Situation Analysis on COVID-19 impact on economic units and workers in the formal and informal economy

International Labour Organization

Socio-Economic Inclusion

Service: Research & Studies

Objectives:

The proposed objectives of the study in consultation with ILO (International Labour Organization) were:

  • Gain information on the impact of MSMEs (establishment and workers in the organised and unorganised sector) due to Covid-19 related market disruptions. 
  • Understand the coverage and access to policy measures of the government (including wage protection, job retention, welfare entitlements, Employee Social Insurance Scheme, Provident Fund coverage, and others).

Approach and methodology:

The study used a mixed methodology to assess the impact of COVID 19 on MSMEs. Along with desk research, quantitative and qualitative data were collected. The study was done in the states of Maharashtra, Tamil Nadu, and Uttar Pradesh. The significant challenge was the lack of a database for MSME units and workers, and this had to be put together from various sources. Both quantitative and qualitative data were collected over the phone. The qualitative data was collected from government officials, trade unions, and NGOs. 3,111 workers and 1525 MSME units were interviewed across the three states. 27 stakeholders were interviewed for the qualitative data. 

Results: 

The Covid and lockdown impact was evident both among the MSMEs and the workers across the three states. However, the revival of the MSME units varied across the states. At the time of the survey, most units had reopened. The challenges faced by the MSME units included the inability to pay wages/salaries, repay loans, supply chain disruptions. The access to social security for the workers was still limited. The access to the various benefits/ support initiated by the government was also limited. The study results will strengthen the ILO social partners’ understanding and design policy responses and discussions to revive the local economy.

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