Transcript The Informal Economy in India: Understanding the

URBAN EMPLOYMENT IN INDIA:
TRENDS & TRAJECTORIES
Marty Alter Chen
Lecturer in Public Policy, Harvard Kennedy School
International Coordinator, WIEGO Network
“Inclusive Cities in India” Workshop
June 7-8, 2011
New Delhi
REMARKS TODAY
• Employment Challenge in India
• Urban Employment in India
• Exclusionary Cities = Threat to Urban Livelihoods
• Inclusive Cities = Alternative Paradigm
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
UNDERLYING ASSUMPTIONS
• The vast majority of the Indian workforce is
informally employed, even in urban areas
• 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
EMPLOYMENT CHALLENGE # 1:
QUANTITY OF EMPLOYMENT
• Employment growth rate = 2.85% per annum (19992005)
o < growth rate of unemployment (3.3% p.a.)
o mostly in informal employment, including
informalization of wage employment in the public
and private sectors
• Unemployment = very high among urban youth (1520 yrs.)
o 20% - young urban men
o 30% - young urban 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: on decline
o self-employment: significant increase (52.5% of total
employment in 2005-6)
• 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)
URBAN WORKING AGE
POPULATION (15+)
2004-2005 (%)
Male
Economically Active
79*
Unemployed
4
Employed
96*
Economically Inactive 21
Female
24**
7**
93
76
All
54**
4
96*
46
Notes:
* = up 1 % point or less since 1999-2000
** = up 2 % points or more since 1999-2000
Unemployed & Employed = percentage of Economically Active
Source: based on data tabulations by G. Raveendran
URBAN EMPLOYED BY
EMPLOYMENT TYPE, STATUS & UNIT
2004-2005 (%)
AG
FE
IE
HH
Total
Total Urban Employed
9
30
58*
3*
100
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
95
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
* = up 1 % point or less since 1999-2000
** = up 2 % points or more since 1999-2000
Sub-Categories = percentage of each Category
Source: based on data tabulations by G. Raveendran
URBAN EMPLOYED (Male & Female) BY
INDUSTRY GROUP & EMPLOYMENT TYPE
2004-2005 (%)
F
<1
5
1
<1
<1
2
14
18
0
21
Male
I
6
19
17
9
24
12
21
38
1
79
Agriculture
Manufacturing
Home-Based
Construction
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 = percentages of Categories
Source: based on data tabulations by G. Raveendran
Female
F
I
<1
18*
2
26*
7* 70*
<1
4
<1
10
0 20*
13 28*
5
3
<1 28*
15 85*
THREATS TO URBAN LIVELIHOODS:
EXCLUSIONARY URBAN POLICIES
• Context: urbanization + urban renewal + de-industrialization of cities
• 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 + eroded by urban renewal schemes
• Key Urban Informal Groups – key threats to livelihoods
o street vendors: bribes + confiscation of goods + evictions
o construction workers: mechanization -> displacement
o transport workers: bans on certain types of transport
o home-based producers: lack of basic infrastructure services
+ single-use zoning regulations
o waste pickers: lack of access to waste + exclusion from solid waste
management
INCLUSIONARY URBAN POLICIES:
PROMISING EXAMPLES
• Street Vendors
o Warwick Junction, Durban, South Africa – participatory,
consultative process + infrastructure and technical support
services to natural market of 6-7,000 vendors
o India – Supreme Court judgment + national policy +
recent Supreme Court ruling calling for national law
• Waste Pickers
o Brazil and Peru – national policies in support of waste pickers
o India - National Environmental Policy (2006) + National
Action Plan for Climate Change (2000) recognition of 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 contribution of the informal economy to both economic and
employment growth should be recognized
• 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
• The size, composition, and contribution of the informal economy
needs to be fully counted in official statistics and fully valued by
policy makers
INCLUSIVE CITIES:
VISION
“The challenge is to convince the policy makers to promote
and encourage hybrid economies in which micro-businesses
can co-exist alongside small, medium, and large businesses: in
which the street vendors can co-exist alongside the kiosks,
retail shops, and large malls. Just as the policy makers
encourage bio diversity, they should encourage economic
diversity. Also, they should try to promote a level playing
field in which all sizes of businesses and all categories of
workers can compete on equal and fair terms.“
Ela Bhatt
Founder, SEWA
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
शक्र
ु ीया
धन्यवाद