in employment opportunities and cascading market condition is
inevitable throughout the world. Countries like China, Italy, and Spain have faced market plunging in the
early stages (December 2019- January 2020) of this pandemic, while others like the US, India, Japan, UK,
Russia, Pakistan, etc have entered in this phase later (after March 2020). Not only the private sector but
even the governments are in a state of helplessness. Saving the lives is the foremost task of all
government and non-governmental agencies and socio-political organizations across the globe. The
devastating effect of this pandemic is evident in the quiescence of economies and irreparable damage to
their social development. Although China has kick-started its industries and opened up the markets and
workplaces, yet it is in the wake of the second phase of this pandemic. The symptoms of the second phase
are visible already as some cases have been registered in Wuhan itself. As per the estimates of the United
Nations Conference on Trade and Development (UNCTAD), there will be a colossal loss to world GDP
of $ 1 trillion in 2020.1 Its implications on various sectors i.e. industrial, market, production, agriculture,
human resource development, etc. need to be examined and addressed simultaneously so that appropriate
initiatives can be taken immediately. Human health is also a challenging issue to address worldwide.
Global death toll has surpassed 3 lakh till mid of May 2020, topped by the US (85k+), UK (38k+), Italy,
Spain, France, etc.2

State of joblessness & economic recession in the world

Observing the international scenario of labor return, economic crunches, and tumbling of job
opportunities, it is clear that the tempestuous situation of economic crises has overtaken the world. As per
the estimates of the US Bureau of Labor Statistics (US-BLS), the unemployment rate in the USA in April

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2020 has gone up to 14.7% which was previously 4.4% in March 2020.3 Resultantly, more than 20
million Americans have applied to the US Govt. for unemployment benefits, including 5.25 million new
applicants in the second week of April 2020.4 Due to the COVID-19 led economic recession in the US,
the country has faced 7 Lakh+ job losses.5 As per a trend analysis by Dante De Antonio, an American
economist, the job overall job losses in April 2020 could be 10 to 20 times greater than those in March
2020.6 The International Labour Organization(ILO) has estimated that more than 25 million jobs would
be threatened due to the pandemic globally. It is further estimated that out of 3.3 billion global
workforces, about 81 percent have been affected by full/ partial workplace closures.7

Surprisingly, in China, the urban Unemployment Rate (based on the urban survey, and estimated based on
the simple ratio of unemployed people to the total working-age population) was 6.2 in February 2020
which declined to 5.9 percent in March 2020 due to commencement of economic activities after
lockdown. This 6.2 percent unemployment rate has been the highest in the last 18 year period(year 2002-
2020).8 Although in July 2019 it was registered as 5.0 percent which is expected to be around 5.1 percent
in July 2021.9 The average unemployment rate in China in the last 18 years is observed 4.2 percent
whereas the lowest was recorded as 3.9 percent in Sept. 2002.10 The GDP rate loss quarterly, for the first
quarter of the year 2020 is estimated as (-) 9.8 percent, which remained 1.5 percent grown in the previous
quarter (Sept.–Dec. 2019). It is the highest loss in GDP since 1992 (almost 3 decades)11.

The unemployment rate in the UK has been registered as 4.0% (-0.1%) in February 2020, which earlier
reached up to the highest, being 3.9 percent in June & July 2019 and January 2020.12 This is expected to
aggravate further up to 6.2 percent and 7.1 percent till mid of June and July 2020 respectively.13
Approximately 9 lakh 50 thousand new applications have been filled for Universal Credit in the latter half
of March 2020 due to the crisis caused by lockdown in the UK. 14 According to the Bank of England, the
economy of the UK has shrunk by 2.9 percent in the first quarter of 2020 and it is yet to witness an
unprecedented 25 percent decline up to the end of the second quarter. This loss isn't expected to attain its
previous state until the mid of 2021. The bank also reported that "It will be the sharpest annual
contraction since 1706.15

In an interview to the UN news, Richard Kozul-Wright, the Director of Division on Globalization and
Development Strategies at the UNCTAD stated about the European economy, "It was almost certain to
delve into recession in the coming months and the German economy is particularly fragile, but the Italian
economy and other parts of the European premises are also facing profound consequences at present".16
He further added that many parts of the Latin American region are similarly vulnerable and that
Argentina, in particular, will be struggling with the sequential effects.17 In Italy, the unemployment rate

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was observed as 9.6 percent at the end of January 2020, which has been forecasted to be approx. 14
percent at the end of July 2020.18

Although unconfirmed yet, the unemployment rate in Japan was estimated to be approximately 3.9
percent at the end of March 2020, which is higher than the 2.4 percent unemployed stocks in the country
in February 2020.19 Similarly, as per the Russian Economy Ministry, the unemployment rate could
contract by 15 percent in 2020. About 7.35 lakh people have been registered as unemployed in the month
of March-April 2020 in Russia.20 According to some estimates; it is reckoned that the GDP of Russia may
further decline by 5 percent till the end of the year 2020, if quarantine is extended.21

Therefore observing this global scenario through these larger economies of the world is clear that the
world is facing two major challenges- recession in GDP and rising unemployment. As of now, i.e. mid-
May 2020, India ranks 12th in terms of no. of positive cases & 15th place in terms of the death count.22
The situation is concerning because the economy is collapsing and the accelerating unemployment will
vandalize it to an irrevocable extent even in the coming few years.

Covid-19 and India

After observing the number of domestic migrants affected by Covid-19 in India, it has been surmised to
be about 40 million within a month after imposing lockdown.23 Till mid-May 2020 India has registered
more than 75 thousand positive cases, with more than 2400 deaths.24 Analyzing the approximations of the
Centre for Monitoring Indian Economy (CMIE), 404 million people were employed till the end of the
third week of March 2020, though the count toppled down to 285 million in the fourth week25. The
number of unemployed persons has crossed 122 million at present(CMIS survey; 2020), which includes
91.3 million small traders & labor and 17.8 million salaried labor & part-time workers.26 The Labour
Participation Rate (LPR) has declined to 41.9 percent in March 2020 from 42.6 percent in February 2020;
a whopping 9 million slump to 434 million in March 2020 from 443 million in February 2020.27 Survival
of such large proportion of human resource is at stake due to a rise in the unemployment rate from 8.7
percent in March to 24.68 percent in the second week of May, with 25.98% in urban and 24.11 in rural
28
areas. There are 8 States & Union Territories in-country witnessing a relatively higher unemployment
rate than the national average (23.7) in April 2020; as Puducherry at the top with 75.8 percent, followed
by Tamil Nadu (49.8), Jharkhand (47.1), Bihar (46.6), Haryana (43.2), Tripura (41.2), Karnataka (29.8)
and Orissa (23.8) while the lowest in Himachal (2.2), Sikkim (2.3), Punjab (2.9) and Chhattisgarh (3.4).29

States like Maharashtra, Gujarat, MP and West Bengal, top the death toll stats while others like UP,
Delhi, Tamil Nadu, UP, Punjab and Telangana are following through. These are the states which have
better perspectives on human resource development and utilization due to their higher level of

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development as compared to the rest of India. As regards the economic implications of the pandemic,
some sources estimate it up to US $ 190 billion in India30 in a span of 47 days of the lockdown besides the
4 percent irrecoverable loss to India's GDP31.

Interstate migration and challenges in India

Unlike the developed western states, India was vigilant enough to take essential measures in the
beginning itself, to prohibit the spread of COVID-19 and prepare the road map to sustain the impending
inflation. The four successive lockdowns have been a strategic move to prevent the third stage of
community spread which would have- if it hadn't been for the lockdown- resulted in the death toll
surpassing lakhs, given the fragile and inefficient health infrastructure in India.

Recently, the Centre's decision to bear only a part of the medical expenses has left many stressed out;
previously, it had assured the downtrodden sections of bearing all the cost of their treatment and now,
such a gesture of irresponsibility has jeopardized the assurance of health security. Those people have been
rendered penniless in the efforts to survive the pandemic, they aren't even employed so there isn't any
source of income for them. In the light of such misfortunes, the Centre has put them in a state of turmoil
with the aforementioned decision. It is obvious for the laborers to return home during the existing crisis,
but the critical situation that remains unanswered is, how will the industries be brought back to life? All
the units are shut down, for the time being, forcing the workers out of their temporary abodes, bereft of
even meager emoluments.

After lockdown 1.0 and (especially) 3.0, the interstate migration increased rapidly. People were forced by
circumstances to walk their thousand kilometers journeys, from Maharashtra and Gujarat to UP, Bihar,
and even northeastward. Many are stuck at borders of different states as the current order there doesn't
permit a hassle-free transit through their territories. A massive crowd has assembled at the Rajasthan-UP
border in Bharatpur district awaiting safe passage to their homes. Similar cases have been recorded in
other states like Chhattisgarh, Bihar, UP who unnecessarily delayed the transit of those poor laborers.
Merely addressing the nation & smooth-talking doesn't ensure the absolute way-out, unless the actions are
directed in the same direction and with the same intensity. The interests of the labor-class weren't thought
about before declaring the nationwide lock-down, instead, if a week had been granted to them, the
situations wouldn't have been so scathing. On top of it, the government is now considering the partial
opening of the markets and industries; one can wonder, how are they planning to evacuate the migrants
again from their present misery ? Several challenges have bogged the country; some of them are as
follows –

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 • How to assure the safe passage of the migrants to their homes, without any additional stress to
their plight?
• How to ensure the minimum survival needs of helpless labor and daily-wage workers?
• What is the optimum strategy to guarantee minimum financial support until they resume
livelihood?
• What is the strategy to release the stuck migrants from detainments?
• Measures to prohibit exploitation of these needy and poor people by the affluent ones.
• Ensuring the availability of laborers once the industries are in function without stressing the
market.
• Strategy to restart production and supply in the country, as well as proper pricing of agro-
products to save farmers from debt-traps.
• Measures to assist the small, medium, and large scale industrialists, retailers, service sectors,
laborers, daily wage workers, manufacturers, peasants, entrepreneurs against any financial burden
and to enhance their sustainability.
• Strategy to facilitate and promote smooth migration of workers towards the production units with
a minimum guaranteed wages to avoid sudden inflations.

The above circumstances have to be considered seriously, only then the economy can be brought on track.
To improvise economy, Governments have to consider concrete plans, rather than baseless
announcements for political vote bank. Money transfer into Jandhan accounts is not a viable solution,
rather people should be given work to earn their livelihood and this money should be paid to them as
wages instead.

Required remedial measures

The government talks about a self-reliant India, but what is the plan for the development and livelihood of
the poor who have just returned home after losing everything? After the Corona tragedy, the biggest
challenge before the country will be to rejuvenate its economy, but so far, the government is working only
to maintain its vote bank. The financial assistance provision of Rs. 20 lakh crores, granted in the name of
'Self-reliant India'32 is unacceptable until it is confirmed whether-

The working class will have an assured source of employment;

There will be any concrete plan to let the workers returned to their workplaces;

The farmers, which weren't infected by the corona, but affected by the lockdown, will get any
compensation.

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The government has to consider the welfare of all sections of society, rather than being worried about
only the top industrial houses by granting them bailouts. In such tragic times, education of the students,
health facilities to the needy, and employment to all are the responsibilities of the government. This will
create an atmosphere of a true spirit of democracy in the country which will give new energy and impetus
to fight against corona collectively. The country is on its way to conquer Corona, but at the same time it is
also becoming the prey of mass poverty, unemployment, and starvation which indeed is agitating. The
fear of future uncertainty is so deep in people's psyche that it may mass protests an inevitable incident.
Policy formers should consider it seriously and plan accordingly. Arrangements like 'work-from-home'
are just term; they have no utility due to the absence of an effective implementation framework. Though
such work arrangements have already been tested in the private sector and have yielded positive results
but, seem to be a far-cry in the government sector. Hence, opening up of all services and offices with
safety and security restrictions is the only solution to resume smooth economic progress in the country.
Also, the operating transport facilities- rail, air, and seaways- can help to travel over long distances in a
shorter time-span and enhance the economic productivity of the working class.

Conclusion

The grim period of Corona will be recorded as one of the most unfortunate events in the
world history. This epidemic has forced massive unemployment and unproductivity coupled with
economic stagnation upon the world. Another trial awaits this mankind once this situation gets
better; rejuvenation of the economies and the adverse social consequences that equal a great
upheaval. The government will have to initiate labor welfare centric initiatives, and provide an
apt alternative to the mass migration which can be dealt with by opening the industries and
businesses within suitable restrictions. In the first place it was an apparently smart government
strategy to evacuate them from their income platforms and send them back to their native places.
So, it is the responsibility of the same government to provide better living conditions and income
perspectives for such people. Proclamations to leave industries open will not make economic
progress; rather strategies to introduce avenues for employment in private & self employment
sectors can prove fruitful in countering the web of uncertainties spun by this disaster.

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References:
1. UN News; Coronavirus update: COVID-19; UN trade agency; 9 March 2020; at
https://news.un.org/en/story/2020/03/1059011
2. Worldometer; Coronavirus Death Toll 2020; at https://www.worldometers.info/coronavirus/coronavirus-death-toll/
3. US Bureau of labour Statistics; Labor Force Statistics from the Current Population Survey; Washington, DC; 2020;
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covid19/
5. Ibid
6. Ibid
7. Covid-19 and the lockdown impact: Estimating the unemployment and job losses in India’s informal economy; The Times
of India; accessed on 8.5.2020 at https://timesofindia.indiatimes.com/blogs/red-button-day-light/covid-19-and-the-
lockdown-impact-estimating-the-unemployment-and-job-losses-in-indias-informal-economy/
8. National Bureau of Statistics of China; China Urban Survey Unemployed Rate 2002-2020;
https://tradingeconomics.com/china/unemployment-rate
9. Ibid
10. Ibid
11. Trading Economics; China Economy Contracts; China GDP Growth Rate; 2020; https://tradingeconomics.com/china/gdp-
growth
12. Trading Economics; United Kingdom Unemployment Rate, 2020; https://tradingeconomics.com/united-
kingdom/unemployment-rate
13. Ibid
14. The Guardian; Universal credit in UK lockdown; UK; https://www.theguardian.com/society/2020/apr/01/950000-apply-
for-universal-credit-in-two-weeks-of-uk-lockdown
15. Covid-19 to push UK economy towards deepest recession: Bank of England; Business World; at
https://www.business-standard.com/article/international/covid-19-to-push-uk-economy-towards-deepest-recession-
bank-of-england-120050700781_1.html
16. UN News; Coronavirus update: COVID-19; at https://news.un.org/en/story/2020/03/1059011
17. Ibid
18. Italy Unemployment Rate, Trading Economics; 2020;
https://tradingeconomics.com/italy/unemployment-rate
19. Business & Human Rights Resource Centre, Japan; Japan: COVID-19 triggers sharp increase in unemployment among
non-permanent workers; April 2020; https://www.business-humanrights.org/en/japan-covid-19-triggers-sharp-
increase-in-unemployment-among-non-permanent-workers
20. China Global Television Network (CGTN); COVID-19 Global Roundup: Russia is balancing between COVID-19
containment and economic fallout; 7th May 2020; https://news.cgtn.com/news/2020-05-07/COVID-19-Global-
Roundup-Russia-to-ease-restricts-as-economy-worsens-QiHNQ3zhrq/index.html
21. TASS: Russian News Agency: Russia's GDP may decline 5% in 2020; Moscow; 13 April 2020; at
https://tass.com/economy/1144029
22. Worldometer; Reported Cases and Deaths by Country, Territory, or Conveyance; 2019-2020; at
https://www.worldometers.info/coronavirus/?utm_campaign=homeAdvegas1?%22
23. Lockdown in India has impacted 40 million internal migrants: World Bank; The Economic Times, Apr 23, 2020; accessed
at
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world-bank/articleshow/75311966.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
24. Worldometer; Reported Cases and Deaths by Country, Territory, or Conveyance; 2019-2020; at
https://www.worldometers.info/coronavirus/?utm_campaign=homeAdvegas1?%22

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25. Firstpost; COVID-19 impact: Informal economy workers excluded from most govt measures, be it cash transfers or tax
th
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07%2008:26:04&msec=770
28. Unemployment Rate in India; Centre for Monitoring Indian Economy Pvt. Ltd. (CMIE), India; 12 May 2020;
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29. Ibid
30. Nilesh Shah; Indian economy has to cover $190 billion output loss due to lockdown; Times of India,
Mangaluru; 9 May 2020; at https://timesofindia.indiatimes.com/business/india-business/indian-economy-has-to-
cover-190-billion-output-loss-due-to-lockdown-nilesh-shah/articleshow/75644780.cms
31. Covid-19 to cause 4% permanent loss to India’s GDP: Crisil; The Indian Express, May 12, 2020;
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32. Nirmala Sitharaman announces second tranche of govt's Rs 20 lakh crore stimulus package: Key points; The Times of
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announces-second-tranche-of-govts-rs-20-lakh-crore-stimulus-package-key-points/articleshow/75736455.cms

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