If work from home is to become a sustainable strategy, there is a need to understand and plan for the effects of this on the whole urban ecosystem
Historically, high urbanisation has been one of the major drivers of economic growth. As cities grow and offer new opportunities, they become attractive to the rural population. In turn, this inflow of workers helps sustain urban economic growth. However, the COVID-19 has brought cities to a standstill and one of the crisis’ most visible effects — the shift from an office-based system to work from home (WFH) arrangements — is likely to have spillover effects on many sectors of the urban economy. With many firms planning long-term strategies for WFH and reducing office space, remote working is here to stay. For example, Infosys recently announced permanent WFH for 33 per cent of its employees.
Though adapting to this new normal may be initially difficult, white-collar workers stand to benefit from low travel costs and the stress associated with travelling in a congested and polluted environment.
However, the effect of this shift to a WFH culture on informal workers, who largely depend on formal sector demand, has not received much attention. In India, 80 to 90 per cent of the workers are employed in the informal or semi-informal sector. For many who work in the cities, livelihoods are heavily dependent on demand from an office-based working system. So, it is clear that workers who are going to be badly hit include cycle rickshaw pullers, autorickshaw and taxi drivers, and street vendors who sell food and other commodities outside offices and Metro stations. Additionally, with the lower in-person presence of professionals in the workplace, offices will also require fewer personnel for housekeeping and administrative services. Thus, remote working has created long-term uncertainty for the informal workers.
More than 10 million street vendors in India are likely to be impacted. A common sight in most cities used to be vendors selling a wide cornucopia of products outside Metro stations and large office spaces. A significant share of this workforce also relied on street-food vendors for their meals. However, the fear of COVID-19 exposure and normalisation of WFH has led many people to switch to the more contactless online ordering and the livelihoods of street vendors are now in question. Many have already chosen to go back to their villages or are at the mercy of donations and Government aid to make ends meet.
In order to provide relief to these vendors, the Government recently announced its scheme for the provision of loans. However, many vendors have not been able to avail of this benefit due to the requirements of the associated paperwork and registration process. Additionally, many vendors are not willing to take the loan scheme as it will only put an extra burden of repayment on them in a no-business scenario. Hence, apart from additional reforms to safeguard the livelihoods of street vendors, there is a need to build back consumer confidence to shop from vendors. If demand continues to stay low, the State Governments will need to rethink how alternate livelihoods and support programmes could be provided for these vendors.
The earnings of taxi, autorickshaw drivers and other informal mobility service providers have also taken a hit, even after easing up of lockdowns. The revenues of Ola and Uber driver partners have fallen significantly, and about 2,000 drivers have been removed by these platforms till date. Those still in business are struggling to stay afloat; many claim that their earnings are down by up to 80 per cent.
This situation is likely to persist, as a large volume of demand for these services came from work trips. Much before the lockdowns, cab driver earnings had already fallen due to changes in incentive schemes. Whereas a driver could earn over Rs 50,000 in the initial years of cab aggregation, their earnings have fallen to around Rs 20,000 in recent years. Most are struggling to afford basics and pay rent, and the situation is even worse for those who had purchased vehicles on EMIs.
The informal mobility services providers such as rickshaw, autorickshaw and Grameen Sewa drivers are also struggling due to lack of demand. Social distancing measures have necessitated business at reduced capacity, making the trips unaffordable for shared mobility services like Grameen Sewa and shared autos. These services were also used heavily as a last and first-mile option, and this demand is also likely to remain low with Metro services shut and public transport limited. Some State Governments had provided monetary help to all these operators when the lockdown had begun. But this could not be availed by many due to lack of paperwork. Now with the lack of demand likely to sustain due to WFH being mainstreamed and reduced leisure trips, these workers are still in need of major assistance. Since a large percentage of them also own vehicles, shifting to alternate livelihoods will also be difficult.
If remote working is to become a sustainable strategy, there is a need to understand and plan for the effects of this on the whole urban ecosystem. While WFH may benefit companies and foster some environmental benefits, it will also negatively affect other parts of the system. The most affected are from lower-income groups and those not covered by most Government safety nets. There is also likely to be very little scope to shift to alternate livelihoods with the expected economic contraction. Many people had already invested in physical capital which will now no longer be able to generate the expected income, leaving them burdened with unpayable debts. In addition to providing further loans, the Government must consider how to provide immediate relief to these sections of society. Immediate relief can be provided in terms of waiving penalties and permits such as challans for transport service providers. Many vendors also face undue evictions and are forced to bribe officials; theft of property or goods is another threat that their community faces. Hence, the regulatory systems need to be strengthened to safeguard vendors from such incidents.
The Centre needs to expand the unemployment claims programme to include the informal sector workers. They should be able to avail benefits for a certain number of days in a year, in case their businesses become unsustainable. If we can’t provide sustainable livelihoods to them, then the actual cost of the pandemic will be much higher.
(Mookherjee and Jain are Research Associates, Centre for Sustainable Mobility, TERI)