In Their Own Words: How Jobs Are A Lifeline For The Poor
COVID-19 was a punch to the face that sent the world reeling. As we start to get our bearings again, a focused effort on preserving and creating jobs will help us deflect a second blow that is close behind in the wake of the pandemic – that of mass unemployment and a resurgence of poverty.
When India’s Prime Minister Narendra Modi announced a nationwide lockdown on March 24th, 2020 – to contain the spread of the COVID-19 virus – experts were swift to predict that the country’s poorest citizens would bear a disproportionate burden of the unfolding public health and economic crisis. Some feared that over 100 million people would be plunged back into poverty, even after a remarkable three-decade period that saw India cut its poverty rate in half.
Theoretically, these fears made sense. We at Upaya decided there was only one way to confirm the predictions: interview vulnerable populations and ask them how the pandemic and resulting lockdown were affecting their daily lives.
Their responses largely confirmed our worst fears: yes, most of them have been adversely affected by the lockdown, and yes, most of them are worried about their financial security above all. Most, however, are still earning an income. To avert any further disaster, we must support the small businesses that are employing them and sustain these jobs.
Our Survey and Findings
Upaya invests in small and growing businesses with a mission to create dignified jobs for the poorest of the poor. We have invested in 20 businesses that have collectively created over 17,000 jobs in marginalized communities all over India. Well before COVID-19 hit, we believed a stable job was the most effective ladder out of poverty. As the COVID-19 crisis unfolded, it became clear these jobs were more than a ladder... they were a lifeline.
With the help of our partner companies, we conducted phone surveys starting in April with a diverse sample of jobholders across our investment portfolio. At the time of writing, we covered six companies – an equal mix of rural and urban settings in four states – and 141 jobholders. Our findings are summarized in a dashboard that we are updating as additional surveys come in.
Admittedly this is a small sample size, but it is telling that three quarters of our respondents have maintained their jobs, despite all odds.
During the month of April, more than 120 million Indians lost their jobs. The majority of our respondents have fortunately avoided the same fate for now, but they are critically dependent on their jobs with Upaya’s partner companies. Our surveys reveal that close to 80% of their household incomes are coming from these companies.
Without employment through these small businesses, alternate opportunities would earn these households only Rs 115 ($1.50) a day on average. This means they tumble back into extreme poverty, erasing the progress they have made over the years.
Another factor that is lending more urgency to the picture: 77% of respondents report having no savings. Only 9% of respondents report having enough savings to last their households three months or more.
Outside of these jobs, 62% of households have received government aid, which provides food rations and some financial support. But this is an area where our partner companies have also stepped up: several have provided their jobholders assistance with food, clean water, and safe shelter when needed.
The Path Forward
The combination of these households’ heavy reliance on their employers, plus the lack of a savings cushion to fall back on only underscores the importance of keeping these small businesses afloat.
The entrepreneurs leading these businesses are dipping into reserves to pay wages, devising creative ways to resume operations with social distancing protocols, launching new products and services to suit post-COVID-19 realities, and providing work-from-home opportunities wherever it is possible. It is testament to their grit and dedication that their businesses have survived at all, in the midst of an economic crisis that has devastated much larger businesses all over the world.
Stabilizing these small businesses is of paramount importance and the single best lever to prevent a ballooning in extreme poverty. Ensuring business owners have liquidity, access to capital that is both flexible and patient – giving them space to find creative ways to stay operational and maintain payroll – and access to markets is more urgent now than ever before.
And we must extend that same support quickly to new small business entrepreneurs. These are the job creators of tomorrow, and we’ll need thousands of them to create the millions of new jobs that are desperately needed in the hardest hit communities.
COVID-19 may have blindsided us all, but we have the power now to avert further destruction; channeling support to small businesses means saving jobs and saving lives.
MEDIA CONTACT:
Madlin D’silva
mdsilva@upayasv.org