Question

what steps goverent should to take for unemployment during covid-19 pandemic

IN DETAIL 20 MARKS QUESTION
NO SHORT ANSWERE PLEASE

Answer 1

• The spread of the coronavirus and the unplanned lockdowns have created economic havoc in the lives of the millions who are part of the informal sector – not just daily wagers, but also workers of the gig economy.
• According to the Employment-Unemployment Survey, 2015-’16, over 80% of India’s workforce is employed in the informal sector. One-third are casual labourers.
• Within 24 hours of Prime Minister Narendra Modi’s address to the nation on March 19, crowds at railway and bus stations across the metros started swelling. If these workers could not earn, they wanted to get home where they would have at least some food and shel
• The Union government is planning to give unemployment benefits to a section of organised workers who may lose their jobs due to the coronavirus pandemic. This will be along the lines of measures taken by some countries such as the United States to combat the impact of the pandemic, also known as COVID-19, on the working population.
• The government’s ‘Atal Beema Vyakti Kalyan Yojana’, which provides unemployment insurance to workers who have subscribed to the Employees’ State Insurance (ESI) scheme, will cover such workers during the pandemic. The ESI is a self-financing health insurance scheme for formal sector workers in India managed by the Employees State Insurance Corporation (ESIC).

• Under the scheme, which has been operational since July 2018, workers who become unemployed get compensation in the form of cash up to three months of unemployment. But this can be availed only once in a lifetime.

  “The labour and employment ministry is looking to extend the scheme and allow workers to avail of unemployment insurance if they are impacted by coronavirus,” a senior government official said.

  Workers get cash to the tune of 25 per cent of the average salary that they were getting in the last two years of their job under this scheme. However, an important condition for workers to get the unemployment benefit is that they should have been a subscriber of the ESIC for at least two years. When the scheme was made effective in July 2018, around 1 million workers were eligible.

• The COVID-19 pandemic has laid bare the fragile threads holding together the way labour and industries function within the country

• In this phase of the lockdown, employees and workers were to be deemed to have attended work, even if physically absent during the lockdown. However, by April 15th 2020, the second phase of the lockdown commenced and the Ministry of Home Affairs started increasing the number of industries that could remain operational during the lockdown.

• The coronavirus (COVID-19) crisis has led to a spike in the country’s unemployment rate to 27.11% for the week ended May 3, up from the under 7% level before the start of the pandemic in mid-March, the Centre for Monitoring Indian Economy (CMIE) has said. The Mumbai-based think tank said the rate of unemployment was the highest in the urban areas, which constitute the most number of the red zones due to the coronavirus cases, at 29.22%, as against 26.69% for the rural areas.

• As per CMIE’s data, the monthly unemployment rate in April stood at 23.52%, up from March’s 8.74%.

• As of the end of April, Puducherry in South India had the highest number of unemployment at 75.8%, followed by neighbouring Tamil Nadu 49.8%, Jharkhand 47.1% and Bihar 46.6%.

• Maharashtra’s unemployment rate was pegged at 20.9% by the CMIE, while the same for Haryana stood at 43.2%, Uttar Pradesh at 21.5% and Karnataka at 29.8%.

• The government is working on an action plan to reskill unemployed migrant and informal sector workers once the lockdown is lifted. The move will not only help rehabilitate those who have lost their jobs because of the coronavirus crisis, but also make workforce readily available once economic activity restarts.About 90% of India’s workforce of 500 million is engaged in the informal sector. The 40-day lockdown to contain the spread of Covid-19 has forced millions of these people out of jobs. Migrant workers have had to return home after factories and establishments closed down.

• A special research team is being formed to do a quick and continuous assessment of skills demand, based on which training will be imparted,” an official of the skills development ministry told ET.
  

  large and comprehensive re-skilling programme for those workers whose jobs may be at risk, including informal workers, workers in malls, cinemas that may not open for some more time, is needed to prepare them to work in other sectors, such as ecommerce,” .

• he ministry of skill development and entrepreneurship is of the view that Covid-19 may be a relevant context for concentrating on re-skilling

• When an economy is facing high unemployment and unutilised capacity, banks too are facing insufficient demand for credit. In such an environment, any increase in the demand for money would result in an increase in supply of money, without any significant change in the interest rate. Therefore, higher fiscal deficit actually ‘crowds in’ or encourages private investment.

  When the government spends, it increases demand not only directly but also indirectly. Direct government purchases from some industries set in motion an increase in demand in many other industries. The benefit of that demand expansion also goes to the private sector and encourages it to invest. In a nutshell, the debt financing public expenditure will ‘crowd in’ rather than ‘crowd out’ private investment.

  We propose the following actions the government can take:

  (i) protect employment and MSME businesses

  (ii) provide direct financial support for affected microenterprises, liberal professions and independent workers

iii) reduce/postpone taxes for affected industries and provide concessional loans from public and private financial institutions

(iv) raise minimum pension and cash assistance to families in need

(v) streamline and boost health infrastructure

(vi) further increase spending on health supplies at least up to 3% of GDP, and

(vii) develop preventive measures against the spread of infection and strengthen treatment capacity