Covid-19 resurgence can swell out-of-pocket expenditure, lead to more loss of labour, experts warn

Morbidity arising out of the resurgence of Covid-19 cases in India is already impacting human resources, work hours and is likely to swell the out-of-pocket expenditure for Indians, if not controlled, warned health economists as country’s daily Coronravirus cases tally breached 10,000-mark last week.   The daily positivity rate has almost doubled in the last one week and the cases are rapidly rising. According to Union Health Ministry data, at least 9,111 new cases were recorded in the last 24 hours at a daily positivity rate of 8.40 per cent that was around 3.39 per cent last week.   “The illness is going to cost individuals heavily. For many medical reimbursement possibilities don't exist, so it is out of pocket expenditure which is going to rise. Secondly, the provision of sick leave does not exist for many. So, the absence from work and wage loss would mean a lot at the individual level due to rising cases of Covid-19,” said Arup Mitra, Professor of Economics, South Asian University (SAU), New Delhi.   It is pertinent to note that Covid-19-led lockdowns in 2020 had severely impacted the economy.  However, a ripple effect on the labour market is continuing. According to a study published in the Indian Journal of Labour Economics, the authors observed a declining probability of employment-to-employment transitions, i.e., higher probability of job loss even before the pandemic. The pandemic reduced that probability drastically even further, which was mirrored in an increase in employment-to-out of labour force transition during the pandemic.   The study, titled 'Labour market dynamics and worker flows in India: Impact of Covid-19,' which was published in January 2023, argued that the trajectory showed a similar trend for both full-time and part-time contracts. The study measured a ratio: 'employed-to-data not available transition,' which has seen a sharp rise. This shows that the data earlier available for employed people is not available now, and this implies that they may be lost and not in the work force during the pandemic-induced lockdown. This possibly reflects also the large-scale urban to rural migration observed in India, as per the study.   Further, the likelihood of getting a job during the pandemic is observed, somewhat unexpectedly, to have improved for workers without formal education. However, it goes down for most other groups, as per the analysis done in the study, the authors, Partha Chatterjee and Akash Dev, both at the department of economics at the Shiv Nadar University, observed.   “Absence of labour would also affect the productivity of the employing agencies and companies. Labor unavailability will hamper growth. Loss of wage and absence from work will reduce purchasing power and aggravate deceleration in demand. India can't afford to have another catastrophe,” warned Mitra.   The cases in India are reporting a spike largely in the metropolitan cities that offer majority of work opportunities to the people. The union health ministry has said that at least eight Indian states are recording a sudden spike in Covid cases with 10 or more districts reporting over 10 per cent positivity rate from Kerala, Maharashtra and Delhi. Also, over 5 districts are reporting more than 5 per cent positivity from Karnataka, Kerala, Maharashtra, Delhi, Himachal Pradesh, Tamil Nadu and Haryana, the government data showed.