Transcript The Informal Economy in India: Understanding the

URBAN EMPLOYMENT IN INDIA:
RECENT TRENDS & FUTURE PROSPECTS
Marty Alter Chen
Lecturer in Public Policy, Harvard Kennedy School
International Coordinator, WIEGO Network
Workshop on Employment - Global & Country Perspectives
NYU Stern School of Business &
Indian Council for Research in International Economic Relations
September 26-27, 2011
REMARKS TODAY
• Employment Challenge in India
• Urban Employment in India
• Inclusive Cities and Urban Livelihoods
• Rethinking Employment Policies
OVERARCHING CONCERN
India is a fast-growing economy BUT…
• employment is not growing as fast as output
• deep pockets of poverty persist
• inequality is growing
BASIC ARGUMENT
• The vast majority of the Indian workforce – both
urban and rural - is informally employed
• Informal employment tends to be associated with lower
earnings and higher risks than formal employment
• Increasing earnings and reducing risks in the
informal economy are key to reducing poverty and
inequality
• Yet exclusionary urban policies tend to decrease
earnings and increase risks in the informal economy
# 1 – Employment Challenge in India
EMPLOYMENT CHALLENGE # 1:
QUANTITY OF EMPLOYMENT
• Employment growth rate = 2.85% per annum (19992005)
o mostly in informal employment, including
informalization of wage employment in the public
and private sectors
• Unemployment
o low rate overall (4%)
o but higher for women (7%) than men (4%)
o and very high among urban youth (20% young men,
30% young women)
• Underemployment = real concern
o common among informal workers – who
represent 93% of total workforce + 80% of urban
workforce
EMPLOYMENT CHALLENGE # 2:
QUALITY OF EMPLOYMENT
• Shift in Type of Employment
o wage employment: decline
o self-employment: significant increase (52.5% of total
employment in 2004-5)
• Fall in Real Wages: from 1999 to 2005
• Low Self-Employment Earnings – around half of all selfemployed in 2004-5 thought their work was not remunerative
o 40% of rural self-employed – earned less than 1,500 rupees
per month
o 33% of urban self-employed – earned less than 2,000 rupees
per month
Source: NSS surveys cited in Ghosh et al 2007, Paul et al 2009
# 2 – Urban Employment in India
Two Story Lines:
Formal vs .Informal Employment
Male vs. Female Employment
URBAN WORKING AGE
POPULATION (15+)
2004-2005 (%)
Economically Active
Unemployed
Employed
Economically Inactive
M
79
4
96
21
F
24
7
93
76
T
54
4
96
46
Note: Unemployed & Employed = percentage of Economically Active
Source: based on data tabulations by G. Raveendran
URBAN EMPLOYED BY
EMPLOYMENT TYPE, STATUS & UNIT
2004-2005 (%)
AG
9
FE
30
IE
58
HH
3
Total
100
Total Urban Employed
Formal
4
62
1
1
20
Informal
96
38
99
99
80
Urban Wage Workers
3
29
21
3
55
Formal
5
62
4
1
34
Informal
94
38
96
99
66
Urban Self-Employed
6
2
38
0
45
Employers
4
22
5
0
5
Own Account Workers
52
55
73
0
70
Contr. Family Workers
44
23
22
0
25
Notes:
AG = agriculture, FE = formal enterprise, IE = informal enterprise, HH = household
Sub-categories in italics = percentage of each category in bold
Source: based on data tabulations by G. Raveendran
URBAN EMPLOYED (Male & Female) BY
INDUSTRY GROUP & EMPLOYMENT TYPE
2004-2005 (%)
Male
F
<1
<1
5
1
<1
3
14
18
<1
21
I
6
9
19
17
24
27
21
39
1
79
Agriculture
Construction
Manufacturing
Home-Based
Trade
Street Traders
Non-Trade Services
Transport
Domestic Workers
TOTAL URBAN EMPLOYED
Note:
F = formal, I = informal
* = higher percentage of female, than of male, workers
Sub-categories in italics = percentages of categories in bold
Source: based on data tabulations by G. Raveendran
Female
F
I
<1
18*
0
4
2
26*
7* 70*
<1
10
0 59*
13 28*
5
3
<1
41*
15 84*
FOUR GROUPS OF
URBAN INFORMAL WORKERS
(2004-5)
% of Urban Employment % of Urban Informal Employment
Total Male Female
Total
Male Female
Domestic Workers
4
1
14
5
2
17
Home-Based
Workers
13
9
31
16
11
38
Street Vendors
7
7
7
9
9
9
Waste Pickers
.05
.05
.05
.1
.1
22
64
ALL FOUR
24
17
52
.1
30
# 3 - Future Prospects
URBAN EMPLOYMENT IN INDIA:
FUTURE PROSPECTS
• Urbanization in India: share of India’s population living in urban
areas
o 2000: 28 per cent (290 million)
o 2008: 30 per cent (340 million)
o 2030: 40 per cent (590 million)
Source: McKinsey Global Institute 2010
• Urban Planning in India:
o in the past: general tolerance for informal livelihoods &
settlements
o today: growing intolerance of informal livelihoods &
settlements
EXCLUSIONARY URBAN POLICIES :
THREATS TO URBAN LIVELIHOODS
• Urban Livelihoods:
o impacted by municipal policies + regulations + practices – more so
than national policies
o overlooked or undermined by municipal authorities + urban planners
o excluded from + destroyed by urban renewal schemes
• Key Urban Informal Groups – key threats to livelihoods
o home-based producers: lack of basic infrastructure services
+ single-use zoning regulations
o street vendors: bribes + confiscation of goods + evictions
o waste pickers: lack of access to waste + exclusion from solid waste
management
INCLUSIONARY URBAN POLICIES:
PROMISING EXAMPLES
• Street Vendors
o Government of India - Supreme Court judgment + national
policy + recent Supreme Court ruling calling for national law
o Bhubaneshwar Municipality, India - designated vending
zones + licensing in consultation with federation of street
vendors
• Waste Pickers
o Government of India - National Environmental Policy (2006) +
National Action Plan for Climate Change (2000) recognize
waste pickers’ contribution to environment/carbon reduction +
right to collect and recycle waste
o Pune Municipality, India - ID cards to waste pickers +
contracts to waste pickers for door-to-door collection of waste
INCLUSIVE CITIES:
GUIDING PRINCIPLES
• India is a hybrid economy – both modern-traditional and formalinformal – and should remain so.
• The size, composition, and contribution of the informal economy
needs to be fully counted in official statistics and fully valued by
policy makers.
• Informal workers, activities, and units should be included in the
modernization of the economy.
• Informal workers need to have representative voice in rule-setting
and policy-making bodies.
INCLUSIVE CITIES:
WHY? WHY NOW?
• Why?
o key pathway to reducing urban poverty + inequality
o chance for India to distinguish itself
• Why Now?
o “window of opportunity” - in the wake of the global
economic crisis
o “moment of urgency” - fast-changing exclusionary cities
# 4 – Rethinking Employment Policies
RETHINKING EMPLOYMENT
POLICES
• Beyond jobs + good jobs = employment + livelihoods
• Beyond employment + unemployment = underemployment +
quality of employment
• Beyond labour markets = financial markets + markets
for goods & services
• Beyond labor market policies/regulations = policies/regulations re
goods & services + government taxation & expenditure/procurement
• Beyond employer-employee relationship = commercial relationships
• Beyond supply & demand: focus on institutions
o market transactions & commercial relationships
o sub-sector or value chain dynamics
o sector policies, including urban planning & policies