INFORMAL SECTOR IN INDIA Workshop 7; 23 – pm

Informal/Unorganised Sector in India The First Indian National Commission on Labour ( ) defined ‘unorganised sector workforce’ as – “those workers who have not been able to organize themselves in pursuit of their common interest dues to certain constraints like casual nature of employment, ignorance and illiteracy, small and scattered size of establishments”.

Concept of Informal Sector Informal employment includes 1 :  Own-account workers working in their own informal enterprise  Own-account worker producing goods exclusively for own final use by their household.  Contributing family workers, irrespective of whether they work in formal or informal sector enterprises  Members of informal producers’ cooperatives  Employees holding informal jobs, whether employed by formal sector enterprises, informal sector enterprises or as domestic worker employed by households and 1. International Conference of Labour Statistics (2003)

Segments of Informal Economy  Wage work for informal enterprises  Domestic work without a regular contract  Casual day labour without a fixed employer  Unregistered or undeclared work for formal or informal firms  Temporary and part-time work for formal firms  EXAMPLES (total = 106 activities): Agriculture: landless labourers, small farmers, traditional artisans, animal husbandry Industry: workers in brick-kilns, construction, beedi-making, incense stick Services: workers in local transport, shops, domestic servants, community services like street cleaning, street vendors, garbage collectors Small Workshops: shoe makers, garment makers and embroiderers At Home: garment workers artisans or craft producers On Rivers, Ponds, Lakes, and Oceans: fishermen, shippers

Informal Employment Employees are considered in informal employment when  their employment relationship, in law or practice, is not subject to: National labour legislation Income taxation Social protection or Entitlement to certain employment benefits, e.g. paid annual leave, sick leave, etc.

Estimates of Employment in India 2 Industrial CategoryNo. of persons (in millions) Formal SectorInformal Sector Agriculture Non-Agriculture Mining & Quarrying Manufacturing Electricity, Gas And Water10.04 Construction Trade, Hotels And Restaurants Transport, Storage & Comm Financial Services Community Services All Sectors28.07(93%) Year: 1999/00 (Total labour force: 406 million) (GDP share: 63%)

Labour Force Characteristics 3 UrbanShare (in percentage) MaleFemaleTotal 1. Employed Unemployed Labour Force (1+2) Not counted in the labour force Working age population (3+4) Non-working age population Population (5+6)100 RuralShare (in percentage) MaleFemaleTotal 1. Employed Unemployed Labour Force (1+2) Not counted in the labour force Working age population (3+4) Non-working age population Population (5+6)100 Year: 1999/00

Regulatory support  No formal wage policy set by the government  Wages set by state governments as per some cost of living calculation and central government directives on minimum wages.  The Constitution of India (Article 41) laid down that the State shall make effective provision for securing these rights Article 41 Right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement Article 42 Provision for just and humane conditions of work and maternity relief. The Indian Government took several steps in compliance of the constitutional requirements.  Indian Ministry of Labour set up from time to time Welfare Funds for five specific category of unorganised workers. These workers include Building and Other Construction Workers, Beedi workers, Cine workers and certain categories of non-coal mine workers.

Researching informal sector - The Wage Indicator way Possible issues of debate

Classifying the sector Clustering according to occupation  Issues: more than one occupation at a time, seasonal variation, variation according to age and experience  No of occupation categories are large : 106 Typical clustering done according to rural/urban or income level or gender Or sometimes clustering done according to household characteristics

Critical characteristics for capture through the questionnaire  Socio-economic conditions including illiteracy and level of awareness in critical areas  Nature of work (seasonal, entails migration in search of jobs)  Payment: Low/irregular wages or income Delayed/no payment of wages Generally piece rate basis or on daily basis  Social security (formal/govt. and informal/family/lender)  Formally organized as a union/association  Bargaining power (formal through association and informal through expertise/caste/education level)  Working conditions – health and safety  Harassment by police, govt. officials  Nature of child care and family support at home  Nature and intensity of problems in obtaining alternative employment  Provision/non provision of reasonable capital/credit

Possible Methodologies Purely work related analysis  primary survey of an localized area or industry (formal or SSI) or gender or occupation based on the current instrument Socio-economic analysis  Include household data – analysis includes parameters like calorie intake, indirect or hidden wages Sociological analysis  Simulating regional/occupational dynamics including economics using instrument and household data – will give a complete scenario of barriers to transparency in wages and possible ways to deal with it.

Possible data/information sources WI questionnaire: primary survey – customized, involves field work Support from national surveys like the decennial Population Census (conducts surveys after every 10 years) or NSSO (conducts the survey on regular interval of five years) or enterprise surveys like The Census of Small-Scale Industries (SSI)

Some more issues Methodological issues Monthly aggregation of data becomes difficult when frequent movement of family member or job. Direct and indirect wages and their sources Data as mostly aggregates and guesses: no culture of systematic data compilation or calculation either in mind or paper: its an urbanized mind orientation Sociological issues Illiteracy However, people open to questioning, receptive to methodologies and ideas

Possible ways ? Clustering: our own based on our objectives, balancing certain sectors, gender and double and single income individuals Include number of opinion questions  Designing unstructured/opinion questions for individuals and for groups.  Multiple questions for same item/variable to identify misinterpretations and ensure consistency Unstructured/informal interviews and discussions in groups crucial to get correct information Indirect estimation through other developmental indicators like expenditure of food, health or education or access to any of these …problem: family decision could be culture based

Thank you