Livelihood diversification has been argued as an effective strategy for reducing income risks and consumption fluctuations.
In other words, by shifting to different economic activities across seasons/months or taking recourse to multiple activities at a given point in time, household incomes can be augmented, and the probability of facing a major decline in consumption and falling below the poverty line can be reduced. The construction sector can serve as a shock absorber in times of economic stress.
Lack of capital, credit, information and skill can hamper occupational mobility and income augmentation. In the urban context the shortage of space and enforcement of regulations make diversification more difficult. Since the industrial sector has been stagnating in terms of employment creation, it becomes pertinent to examine the construction sector’s potential in this regard.
This sector is expected to be more flexible as it can grow and generate employment in relation to the income growth originating from either the industry or the services sector.
After the Covid-19 pandemic and the subsequent lockdown hit the economic activities drastically, the concern for job creation gets even bigger. Rapid growth in the construction sector can mitigate the employment challenges and create vast sources of livelihood both in the rural and urban areas.
During the post lock-down phase, the government is trying to stimulate the effective demand.
However, given the major losses in livelihood and slowing growth in the economy it is difficult to revive the effective demand instantaneously. An alternative way would be to provide encouragement to the producers to augment supplies so that with a rise in production, factor income will increase and the demand will be stepped up subsequently.
As a first step to providing a boost to the economy, the construction sector’s potential needs to be utilised and employment opportunities in this sector can come as a great saviour. Government sponsored construction activities need to be pursued on a large scale to create wage income, which, in turn, may provide an impetus to economic revival.
Guidance required
The second wave of Covid hit the economy hard and caused massive employment loss. In low-income countries even under normal circumstances a large number of households are vulnerable to the precarity of livelihood loss.
Their capacity to withstand employment loss is limited as they do not have an asset base or the flexibility to switch occupations. The strategy of livelihood diversification requires enormous amount of guidance from both government and non-government agencies.
While distribution of food and provision of health support are indeed the short-run rescue measures at the time of crisis, massive planning will be required to create employment both in the rural and the urban areas.
Urban employment guarantee programmes will be relevant for the urban poor/members of low-income households living in urban areas for a long time with little access to the rural areas. In this context, the designing and revamping of the construction sector can play a major role in the design of an urban employment guarantee programme .
Through the revival of construction activities, particularly in the public sector, the employment guarantee programme can be implemented successfully both in the rural and urban areas.
The writer is Professor, South Asian University, Delhi