The Unequal Costs of the Pandemic: Analysing Industry and Employment in Two Sectors

COVID-19 and its fallout have had severe and uneven consequences for workers and livelihoods. Two recent studies by the Centre for Labour Studies, NLSIU, offer insights into the pandemic’s impact on industry and employment in two sectors: export-oriented ready-made garments manufacturing and food delivery platforms. Both sectors rely on a large number of workers in Bengaluru, where the studies are located. Most of these workers belong to economically and socially disadvantaged sections, and therefore lack significant bargaining strength. Even as the pandemic disrupted the two sectors in different ways, both the studies highlight the disproportionate burden borne by the low-wage workers who power these industries. The two studies, supported by the Rosa Luxemburg Stiftung, were completed in December 2021.

The readymade garments export sector

Over the past three decades, the global garment industry has been characterised by production in low-income countries—mainly in Asia—and consumption in the global North—primarily USA and Europe. To put the garment supply chain in perspective, in the early 1990s, half the apparel sold in USA was produced within the country; today, around 98% of apparel sold in the country is outsourced. The pandemic severely affected this supply chain, with disruptions in both production and logistics.

Bengaluru is one of India’s major garment manufacturing hubs—the sector employs around 2 lakh workers. A large proportion of this workforce are women, many of them rural migrants. The industry has gradually been relocating to surrounding rural areas, given rising real estate costs and the need to source workers at low wages. The pandemic accentuated this trend. Many large garment companies carried out major restriction, closure or downsizing of production in the city, without being constrained by the Industrial Disputes Act.[1] Moreover, several American and European brands decided to shift from outlet-based to online selling, in the process shedding both retail space and employees.

According to estimates, garment sector employment fell by nearly 10% during 2020 and 2021. Further, several companies used the pandemic as an excuse to deny workers their Variable Dearness Allowance (VDA) for nearly 20 months, starting April 2020. It took a sustained trade union campaign[2] with the support of workers’ rights groups in the USA and Europe to pressure companies to restore the workers’ VDA benefits.

The financial returns of global brands like H&M and GAP, as well as large Indian garment manufacturers, show that the companies were able to sustain profitable operations through the pandemic. The costs of the pandemic were largely borne by their workers who had to suffer loss of employment, often without even being paid their full legal dues.

Food delivery platforms

Food delivery platforms in India are largely monopolised by Zomato and Swiggy. The pandemic came as a boon to both companies, with many customers looking to them to deliver food, with the closing down of food outlets and restrictions on movement. The companies gained market shares on the back of delivery workers who found alternative urban opportunities shrinking during the pandemic.

Between them, Zomato and Swiggy employed nearly 50,000 workers, or ‘delivery partners’ in Bengaluru during the pandemic . Delivery partners are technically represented as free agents, with platforms claiming to be mere virtual marketplaces that connect customers with food outlets. By a legal fiction, the platforms maintained that delivery partners were contractually linked only to customers, with whom the platform put them in touch for the duration of the delivery and collection of payment. Globally, platform employers have denied the existence of any employer-employee relationship. However, this claim has been challenged in many developed countries—with varying degrees of success—with respect to both ride-hire and delivery platforms. In India, there has been some questioning of the dismissal of platform partners. One trade union has challenged the denial of legal status and legal protection to delivery partners, demanding their recognition as ‘workers’.

The gains of monopolistic growth have enabled Zomato and Swiggy to multiply their market capitalisation. Zomato with a recent IPO on the Indian share market, has hit a market capitalisation of around INR 1 lakh crore; Swiggy is preparing for its own IPO. The companies’ claims that their delivery partners also made substantial gains have been belied by the findings of our study.

Platform workers are onboarded with their own assets—primarily a two-wheeler for food delivery— and must bear all costs of fuel, maintenance, depreciation, road and vehicle taxes, and other miscellaneous expenses. Even the company-branded sweatshirts, bags and jackets—that effectively transform them into moving billboards of these companies—are paid for by the workers.

Accounting for all these costs, the average net earnings of a platform worker were estimated at a mere 40% of their gross earnings. Pro-rated for an 8-hour work day, net earnings for most delivery workers were even lower than the daily minimum wage for unskilled workers in garment export manufacturing.

Most delivery workers were expected to work for 10–12 hours, driving up to 150 kilometres a day through Bengaluru traffic, and at all times of the day. Without the long working hours, they would not have been able to earn enough to meet their variable costs, provide for fixed costs, and still be left with some earnings for the day to sustain themselves and their families. While the impacts of these stresses may not be immediately evident among younger delivery workers, they would likely have contributed to serious long-term occupational ailments.

Conclusion

Both studies showed similar results from two vastly different production processes: the costs of disasters are unequally borne by stakeholders, with those at the bottom collectively having to bear the brunt. The garment export sector, employing primarily women from disadvantaged sections, has low levels of unionisation. The pandemic will likely reduce their bargaining strength further. In platform work, the challenge is more fundamental: workers designated as ‘delivery partners’ are not even recognised as workers, and therefore lack any protection under labour law. Disasters often become opportunities for companies to restructure their operations to lower their costs, resulting in lower wages and declining bargaining strength for workers.

Notes

[1] According to the Industrial Disputes Act, factories employing more than 300 workers require government permission to lay off workers or close down factories. During the pandemic, factories could circumvent these restrictions, and in many cases, workers were pressurised to “voluntarily” resign.

[2] The campaign was sustained by the Garment and Textile Workers Union (GATWU). This knowledge is based on the author’s personal interactions with the union and with the main organisations involved in the campaign.

About the Author

Mohan Mani worked with industry as a finance and business policy professional for over ten years before changing sides to work with trade unions as a labour and industry researcher for three decades. He is currently a Visiting Fellow with the Centre for Labour Studies at NLSIU.