Coronavirus Outbreak: Reverse-migration and labour shortage likely to be long-term impact, says report

Reverse migration of workers since the Covid-19 outbreak has serious public-health implications. With basic sustenance support from the government for three months, many interstate migrants may not return to work soon. Labour shortage, it is being feared, can hinder economic recovery. The shares of interstate migrants in overall migration and employment are estimated at 15 percent and 20 percent, respectively.

Lack of interstate migrant labour may create some shortage but the situation may not turn alarming unless migrants from the same state, too, do not return to work. Labour deficit states such as Maharashtra, Delhi and Punjab may, however, feel the impact more. Labour shortage is already curtailing rabi harvesting. Construction, trade, transportation and hospitality, too, may face temporary shortages. In the medium term, however, the impact of Covid-19 would result in more unemployment rather than labour shortage, according to a research report by Anand Rathi Share and Stock Brokers.

Huge reverse migration poses a serious challenge. With the threat to sustenance at the workplace post the Covid-19 outbreak, vast numbers of migrant workers set off for native places. This has opened up the serious threat of rural contagion, which can result in medical exigencies, extended lockdown and diversion of more funds to fight Covid-19 rather than aid economic activities.

Migrant workers may delay returning to work. Factors such as harrowing experiences during reverse migration, basic sustenance support from the government till Jun’20, increased rural labour demand during the monsoon (Jun-Sep’20) and anticipated slow normalisation of labour demand on the withdrawal of the lockdown, may delay a part of interstate migrant workers returning to their workplaces. This, it is feared, may create labour shortages and, thereby, further hinder an economic recovery.

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Relatively modest role of interstate migrant workers. While the net figure of interstate migration is large – over 25 lakh a year – it accounts for less than 15 percent of overall migration 62 percent being from the same district, 24 percent from other districts of the same state. Similarly, our estimates suggest that just about 20 percent of the employed are interstate migrants.

Delay in return of interstate migrants unlikely to be crippling. Even if a large part of interstate migrants do not return to work, it is unlikely to create a huge problem, as labour demand after the lockdown is expected to climb slowly. Yet, if migrants from the same district/state also delay returning to work, that can create a serious labour shortage.

Maharashtra, Delhi and Punjab most vulnerable. These states attract interstate migrant workers the most. A delay in return of migrant workers would impact these states more.

Agriculture, trade, transport and hospitality likely to be more impacted. With high proportions of elementary/low-skilled workers, these sectors are more likely to be hit.

Already rabi harvesting is being impacted and perishable agricultural and allied products are being destroyed due to lack of transportation, demand and storage facilities.

Unemployment, a bigger issue than labour shortage. While labour shortage can persist for up to six months, we expect the longer-term impact of Covid-19 in terms of worsening of the already precarious employment situation in the country.