Massive impact on migratory workforce-Time to Act

The pandemic has created a hell lot of pain for all of us. The worst hit are the blue collar workers who are mostly migratory. The pictures of people going back and wanting to go back leaves a deep scar in our perception of a safe and secure life. Its time to act and act decisively for the betterment of millions of people who need concentrated effort more than ever. Lets try to understand the situation a bit better ..

Are people losing Jobs?

   This is no more a doubt .Right thing to ask is how many ? while it's debatable, our understanding is that roughly 10 million people are impacted. People who are in Gig economy, mobility, retail, hospitality, manufacturing , facility , security, construction and perhaps most other areas. Infact logistics that employs more than 10 million people is also hit due to lockdown. Based on our data points, almost 40-60% are impacted in the logistic area while 80-90% in mobility. As people have started working from home and offices / hotels are literally shut down causing an impact on facility management demands which could be to the tune of 50% or more. Fortunately enterprises are holding the forte and engaging with their employees. They have to ensure the ship keeps sailing while keeping the flock together. But the depleting cash and unpredictable future forces leaders to take undesirable calls resulting in job losses. MSME e.g., is the worst hit with limited cash flows and unmanageable costs. I believe we will continue to see this in coming months and it's anybody's guess on the potential economic impact it would leave behind long term.  

Reverse Migration 

  There are roughly 15cr people in the blue collar economy. Almost 80% of those are migrant labourers. Almost 80-90% of the people in security, facility or hospitality are from North East of India. Large part of construction labourers comes from Bihar and UP . The delivery and mobility community is largely inter state migratory workforce. Even farming is dominated by migratory helpers due to local resource crunch. 6 states ( Assam,Odisha,Bengal,Bihar,UP and MP) constitute the largest share of the migrant workforce contribution. People have developed fear . Fear of pandemic and depleting income without any signs of revival. With this hazy picture in mind the best option left with a large part of the migrant community is finding a safer heaven. Clearly that is going back home, managing life at much lower cost in times of uncertainty. Staying with family gives  much needed strength. I believe 30-40% of the people would like to go back at the first opportunity. We are also closing on onset of monsoon season and perhaps they can contribute in the harvesting work. Having said that, there are people who will stay back. People who have moved with families or people who are salaried and have not lost their job, or people who have no other option but to stay and earn . Historical data tells us that people who go back tend to stay back for 4-8 months. In the given situation, I assume most would not think of coming back till the situation improves or the end of the festival season by Oct end, whichever is later. 

Would there be sufficient demand resulting in a shortage of supply ?

  While it's early to say anything, we already see some positive signs with the relaxation and Lockdown limited to Red zones and Hot Spots. I believe the delivery segment will pick up really fast as people are wanting all kinds of things. Same applies to facility and Security as people would start going back to work. Manufacturing has to continue to meet local consumption except luxury or special goods . Some others might see very small or no near term demand like hospitality, fine dining restaurants, Construction etc. Government could definitely push demand by creating huge infrastructure budgets. Overall I think there could be 30-40% less demand for the next 3-6 months which could be similar to the number of people gone back. Nevertheless the supply might be skewed towards certain skills or roles and hence we would need to find smart ways of reskilling for adjacent jobs. Some areas would definitely face shortage of supply in the unskilled workforce. 

 What's the future of GiG economy 

    Covid has created an interesting cross section of thoughts around the GiG economy. As of today Logistics and Mobility has the highest share of GiG Workers in organized sectors which shall continue to grow. Nevertheless , in the face of unpredictable market dynamics Employers would like to have flexible staff to manage ever changing demand. A resource pool which is readily available without too many strings attached would be perhaps the sweet spot for them. Might be enterprises would prefer to have 20-30% as GiG Workers and even more in MSME to effectively manage their cost. On the other hand job seekers might prefer to have stable jobs in times of uncertainty so that they can manage their income visibility. Looking at the current situation , It would be more driven by Demand and people would pick up whatever is available to meet personal needs. As things will start towards normalcy , we could see new norms coming into the GiG economy for its surge creating potentially a Win-Win for all

What shall the gov do to catalyze the recovery ?

  I think the first and foremost responsibility of any gov. in the given situation is to fight the pandemic. We are lucky that we have seen a decisive gov. which could contain the spread so far in the best possible way. But, Its time to think about what’s next. Whichever way we go it has to be centered around the millions of people who have lost jobs or taken a hit in their daily income. In my view few things that the gov should to at lighting speed are

• Formalize GiG economy including contract labourers , house help staff that will create value for all. Some of the states have relaxed few labor laws to facilitate job creation without fear of compliance issues which is a great step forward. It's time we look into new laws which benefits all. Laws that ensure higher income, savings, continuity, unplanned expenses etc. Laws that helps build better and secured living for so many migrant workers.
• In the existing formal segments give a 2 year break on PF depoits and allow principal employers to pay that amount to their employees vs deducting and depositing it in PF accounts. People need more take home in these tough times. 
• Avoid any minimum wages hike for next 12 month as it will only hit absorption of supply of people due to increased operating costs in face of weak projected demand
• MSME are the largest job creators and they are the worst hit. They need many helping hands. A suitable financial package for them is a must.
• Every problem comes with opportunities. This is the opportunity for India to build world class infrastructure thereby creating millions of local jobs. 
• Make in India has to fly higher. There is a need to cut down dependency on China and manufacture all things possible for local consumption as well as export. Perhaps its time that we invite all potential companies to come here and manufacture. Gov. should expedite that and create the foundation for it , world class infrastructure, Skilled workforce with relaxed labor laws and a ecosystem of supply chain. 

While we are all fighting the covid war, it's also time to build the foundation for the future. It's time to WIN. 

Next week I would share my views on how the Human Capital Management would look like in Blue collar economy post covid. 

Stay happy !