Post-Lockdown, Bihar's Labour Market Needs a Long-Overdue Shot in the Arm

A minimum income guarantee scheme offers the potential to offset the effects of reverse migration and the lack of rural employment opportunities.

As scores of migrant workers are returning to their native states, the situation after the COVID-19 induced lockdown was lifted looks even grimmer. Massive unemployment and rising joblessness are posing existential threats to millions of people in the country, bringing them to the brink of starvation and hunger.

Bihar is situated more critically with respect to the ongoing pandemic for two reasons. After Uttar Pradesh, the maximum number of migrant workers come from Bihar. Secondly, the higher rate of economic growth under the Nitish Kumar government has not translated into economic prosperity and social upliftment for the people of the state.

Highest percentage of informal workers

The immediate impact of the nationwide lockdown was severely experienced by informal workers who constitute around 90% of the country’s workforce. These workers lead a hand-to-mouth existence and have no job protection or savings to fall back on during extraordinary times such as these.

Among all states, Bihar has the highest number of informal workers. Out of the state’s total workforce, it is estimated that informal workers account for more than 90%. This number has remained consistent for the past 15 years. According to the Periodic Labour Force Survey of 2017-18, informal workers constitute about 94% of the state’s workforce.

The shares of casual and self-employed workers in Bihar are 32% and 54.45% respectively. In rural areas, most self-employed workers are marginal cultivators or petty artisans. In urban areas, they are engaged in small shops, low-scale businesses or intermediation activities. On the other hand, salaried workers are a mere 13%, much lesser than the national average of 24%. If we go by only the share of casual workers – and be conservative in our estimates – we are speaking of about more than 88 lakh workers who are financially fragile and economically vulnerable.

Also read: Lockdown: Bihar Is Perilously Ignoring the Consequences of Undernutrition on Children

A telephonic survey conducted between April 17 and May 12 by Azim Premji University has shown that in Bihar, 46% of workers reported having lost their employment, with casual workers being hit the worst. Nearly 82% of casual workers lost their employment. As expected with any pandemic, the marginalised population is hit harder than other groups. The survey reported that 58% of ST/SC workers had lost their employment and 32% of OBCs workers also lost their employment.

Outmigration despite economic growth

During the lockdown, scenes of the migrant exodus at bus and railway stations have depicted a human tragedy that is on par with pandemic. Images of workers trudging back to their villages on foot, bicycle, or wheeled-cart to survive were met by the government’s callous attitude while arranging daily ration or safe transportation.

This, in turn, has exposed the systemic vulnerabilities of the fragmented and unorganised labour market. The trigger for the people to migrate for employment is the lack of opportunities in their domicile state and an expectation of higher incomes or wages.

Bihar accounts for 14% of interstate migration in the country, second only to Uttar Pradesh. According to the 2011 Census, 7.5 million migrants were from Bihar. The prime reason for such migration is the search for employment. Despite a sustained annual growth rate of 10.5% in the decade from FY 2005-06 to 2014-15, Bihar’s economy has failed to generate enough employment opportunities to absorb its growing working-age population.

Table 1 is an eye-opener for us on what is happening with respect to Bihar’s labour market profile. Though the working-age population has increased from 66.27 million to 79 million, the capacity of the economy to offer employment or work opportunities to its productive population has reduced. This is clear from the employment rate falling to 35% from 43% between 2012 and 2018.

Strikingly, the employment rate has decreased by a greater proportion in rural areas than in urban areas. At this point, we should not forget the fact that the majority of Bihar’s population is rural-based. The falling employment rate in rural areas indicates a distress and pushes people to migrate from the state. Further, a worrying concern is a drastic fall in the male employment rate from 75% in 2012 to 63.5% in 2018.

Statistics on Bihar labour market indicators over 2012 & 2018
Rural Urban Male Female Overall
WAP(mn) 58.31 7.97 34.38 31.9 66.27
LFPR(%) 44.78 38.75 76.91 8.64 44.05
Employment rate (%) 43.47 36.56 74.78 8.01 42.64
Unemployment rate(%) 2.91 5.66 2.78 7.25 3.2
WAP(mn) 69.43 9.87 41.14 38.16 79.3
LFPR(%) 37.5 38.1 68.54 4.19 37.57
Employment rate (%) 34.95 34.67 63.53 4.06 34.91
Unemployment rate(%) 6.8 9.02 7.31 2.99 7.08

Source: Author’s calculation from NSS 68th round & PLFS 2017-18

Unemployment has also increased in Bihar. On the one hand, urban unemployment is higher than rural unemployment. What is more worrying is that the unemployment rate in Bihar (7.08%) was higher than the country’s average rate (6.1%) in 2017-18.

Also read: Will Bihar’s Economy Rise to the Reverse Migration Challenge?

To add to the woes, the female labour force participation is at an extremely low rate, at a meagre 4%. This is another matter of great concern. This low rate suggests two things: one, the decline in agriculture-based employment and increasing landlessness has forced women out of employment, and secondly, the overall labour market situation is tilted against women.

For a poor state like Bihar, such a dismal picture offers many challenges, and the government has to undertake effective labour market policies which provide decent work, decent pay and also promote the integration of women into the economy.

The reverse migration should also encourage the government to implement employment-generating policies. These appear more necessary than ever before for it is unlikely that the returning migrants will to go back to their destination cities in the near future.

Migrants walk on the Delhi-Noida road in Ghaziabad, May 14, 2020. Photo: PTI/Vijay Verma

Lowest human development, highest deprivation

Bihar is among the five poorest states in India, with around 33% of the population currently below the poverty line. Lack of employment opportunities meant that the living standard of the state’s residents has not improved. Bihar’s human development index continues to be at the lowest since the 1990s.

The Socio Economic Caste Census (SECC) of 2011 provides a grading of deprivation on the basis of seven criteria. A recent study by the Indian Council for Research on International Economic Relations (ICRIER) has shown that Bihar has the largest number of landless households which derive their income from manual casual labour. At 47.2%, this proportion is much higher than the country’s average of 30%. Also, 34% of the households do not have an adult member over the age of 25. This is also the highest in the country.

The way forward

The COVID-19 pandemic has exposed the existing vulnerabilities in the labour market and the informal workers, including migrants, have been hit the worst. With no unemployment benefits and very limited social safety reach, it becomes morally imperative and constitutionally obligatory to provide the affected population with decent employment and access to better standards of life. The right to life as enshrined in the constitution cannot be realised without the right to decent work.

With Bihar’s unemployment already higher than the country’s, it will be extremely difficult for many of the returning migrant workers and the marginalised population to survive. In this regard, the state government must roll out a minimum income guarantee scheme which targets the deprived households on the basis of deprivation criteria used by SECC.

Also read: The Coronavirus Has Brought Out Years of Inept Governance in Bihar

The ICRIER study suggests that an annual transfer worth Rs 6,000-8,000, depending on the level of deprivation, will help these families. The calculation shows that if the Bihar government undertakes full financing of this scheme on its own, it will cost the government not more than 0.10% of the gross state domestic product (GSDP). On the other hand, if the Centre bears 50% of the financing for the scheme, the cost to the Bihar government would amount to around 0.05% of its GSDP.

To absorb the growing employable population, the government has two options. It must first increase the MGNREGA worksites and launch an urban employment scheme.

Kashif Mansoor is a PhD scholar at Centre For Development Studies, Thiruvananthapuram. Bihar is his native place.