Friday, September 15, 2006

Profile of Indian "Unorganised"/ "Infomal" Sector

Often classified as part of the “informal” economy, the unorganized sector constitute the largest, yet surprisingly the most invisible, part of the economically active workforce in India.

According to the definition of International Labour Organisation (ILO, 2002), they comprise

  • the own-account workers in survival-type activities, e.g. vendors of vegetables, fruits, meat, fish, etc., and of non-perishable items like locks, clothes, vessels; garbage collectors, rag-and scrap pickers; head-loaders, construction and agricultural workers, rickshaw- and cart-puller, etc.

  • the paid domestic workers, e.g., maids, gardeners, chauffeurs, etc.

  • the home-based workers, e.g., garment makers, embroiderers, incense stick rollers, bidi-rollers, paper bag makers, kite makers, food processors, etc., and

  • the self-employed in micro-enterprises, e.g., road-side mechanics, barbers, cobblers, carpenters, tailors, book-binders, owners of small stalls and kiosks, etc. What they share in common is a lack of secure contracts, worker benefits or social protection.

    In India the self-employed workers account for 93% of the total workforce. In other developing countries/regions also, informal employment comprises 50%-75% of non-agricultural employment, e.g., 78% in Sub-Saharan Africa, 51% in Latin America, 55% in Mexico. Even in developed economies, the temporary/part-time/self-employed – i.e., employment without benefits or protection – account for a large working population.

    The contribution of the unorganized workforce to the economic health of India society has largely remained neglected. In India, this sector accounts for
    - 60% of Net Domestic Product (i.e., GDP minus depreciation),
    - 68% of income, 60% of savings,
    - 31% of agricultural exports, and
    - 41% of manufactured exports.

    Even in the urban centers of India, the unorganized workers account for about 60-67% of the employment.

    Women workers in the unorganized sector – the farm workers, vendors, casual construction labour, domestic help, home-based workers – are even far more neglected and unaccounted-for part of the informal economy. This is so, since the self-employed women work from homes and their contribution is mostly not calculated into the national economic data. However, according to the National Sample Survey ’05, one-third of the informal sector workforce (about 120mn) comprises of women. Collectively, they accounted for 96% of the female workforce in the country, and contribute to about 20% GDP of India.

    gaddeswarup said...

    What are the implications? Does it mean that we have parallel governments at various levels interacting with the main governing bodies? Nobody is really in control? The invisible hand is much more invisible than one thought? How does any thing get planned or implemented? How do governments plan? It raises a lot of questions and doubts. Do you any theories or answers? I am more confused than before.

    Madhukar Shukla said...

    Thanks for the visit and comments, Prof!

    If you are refeing to "invisible hand" as "markets", then my guess is that markets do not work effectively for the informal sector. But they are invisible, yes!

    One implication to me is that the only way one can build a sustainable country/economy/ society is by tapping into the entrepreneurial potential that lies here in this neglected workforce...
    ... at least, that is my reason for pitching for social entrepreneurship.