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The Vulnerable Majority

India’s informal sector workers are growing in numbers and precariousness.

The World Employment and Social Outlook—Trends 2016 report by the International Labour Organization (ILO), in its predictions on global vulnerable employment, states that the number of jobless in India will increase from 17.7 million in 2016 to 18 million by 2018 even though its employment rate is expected to go down from 3.5% to 3.4% in 2017. The ILO’s definition of “vulnerable employment” covers the own-account workers and unpaid family workers more likely to lack decent working conditions, proper social security and any form of effective representation through unions or similar organisations. The report predicts “only marginal improvements” in the share of workers in vulnerable employment all over the world with the rate of such employment expected to fall by less than 0.2 percentage points per year over the next two years. This form of employment is expected to remain above 42% of the total employment in 2017 and accounts for 1.4 billion people all over the world. In emerging countries (India is classified as such by the ILO), one in two workers fit this definition while in developing countries it is four out of five workers. The two regions most affected by vulnerable employment are Southern Asia and sub-Saharan Africa with the number of such workers projected to grow globally by 11 million every year.

The ILO’s statistics about India are not unexpected. The large majority of India’s workers, 92% of them, are in the informal sector. The slowdown in agriculture has pushed landless labourers and small farmers also into this sector, notably into construction. More alarmingly, even the new jobs being created in the formal sector are informal in nature due to the lack of employment benefits and social security. Barely regulated by the government, this sector nevertheless makes a significant contribution to the economy quite apart from providing employment to people the state cannot help. It stands to reason, therefore, that this would be the section of workers mostly found in manufacturing, construction, transportation, storage and wholesale and retail trade. It is also a known fact that women tend to be overwhelmingly employed in this sector, subjected to even greater precariousness than their male counterparts, facing especially gender disparity in wages and sexual harassment at the workplace.

One should expect that policymakers and those in government would make efforts to not only mitigate the insecurity that these workers face but also to ensure that they enter into more formal and therefore regularised and protected forms of employment. This would entail legislating for greater regularisation of their working conditions and wages and providing state support in terms of better infrastructure and connectivity. It would also mean paying attention to some of the biggest hurdles that small entrepreneurs and businesses face—byzantine red tape and corruption.

Yet, the National Democratic Alliance (NDA) government at the centre and the Bharatiya Janata Party-led states like Rajasthan and Maharashtra seem to have got hold of the wrong end of the stick. It must be noted here that the NDA government’s much vaunted demonetisation drive most brutally affected the vast majority of workers in the informal sector, leaving them jobless and subjecting their families to untold privations. Not only did the recently announced budget not take cognisance of their sufferings and the many “units” forced to close down due to demonetisation, the finance minister announced in his budget speech that existing labour laws would be simplified and merged into four codes—wages, industrial relations, social security and welfare, and safety and working conditions. Given the small percentage of workers within the organised sector who are supposed beneficiaries of existing laws and the poor implementation of these laws, it is ironical that they are being blamed for investors shying off. The term “archaic” is constantly used to describe labour laws, and the Industrial Relations Code Bill, 2016 and Wage Code Bill, 2016 are expected to take care of this state of affairs once they are passed.

According to the ILO report, the vulnerable employment numbers look set to rise in the Asia–Pacific region. The report echoes familiar remedies for this: structural transformation, greater investment in education and skills for the most vulnerable groups to take advantage of the so-called democratic dividend, incentives to labour-intensive sectors like clothing, leather, farming and food processing, and attending to India’s notorious high export duty structure. These are the suggestions the government needs to heed to ensure that India’s ill-protected majority can look forward to job security and a dignified old age.

Updated On : 10th Feb, 2017


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