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Welfare without Work or Wages

A Contradiction?

Supriya RoyChowdhury ( teaches at the Institute for Social and Economic Change, Bengaluru.

Reiterations of the state’s responsibilities have emerged at a time when the market had gained legitimacy of hegemonic proportions. This new thinking can be seen as an effort to redefine the state’s welfarist profile. Closely tied to the idea of democracy and civil society’s initiatives as means of securing the state’s obligations, these discourses and policies remain exclusively focused on welfare-related social policies, while work and work-related rights have been pushed to the margins of the framework of state responsibility. This widely shared position fails to engage with broader political economy issues, particularly with the specificity of the ever expanding domain of irregular workers, and the contradictions of talking about welfare, but not about work or wages.

The author is grateful to the anonymous reviewer for comments and suggestions. She is also grateful to Aparna Sundar for comments on an earlier draft of this paper, which was also presented at a seminar at the Centre for Political Studies, Jawaharlal Nehru University.

As a generalised critique of the iniquitous nature of globalisation/market-led development began to emerge in both academic and public discourses, the expansion of social rights became part of the defined political agenda of democratic governments. Scholarship on new welfarism mirrors and supports the new political and policy discourse on rights, reflecting, to some extent, essential Keynesian principles of the post-World War II Western welfare state. The distinctiveness of these discourses, emerging from global institutions and leading scholars, at a time when the market had gained legitimacy of hegemonic proportions, lies in the reiterations of the state’s centrality, and in the shaping of a new political normativity of justice and public responsibility. Do they do more? Does a substantively new theory of the state emerge from contemporary writings on the capitalist developmental state?

Received literature on this theme has looked closely at both governance and politics of welfare. This paper takes a somewhat different route to argue that, by focusing exclusively on social policies relating to basic services and human resources, the welfare paradigm has turned the discourse of state responsibilities away from the political economy questions of work, wages, and income. Drawing mainly on available work, including my own, on urban informal workers, the paper argues that for large numbers of the poor, their structural situation in the world of informal work with low incomes and precarious livelihoods constitute the rough edge of poverty and exclusion. The fragmented structure of the informal sector workforce, by and large, precludes a sustained, systematic, and organised representation of their interests. The structure and politics of informality, thus, could be central to understanding the limits of welfare. And, the welfare paradigm could become a shield for ignoring the most stubborn dimensions of poverty, rooted in an economic policy regime, which creates and recreates the poor’s lack of access to skills, secure work, and regular incomes. This paper draws attention to the distinctive features on the new thinking on welfare in the capitalist developmental state.

First, while critical of the iniquitous impact of global capitalism, the emphasis in the welfare discourse is on the possibility of a politically negotiated balance between the inherent narrowness of a globalisation/market-led growth model on the one hand, and the developmental state’s capacity to sustain an inclusive pattern of growth, on the other.

Second, this theorisation of possibilities rests on an important, albeit old and now refurbished, concept in comparative politics. The concept of state autonomy vis-à-vis classes had been widely used in comparative politics in the 1970s and 1980s, and informed the work of a whole generation of Weberian scholars, mainly located in universities in the United States, writing on developmental states.1 In this view, the state is a coherent composition of a set of institutions, relating both to elected governments and to the more permanent state bureaucracy. It is this institutional complex, endowed with rationality, structure, coherence, policy preferences, and its own self-interest, which provides the context to state policymaking. This older perspective on state autonomy deeply informs contemporary writings on the developmental state.

In a brief digression, it is important to highlight that this notion of state autonomy has, by and large, stood away from the debate over the “relative autonomy” of the capitalist state. Initially emerging from the famous Miliband-Poulantzas argument, over the levels of determination or autonomy of the Western welfare state vis-à-vis the capitalist structure in which it was embedded, the “relative autonomy” debate eventually generated a rich theoretical literature on the relationship of the capitalist state to different sections of capital, and what it means to talk about the capitalist state’s relative autonomy, in the context of varying sets of class constellations in historically specific circumstances. A theoretically rich literature emerged on India, informed by the relative autonomy debate, as balancing a constellation of dominant classes that share power (Alavi 1972; Kaviraj 1988; Bardhan 1984). More recent literature in this genre has perceived the post-independence Indian state in terms of its increasing alignment with capital (Chatterjee 2008), and the evolution of key dimensions of political economy—structure of property, taxation, and labour laws—as reflective of the closeness of the state to capital (DasGupta 2016).

On the other hand, protagonists of the state autonomy perspective, given their distinctive set of premises, and strongly anchored on the state’s institutional power, have understandably not engaged with the relative autonomy debate, or the state–capital relationship. The broad assumption has been that greater wealth generation (made possible via private capital and the market), institutional autonomy, and the imperatives of democratic governance provide the state with the necessary rationale and capacity to enact welfare policies for disadvantaged sections of society.

In this view, democracy makes it imperative for the state to be attentive to lower-class claims, which are expressed increasingly through informal, even transitory, associational expressions in political society. The understanding of welfare regimes and lower-class demands rests on the politics of democracy, and precludes a political economy understanding of the situation of workers in the informal sector.

To illustrate, in an important recent contribution to the literature on the comparative politics of welfare in Indian states, the authors, while acknowledging the significance of understanding the labour market, clearly state that they do not subscribe to “reductionist political economy explanations for understanding changes in the policy environment” (Tillin et al 2015: 23).2 Reductionism is indeed passé and, in this context, would close off the possibilities of considering what the capitalist state may actually achieve by way of welfare. On the other side, universalist reiterations of state capacity to promote welfare within a capitalist developmental framework, possibly lack a historically specific understanding of the state–class relationship within the context created by globalisation and liberalisation in developing countries, more particularly, the position of different segments of the informal workforce vis-à-vis both state and capital. This paper poses the question: Does the informal sector constitute a blind spot in theorisations of welfare in the Indian context?

Here, it is perhaps necessary to briefly highlight the sense in which the term informal sector is being used in the present paper. No longer seen as a residue which will disappear in the process of development, informality is now seen as structured in and by capitalism. Many see the informal economy as in a continuum with the formal economy, as a domain representing flexibility and efficiency, and emphasise the need to draw informal workers into the network of state-sponsored welfare programmes (Kanbur et al 2007; Chen 2009; Castells and Portes 1989). More critical scholars have seen informality, particularly in the context of global capitalism, as representing a domain of exclusion, where large numbers of both rural and urban underclasses, dislocated from their traditional means of production, fall back upon informal work. Particularly, self-employment in small and tiny production units or in petty trade and services serves as a basin to absorb those who can never hope to find a foothold in the organised sectors of the economy (Sanyal 2007). To subsume the informal economy, thus, as the permanent fixture outside of capital offers a deeply pessimistic reading, which steps out of the received paradigm of inclusion. In this paper, I do not engage further with the characterisation of informal work or the informal economy. The purpose here is a more limited one, that of pointing out that poverty and economic marginalisation of large numbers of informal workers are not touched by welfare-related programmes.

Rethinking the Capitalist Developmental State

Around the mid-1980s, the impact of Structural Adjustment Programmes (SAP) began to be widely perceived as having generated economic hardships in much of South Asia and sub-Saharan Africa. The early critical literature on SAP had emerged from multilateral institutions, which reiterated the importance of state engagement with poverty.3 The work of two iconic economists, Joseph Stiglitz and Amartya Sen, represented the discomfiture of an important section of scholars with the exclusionary impacts of globalisation-led growth. The central place of the state in the writings of Stiglitz and Sen is well known, but bears highlighting as a backdrop to an emerging consensus on a revitalised state within a framework of market-led capitalism. Stiglitz (2002) criticised the impact of SAP-induced deflationary measures as well as trade liberalisation in South Asia and sub-Saharan Africa, as declining public expenditures, and global competition imposed on unprepared economies led to closures, declining employment, and social sector cuts. On the other hand, citing the examples of pre-crisis East Asia and post-reform China, Stiglitz pointed out that in each of these cases the states had the autonomy to liberalise their economies, both externally and internally, at their own pace, taking care to create jobs and to protect industries until such time as there was readiness for greater integration into the global economy (Stiglitz 2002: 60).4

Amartya Sen for long recommended combining extensive use of markets with the development of social opportunities, as part of a broader, comprehensive approach to development (Sen 1994, 1999; Sen and Drèze 2013). Sen and Stiglitz, perhaps, provided the first building blocks of a refurbished theory of the developmental state, firmly anchored in the logic of market- and globalisation-led development, but where a space for state autonomy is retained to ensure job creation, social opportunities, and welfare. A renewed sensibility of state action emerged, with globalisation/liberalisation as the backdrop, and a revitalised commitment to take care of groups that may be disadvantaged vis-à-vis the market. This normative perspective has been reflected in the recent scholarly thinking on developmental states (Rodrik 1997, 2012).

It is now widely acknowledged that the dramatic development of the Asian newly industrialised countries (NICs) in the post-war years, although private sector-led and market-driven, was largely guided by authoritarian states (Amsden 1989; Haggard and Moon 1990). The NIC’s more decisive turn towards both economic liberalisation and political democratisation from the 1980s onwards led to debates about the specific future trajectory of capitalism in this region. From the mid-1980s onwards, and particularly after the financial crisis of the late 1990s, deeper integration into globally competitive markets meant that in South Korea and Taiwan there was a shift from manufacturing-based economies to service-oriented and knowledge-based economies, calling for greater labour market flexibility and a corresponding increase in demand for flexible and skilled labour with corresponding shifts in labour laws and institutions. In both South Korea and Taiwan, new labour legislation in the mid-1990s marked the beginnings of a flexible work week, easy dismissals, and the recruitment of a temporary workforce. Reforms also included closures or privatisation of state-owned enterprises.

However, in the context of the aftermath of the 1998 economic crisis, scholars had pointed out that East Asian states were constrained by the globalisation of their financial markets as well as the limits of export-led growth imposed by changing metropolitan markets and competition from South East Asian countries (Pattnaik 2001). These structural features provide an implicit critique of the notion of East Asian states’ autonomy as presented in Stiglitz’s work. Without entering into the details of that debate, this paper draws upon more recent literature on East Asian welfare policies to highlight the ways in which changes in the labour market—consequent to East Asia’s deeper integration in the global market—shape the increasing narrowness of welfare.

Scholars of East Asia have noted a gradual shift towards irregular employment. The changing structure of the labour market is a key element in understanding social security in NICs in the post-liberalisation period. During the pre-1980s phase of development, in both South Korea and Taiwan, social security had been tied to occupations. With the onset of democratisation in both countries in the 1980s and early 1990s, more broad-based political regimes created universalised social insurance, and self-employed workers and dependents were included in these programmes. During two successive progressive left-leaning regimes (1997–2008), existing insurance schemes—such as the National Pension Scheme, the Health Insurance Scheme, and the Employment Insurance Scheme—were extended and universalised to include the entire workforce. It should be noted that social spending in South Korea remains one of the lowest among the Organisation for Economic Co-operation and Development countries. Nevertheless, according to some scholars of the region, neo-liberal reforms and the strengthening of social security went hand in hand (Kalinowski 2007: 367), and this model represents a vision of economic pluralism in which competitive markets and social objectives could be reconciled (Kong 2005: 177). For other observers, there are serious limits to state-sponsored welfare in South East Asian capitalism, and these have been reinforced in the post-liberalisation, post-economic crisis periods (Yang 2013). It has been pointed out that, although social insurance was extended to the informal sector workforce, it remained tied to contributions, and non-regular workers suffered from lower coverage. In Korea, large, powerful trade unions remained within the chaebol-dominated corporate sector, and a strong tradition of enterprise-based economism led to corporate benefits being extended only to regular workers (Kalinowski 2007: 359). This, and the weak presence of left-oriented political parties, prevented a more robust welfare system that could have included the increasing numbers of informal sector workers. Thus, the emerging dualism in the structure of the labour market precluded a genuinely universal social security system. The debate on the NICs, thus, indicates that, even with high rates of growth, a skilled labour force, and a relatively tight labour market (the macroeconomic context right up to the economic crisis of 1997) (Kong 2005), the emerging informalisation of the workforce meant that the access of workers to social security was inevitably uneven across sectors.

These macroeconomic conditions—pertaining to high growth rates and a skilled labour force—are largely unavailable in most developing countries. In India, recent economic growth has been rapid, but overall development is caught up in the complex issues posed by a huge unskilled labour force. The argument that the state can balance the dualistic demands of neo-liberal reforms and social justice looks far more complex in such a context.

Welfare and the State’s Autonomy in India

In India, economic liberalisation, which proceeded in a gradual but steady manner, was never presented politically in terms of withdrawal of the state from welfare. On the contrary, a large number of welfare and social security-related provisions have been enacted, by central and state governments, during the last two and half decades, even as economic liberalisation has been under way.

Several scholars have presented these welfare measures as validations, to highlight the Indian state’s capacity to balance the dual claims of the market and social justice. In this view, the Indian state continues to be welfarist, as seen in efforts to extend primary education, healthcare, the national employment guarantee scheme and so on (Ahluwalia 2006: 12). Some have written that economic liberalisation ultimately empowered the masses by generating more wealth and making this available to larger numbers. Thus, according to Ashutosh Varshney (2005: 218, 222–23), there is a clear connection between economic reforms and the market on the one hand, and mass welfare on the other. Among important recent welfare legislations are the Right to Information Act, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Forest Rights Act, Right to Education Act, and the National Food Security Act. Other scholars have lauded the Indian state’s “new welfare architecture,” particularly during the United Progressive Alliance’s (UPA) 10-year rule (2004–14), but have been quick to reaffirm the importance of state–market balance: “Can the proponents of India’s rights agenda realise its ambitions without jeorpardising the dynamic economic changes witnessed over the last two decades?” (Ruparelia 2013: 589)

This vision, then, is all about retaining the best of capitalism and creating the best of welfare. In a second genre are scholars who have been hugely critical of India’s welfare deficit, but nevertheless remain committed to a paradigm of the possible, by drawing on cases of success within the framework of capitalist developmental states. Here, too, Amartya Sen’s work has been the most notable in highlighting this duality, between India’s lacklustre performance in welfare, and the achievements of other developing countries, drawing attention to the factors that make a difference. Sen and Drèze (2013: 59–64, 72–80), point out significant examples: not only the great East Asian performers, but states such as Bangladesh and even Nepal, and within India, not only the well-known case of Kerala, but also that of Tamil Nadu and Himachal Pradesh, where steady state action on welfare over time, was reflected in higher performance in basic indicators of human development, such as women’s health, infant mortality, literacy, and so on. Sen and Drèze (2013) provide a wide-ranging analysis of the factors that account for better performance: non-governmental organisations (NGOs) and women’s progress in the case of Bangladesh, effective local governance in the case of Himachal Pradesh, and a socially committed state in the case of Kerala. Each of these cases affirms the realm of the possible.

Finally, an important group of scholars, sharply critical of India’s exclusionary trajectory, have traced this trend to economic policies and, in particular, the emerging economic and employment structure. The debate on growth and employment in India is wide-ranging, and beyond the scope of this paper;5 I highlight, briefly, some of the key features of that discussion, which have a direct bearing on the issues presented here. In their work on social policy in India, Jos Mooji and Mahendra Dev (2004: 103) had pointed out that, in the 1990s, India had no employment policy; the continuing absence of an inclusive employment policy drew further attention from scholars who have reflected on the iniquitous nature of economic growth (Frankel 2005; Bardhan 2009; Harriss 2011; Kohli 2012). Each of these scholars has drawn attention, as have many others, to the decline of employment in the manufacturing sector. They point out that while recent Indian economic growth is predicated on the expansion of services, in high-skill sectors, like information technology (IT) and IT-enabled services, the largest numbers of India’s poor do not have access to skills that could incorporate them within knowledge-based IT services.

This literature indeed relates to economic structure and employment more centrally than to the issue of welfare. However, the overall position that emerges on the nature of the Indian state is germane to the present discussion. While sharply critical, these scholars remain tied to a paradigm of the possible, if only the appropriate policies are taken.

It is increasingly accepted that the relationship of growth to inequality is mediated by policy. Among the important determinants of growing inequality in India is the decline of public investment in agriculture and in India’s poor regions. There is nothing inevitable about such policy choices (Kohli 2012: 222; emphasis added).

Pranab Bardhan (2009) emphasised that a specific trajectory is the result of policy choice, and policies or trajectories are not determined by the logic or structure of capitalism. Poverty, in India, cannot be extended to be a criticism of the overall trajectory of late capitalist development. In his opinion, when there is political action and negotiation, it is possible for the state to bring some benefits to the jobless, “without fundamentally altering the basic nature of capitalist relations” (Bardhan 2009: 33).

Forced to Share Fruits of Growth

This perspective echoes through the writings of many others for whom democracy indeed is the touchstone of the domain of possibilities. Partha Chatterjee (2008), in a way, represents the democracy–poverty relationship. In the backdrop of the dispossession that occurs in the process of capitalist accumulation, the state, even as it may be predominantly pursuing a capitalist growth path which benefits a narrow class, also brings some welfare to the poorer classes, which may be microcredit movements, indirect interventions such as minimum days of job creation, or direct interventions such as supply of foodgrains or food at subsidised rates. The state is forced or may be persuaded by the democratic imperative to ensure some sharing of the fruits of growth. Several scholars have touched on a range of factors, relating to India’s democratic institutions, which push the state towards inclusive social policies. These range from NGOs and judicial activism (Ruparelia 2013), to new types of unions which present informal workers’ demands for social security to governments rather than demands for higher wages to employers (Aggarwal 2012). These reflections can be seen within the framework of Partha Chatterjee’s broader reading of how democracy might bring some benefits to poor groups.

For this genre of scholars, then, anchored on the twin concepts of state autonomy and democracy, the analytical framework remains open-ended in terms of the state’s potential capacity to respond to popular demands and to adopt policies which would have a more pro-people slant. There has been relatively less attention paid to the fact that welfare policies are embedded in broader policy regimes, which have consistently ignored issues of work and income, and to the question: What does statist welfare mean in a context where the economic structure excludes large numbers from decent employment and fair wages? The following section provides a brief discussion of the disconnect between welfare policies and the marginalisation of low-income earners in the informal sector.

Welfare, in the Absence of Work or Wages?

An early signal of this disconnect was highlighted in Mooji and Dev’s (2004: 97, 117) work, which showed that, in the 1990s, public policy marked “a shift away from income and employment programs to human development,” which “helped to divert attention from the more structural characteristics of poverty.” Indeed, if welfare had pushed work and income out of the development paradigm, nothing highlights this as much as the recent policy debate in India on MGNREGA and minimum wages. MGNREGA provides a minimum of 100 days of work to rural unemployed workers to ensure a minimum subsistence.6 MGNREGA is a legal recognition of the right to work, although highly limited in scope (days of work availability and wages paid). For the first two years of its existence (2005–07), the wage rates of workers employed under MGNREGA were the same as the minimum agricultural wage rates prevailing in the respective states. In 2008, the Congress-led UPA government at the centre delinked the scheme’s wages from the states’ minimum wages and linked them, instead, to the states’ consumer price index for agricultural labour.7 This became a highly controversial and widely criticised move and, in 2009, the Andhra Pradesh High Court stated that payments below the minimum wage were unconstitutional and as this placed MGNREGA workers in the position of forced labour. In 2010, the Sonia Gandhi-led National Advisory Council had raised the issue that the minimum wages must be made mandatory for MGNREGA workers. However, the finance ministry opposed this, citing limited resources, which was supported by the rural development ministry, stating that, if the two wage rates were linked, the centre would have to fund any arbitrary increase in the minimum wages by states. In 2011, the Karnataka High Court directed the central government to bring MGNREGA wages on par with the minimum wages applicable in the state.

To take an illustrative case, in Karnataka, across different categories (A, B, and C) of agriculture-related occupations, during 2015–16, the minimum wage was fixed at ₹7,505 per month, corresponding to a daily wage of ₹288.66, which includes the daily basic wage of ₹200 plus a variable DA of ₹88.66 (GoK 2015–16). The daily wage of MGNREGA workers in Karnataka was increased from ₹224 to ₹240 in 2016, which, for 26 days of work, came to ₹6,240 per month. In terms of monthly income, the difference of ₹1,265 is considerable for poor rural households. Keeping in mind that income from MGNREGA does not translate to a monthly income throughout the year, and that work was available for only 100 days per year, at the rate of the current daily wages, the total income available to a worker through MGNREGA would be ₹24,000, which is ₹2,000 per month, well below the minimum wage. In several other states, the differential between minimum wages in rural areas and MGNREGA wages is even more stark. As per the hike in MGNREGA wages in 2016, in Punjab and Rajasthan, the daily wage for MGNREGA workers was ₹218 and ₹181, while the daily wage for unskilled agricultural workers was ₹300 and ₹197, respectively.

There is considerable debate on whether the minimum wage itself actually represents a living wage, and many trade unions and social activists have been pushing for the minimum wages to be raised by as much as 50% of the existing rates. While MGNREGA remains the largest anti-poverty effort by the state, however, the fixing of MGNREGA wages below the minimum wage rates and the fact that it does not provide a stable year-round income, indicates that the policy itself is designed to offer the barest relief, for it does not address in any substantive way the issues of dispossession, work, and income of rural landless households. The question that is highlighted then is: Where does one locate the debate on MGNREGA wages within the broader debate on welfare? If the barest minimum wage remains out of reach of the poor agricultural labourer, what are the normative and conceptual pillars of a welfarist discourse in this context?

I draw very briefly on my research on urban informal workers which has highlighted, particularly, that deprivation of the urban underclass stems from low earnings and insecurity of work (RoyChowdhury 2011, 2017). These were field-based surveys of migrant construction workers living in different parts of Bengaluru focusing on workers’ access to both income and social security. Close to half of the workers surveyed earned less than the minimum wage, while work availability was insufficient and irregular. Access to social security—accident insurance, pension, scholarships for children, and so on—was examined particularly within the framework of the Building and Other Construction Workers Welfare Act, enacted in Karnataka in 2006, which brought into force the Building and Other Construction Workers Welfare Boards. The number of workers registered with the welfare boards is, in any case, low. Registration was conditional on a minimum stipulated number of years of continuous work as a construction worker. For a large number of migrant workers, this condition remained unfulfilled, as construction work availability was irregular and many, therefore, returned to their villages for seasonal agricultural work. In the course of the study, it was found that the two most important points of deprivation in the lives of construction workers were income and housing. Neither of these issues was covered by the welfare boards. Awareness and implementation of the welfare measures remained partial and inadequate.8 Overall, the situation highlighted the conditions of irregular work, low incomes/wages, and inadequate access to social security.

A broadly similar situation prevailed in the ready made garments (RMG) industry in Bengaluru. While textiles have historically been one of the largest industries in India, the boom in apparels exports is a relatively recent phenomenon.9 Karnataka, and particularly Bengaluru, has emerged as a central player in the growth of RMG exports. There are around 1,000 production units in Bengaluru and around 4,00,000 workers. These units primarily produce for large global apparels brands, many of which have now set up their purchase and distribution establishments in the city. A predominantly female, unskilled, young, and migrant workforce provides the backbone to this export-oriented, global supply chain. While in principle a wage board oversees the regular revision of wages, successive studies found that over 20% of the workforce does not receive even the minimum stipulated wage. A high rate of turnover reflects both insecurity of tenure and harsh working conditions, which force workers to move from factory to factory, and also to leave the garments sector, typically to seek work in domestic service (RoyChowdhury 2015; Mani 2012). These findings, which are corroborated by the findings of many similar studies of informal sector wage earners, lend credence to the question: How meaningful is the policy and academic discourse on industrial worker welfare through state-sponsored social security, in a context where the issue of work and wages underpins the economic deprivation and powerlessness of the workforce?

Relatedly, perhaps one could raise a tentative question about social welfare in other South Asian states, taking, particularly, the discussion on Bangladesh by Sen and Drèze, as an example of a small nation, with relatively low rates of economic growth, but impressive gains on welfare, seen particularly in health, literacy, and infant mortality rates. Women’s education has made a huge difference to awareness about health issues as has, particularly, the role of grass-roots women health activists and social workers who undertook sustained door-to-door rural campaigns to raise awareness about health issues. Thus, with a combination of state-supported social policies in health and education, and well-functioning civil society, activated, importantly, through women’s education and awareness, welfarist human development becomes a possibility in a developing country context, even in the poorer ones (Sen and Drèze 2013).

This image of women’s empowerment stands in curious contrast to the deep-rooted vulnerabilities of the predominantly feminine workforce in Bangladesh’s rapidly growing global apparels export supply chain. Both public media and academic research have pointed to widespread violation of minimum wages, denial of social security, imposition of unfair and unpaid overtime work, and the use of child labour, highlighting that women’s inequality in a highly traditional society has been used and reproduced in this global supply chain (Absar 2002; Rahman and Langford 2001; Mezzadri 2016). While apparels export has clearly generated work and subsistence-level incomes for a large army of unskilled women workers, it has not led to economic security or empowerment of this workforce.

The advancements in women’s health and education in Bangladesh remain singularly commendable. On the other side, a vast swathe of unregulated manufacturing, marked by the exploitation of unskilled women’s labour, raise questions about workers’ rights in the context of Bangladesh’s increasing integration into the global economy through export industries based primarily on cheap labour. To what extent, then, can we theorise the welfare capacities of developmental states, even where some have recorded remarkable advances in human development, in a context where the structure and practices of economic production underpin the disempowerment of vulnerable sections of the workforce?

Democracy and Political Agency of Informal Workers

Finally, in the case of India, the argument for statist welfare rests on the democratic political framework, particularly the lower class’s demands for inclusive welfare policies. Partha Chatterjee’s (2004) idea of political society represented one of the first efforts to conceptualise political agency in the informal sector.

Political society may frequently be seen in the margins of legality (slum dwellers organising for rights on encroached land, pavement sellers for rights to sell on public roads, and so on). Claims of political society are a matter of continuous political negotiation and the results are never secure or permanent, being dependent on the constellation of political forces at a given point in time, and entitlements, even when recognised, may not become rights. Nevertheless, the claims of large numbers of informal units in India for survival and the role of local-level organisations and grass-roots leaders in negotiating these claims with the state are part of the democratic political process (Chatterjee 2008: 58–59).

According to other scholars, campaigns which led to recent social rights legislation were led by middle-class activists and intellectuals, who have engaged with policymakers and the judiciary, but have not been particularly concerned about organising broad-based popular movements (Drèze 2004: 128; Harriss 2011: 137). The question then clearly is: Can we indeed make a substantive set of connections between the political economy of the informal sector, a possible politics of welfare, and the state? How does the political activism of informal workers look on the ground?

The self-representation by the poor through slum associations, neighbourhood committees, grass-roots caste associations, and so on, pose formidable challenges. Drawing again from my research on slums in Bengaluru, I make two brief points here. First, regarding the nature of claims: constrained by funds, the work of local-level, grass-roots organisations are issue-based, time- and space-limited, and specific to neighbourhoods or communities; for example, slum housing, water, sanitation, and so on (RoyChowdhury 2009, 2011). Claim-making may be defined by the urgency of everyday needs: an old age or widow pension, the threat of eviction from a slum, or acute shortage of water in summer. Second, as to the methods adopted, on very rare occasions do local claims take the form of organised demand, reaching a crescendo as an agitation of sorts, for example, during a water crisis in summer. Most typically, however, the local organisation acts as a mediator, representing local, or even individual needs to members of local bodies or members of legislative assemblies, using their contacts with political parties, with the help of NGOs, local activists, caste associations, or neighbourhood strongmen. Organised or collective pressure is rarely used. The gains—whether a pension for an individual or the construction of a borewell or two in a slum—are important, but essentially limited in the context of the larger set of needs and deprivations that mark the lives of the urban poor. For example, a sustained theme of slum dwellers’ claims on the state has been the
demand for right of ownership of land. Yet, skirting around this key demand, urban housing policies in most states have moved between diverse themes: relocation, in situ housing, multistoried housing projects, public–private partnerships, etc. The demand for right to land is yet unmet, and urban activists have remained fragmented over the purpose and impact of government housing policies, unable to present a unified struggle focused on poor peoples’ claim to land. Similarly, questions relating to low wages and uncertain incomes do not feature in the everyday struggles of local activists.

A recent study has found that, after the introduction of a pension scheme for construction workers in Karnataka in 2016, only 352 persons (that is, 0.34%) claimed the pension over a period of one year. Thus, local-level engagement, even with basic welfare provisions, could be very low. Local activism, therefore, provides a rich imagination of continuous, everyday struggles of the urban poor for limited gains, but is possibly an uncertain pillar on which to peg a theory of the developmental state’s welfarism.


A strong academic and policy discourse has emerged on state-sponsored social security, positioned as key to correcting increasing inequality in the era of globalisation. A central pillar of this welfarist discourse is the notion of state autonomy, that a political space is available to capitalist states to ensure broad-based welfare, even as the economy is propelled by global capital, private enterprise and market forces. Stiglitz’s (2002: 10) statement that “globalisation is neither good nor bad, but has the potential to do immense good,” indeed sums up the philosophy of this entire discourse in which the market generates growth, and the state ensures justice and equity. Both academic and policy discourses, while strong on the need and normativity of statist welfare, have not spoken to the issue of disconnect between welfare on the one hand, and work and wages on the other, and that state policies remain deeply invested in a globally competitive growth model anchored in rapidly advancing technologies, a flexible labour force, and unregulated employment practices.

This paper has addressed the question of contextualising welfare, particularly in relation to workers in the informal economy. This question is in fact relevant to different types of welfare regimes. A serious debate now surrounds the Western welfare state, particularly around the issue of the importance of labour in the political economy of welfare. Paul Pierson’s pioneering work, “Dismantling the Welfare State” (1995), had argued that the Western welfare state has shown much resilience against neo-liberal attacks, and a key feature of his analysis was that, even as the power of organised labour receded, other constituencies (the elderly, disabled, advocates of women’s and children’s rights, and minorities) had successfully defended the welfare state. Twenty years since, recent research on Western welfare has pointed out the need for more nuanced attention, particularly to labour unions and left parties, and more generally to the structure of welfare politics and shifts in labour markets (APSA 2015). The discussion has indicated that the shift to a flexible and unregulated labour market in East Asia had posed significant challenges for state-sponsored welfare, and highlighted that MGNREGA workers in India were denied minimum wages, and also that construction workers and ready-made garments workers may be denied minimum wages, access to decent housing, and decent conditions of work. Informal work not only defines the livelihood of the poor, but also provides the boundaries which limit a possible politics of the poor.

How important is the larger political economy to understanding the dynamics of welfare? Commonsensically, an over-determinist perspective closes down the possibilities of a nuanced and comparative understanding of the different options that may be available to states towards greater inclusiveness within the broadly defined framework of capitalism. An expanding knowledge base on welfare, within the existing framework of developmental capitalist states can greatly add to informed thinking on public policy options, particularly the comparative understanding of institutions of welfare governance. However, on the other hand, the attempt to extend this essentially empirical understanding to more universalist reiterations of the autonomy of capitalist democratic states to ensure equity may falter on the quicksand of welfare itself remaining framed within a broader economic structure, which is marked by continuing and systemic inequities, and a large, powerless, marginalised citizenry in the informal sector of the economy.


1 This literature is extensive. For a sampling, see Kohli (1987), Evans (1995), Schneider (1991), Grindle (1980), and Shue (1988).

2 Similar arguments have been made by others, notably Atul Kohli (2012) and Pranab Bardhan (2009), that there is nothing determined or inevitable about the relationship between capitalism and social policy.

3 See, particularly, the well-known 1987 UNICEF Report “Structural Adjustment with a Human Face.” See also, World Bank (2004).

4 Stiglitz’s analysis of the East Asian crisis of the late 1990s is predicated on the same argument that it happened when East Asian states lost their autonomy vis-à-vis foreign banks and institutions like the International Monetary Fund (Stiglitz 2002: 97–98). Similarly, Dani Rodrik (1997, 2012) argued that deep integration into the global economy meant that developmental states lost the space for policy choice.

5 Some have underlined that there has been an increase in self-employment and in salaried wage employment (Sundaram 2007); others have argued that wage employment has grown at the low levels of the employment hierarchy, representing low quality, informal and unregulated work (Raveendran and Unni 2007; Papola and Sahu 2012). Many scholars have noted the slow pace of structural transformation of the Indian economy, despite high growth rates. Even though agriculture’s share in the gross domestic product has steadily declined, agriculture remains the largest employer, at 46%. Employment in the secondary (industries) sector has grown marginally from 19% in 2011–12 to 21% in 2015–16, and in the tertiary sector from 27% to 32% during this period. That large numbers of people still remain tied to agriculture at low levels of income indicates the absence of growth of employment in urban areas, particularly for unskilled and semi-skilled workers. See Hashim (2009), Kannan and Raveendran (2012), and Das and Sen (2015).

6 Several studies have recorded the faltering and flawed implementation of the Mahatma Gandhi National Rural Employment Guarantee Act in many states (Pani 2011; Kumar and Chakravarty 2016); however, many have endorsed the scheme’s positive impact on rural incomes and changing local power structures (Shah 2004, 2007; Drèze 2007).

7 Under Section 6(1) of the MGNREGA Act, MGNREGA and minimum wages of states are statutorily delinked.

8 A recently concluded study by M R Narayana found that out of 28.76 lakh construction workers in Karnataka, only 36% are registered with the welfare boards in existence since 2006. Reported in Hindu, 30 July 2017.

9 The export of RMG from India increased exponentially from the 1980s onwards. In 2014, textiles and apparels exports from India were worth $40 billion, and RMG remained the largest contributor (40%) to total textiles and apparels exports from India.


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Updated On : 31st Aug, 2018


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