Thursday, December 01, 2005

India's Most Privatised and "Invisible" Workforce

One may have used the term "Working Poor" to describe them, but, to my knowledge, this term is not much in currency in India. Instead, they are termed as part of "unorganised or informal workforce"...or more often than not, they remain nameless, faceless part of the country.

So who are they?

Of course, the "rural poor" are part of this category. But even if one lives in an Indian city/town - big or small - and moves out of the neat and clean commercial and residential area (only from which one would be able to access this blog/mail)... and one decides to notice ...well, they are actually all around!!!

- On the sidewalks which are occupied by vendors and hawkers of vegetables, fruit, meat, fish, snack-foods and a myriad of non-perishable items ranging from locks and keys, soaps and detergents, clothing, vessels to books...

- On the sidewalks and street corners, as the owners of those numerous stalls and kiosks selling various things and services... as the road-side cobblers, barbers, tailors, book-binders, cycle mechanics... as the garbage collectors, rag-pickers... construction workers...

- On the road, one would also notice them as head-loaders, cart-pullers, camel/bullock/horse-cart drivers ferrying goods/passengers to other places... and of course, the rickshaw and auto rickshaw drivers... the truck drivers...

- Down the narrow crowded lanes, they work in/ own small workshops that repair bicycles and motorcycles, recycle scrap metal, make furniture and metal parts, tan leather and stitch shoes, weave, dye, and print cloth, polish diamonds and other gems, make and embroider garments, sort and sell cloth, paper, and metal waste... and more.

- Many of them remain "invisible" and produce and sell from their homes/shanties (mostly women) as garment makers, embroiderers, incense stick rollers, bidi-rollers, paper bag makers, kite makers, hair band makers, pickle and papad-makers, and others.

- Back in one's home, they work as maids, domestic servants, chauffeurs, gardners... the person who comes to wash the car, to deliver newspaper, milk...

Irrespective of their trade, however, they share a few things in common:

  • they work without a secure contract,
  • they have no or minimal worker/employment benefits, and
  • they have no access to social, or even legal, security.

    ... And they comprise of 93% of India's 370mn strong economically active workforce.

    Even in the urban centers of India (Delhi, Mumbai, Bangalore, Chennai, etc.) - which cluster most of the employment opportunities - this "unorganised workforce" accounts for about 60-67% of total employment.

    ...As a collective entity they are quite productive as well. These "India's most privatised citizens" contribute to:

  • 60% of Net Domestic Product
  • 68% of income
  • 60% of savings
  • 31% of agricultural exports
  • 41% of manufactured exports

    They perform one other very "useful" function in the society, which is least acknowledged:
    They subsidise life-styles of their "more organised" fellow citizens!!!

    One of the hopes/dreams (/fantasy/delusion/hallucination?) of the middle-class Indians is that, with the liberalisation of economy, the wealth will "trickle down", and these boats will also rise with the tide...

    Somehow, this has not happened (in fact, it has not happened anywhere in the world either). In fact, if anything, - though there are more formal enterprises in India than 15 years back - the proportion of the "unorganised" in the workforce has risen from 89% in 1989 to 93% today .

    ...and their numbers will perhaps keep on rising... as India's formal enterprises increasingly become "leaner" and more "competitive", increase their "labour/manpower productivity", and achieve the "least-cost producer" status, etc.,....

    After all, where else do all those down-sized/right-sized people disappear and become "invisible"??!!!


    golliwog said...

    Hi Prof. Madhukar,
    Found this a very interesting read since I am presently studying informal housing, and incidentally in jamshedpur. My starting point was precisely this- that there exists a huge informal work force in JSR, as in many other industrial urban centres, who do not have access to urban services, infrastructure and housing. Bastis have existed since the construction of the factory itself, and in 100 years the city has been unable to come up with a satisfactory attempt at better housing or upgradation of any sort.
    Also interesting were the two contrasting photographs of the classroom and the jhopri.

    Ambar said...

    >>... And they comprise of 93% of India's 370mn strong economically active workforce.

    That is a very intriguing statistic. I don't understand your "subsidizing" notion here though.

    Anonymous said...

    zero sum games

    Anonymous said...

    I think what the author means by subsidizing is by denying any kind of employment benefits or social security to these people we get labour very cheap. Compare the cost of having domestic help in the US and India and it becomes quite evident.

    Ambar said...

    anon2, thanks for the clarification. So he's pointing out the fact that the few exploit the many. And this is news because?

    Anonymous said...

    In India, its hard to put a number to the contributions made by this invisible work force purely because there is a lack of book keeping by such population and by the local governments about such unregistered/unincorporated businesses. Its therefore difficult to put a number to the contribution, no matter how strong your statistical technique is and no matter what margin of error you assign to the number

    AA said...

    One of the hopes/dreams (/fantasy/delusion/hallucination?) of the middle-class Indians is that, with the liberalisation of economy, the wealth will "trickle down", and these boats will also rise with the tide...

    I have only started studying elementry economics but I am very intrigued by the concept and study of income distribution. Seems you have given some thought to this. Where can more stuff about this, either specific to India, or even otherwise be found?

    Great post.

    Red said...

    Prof Madhukar

    Excellent analysis. But does this lead to the inference that introduction of social security systems (as being attempted under the Unorganized Sector Bill) will be economically unsustainable?

    Pramod said...

    Very interesting indeed!

    But are there enough realistic data available to substantiate some of the statements? If so what sources?

    We (some NGOs I work with) have been working trying to understand the situation with street children in India; and have consistently been bowled over by the enormity of the situation. A city like Mumbai alone has at the very least quarter of a million street children. And the kind of people Dr. Shukla is talking about is many times greater!

    The problem I have is - I think (and to be frank I am quite ignorant as to how actually this is done!) that the contribution of these sections of society is not considered while calculating the GDP/NDP of our country. So my question is - is it meaningful to say that x% of our NDP is contributed by this section.

    As somone rightly pointed out - there is no book keeping - so how is it accounted for? if this is the case - and assuming that the source of the info here is valid - the contribution should actually be around 40%!

    Just some thoughts - but a very good post - I think there is a need to somehow institutionalise this sector so that our growth/development is even more sustainable and reaches every sections of the society.

    Madhukar said...

    Didn't know that the post will create so much discussion - but am sure glad it did.

    The figures quoted are from the National Sample Survey 2005, which was published around July-Aug this year. Like all sample surveys,I am sure there will be some margin of error.

    But, no! I was not saying that the "rich exploit the poor" - even though that maybe true. Rather, the system is such in which the poor get to subsidize the life styles of the rich... unknowingly, and unwittingly, we all "exploit" the poor. For instance, the rag-pickers provide a "service", which if done by the municipality, and taxed, our cost of living will zoom up. Or if the vegetable vendor does not reach - and sell - the vegetables to homes, and we have to drive to buy them, our "transaction costs" will go up. The vendor, however, lives through a borrowed working capital (@10% per day interest!!), and earns just enough to keep him/herself alive through his daily turnover.

    That's what I meant about our lives being "subsidized".

    AKS said...

    Great post.

    Should this mean that in the new liberalised India, being competitive, lean and organised mean widening the divide between haves and have nots? On a gut feel - this might actually be hapenning.

    anup.777 said...

    Well written! This really makes me rethink the hype associated with liberalisation ...

    Madhukar said...

    vThanks for the comment, Anup!

    Yes, there is a hype about "liberalisation" much beyond what it can deliver (or has delivered). Also, often the "social cost" of these measures is not calculated. I had posted some ideas in an earlier post, that you may find of interest:

    Anonymous said...


    That was a phenomenal post.I haf'nt read many better ones.
    I am myself an aspirant for XLRI jamshedpur and would be giving my interview on 2nd March-2006, Bombay. I would like to ask you regarding the acute problem being faced, that of un-organised workforce, which you pointed out.Benefits of economic boom are not percolating to them and neither do they enjoy much social and economic security, despite contributing to major chunk of GDP. I would like to ask you that what can be done by our government for reducing this disparity and for upliftment of these classes?Is there any method at all or any hope for these classes...??

    Yawar said...


    Just back from South Africa when I read the post on the Indian Ant and then this post on the Working Poor. I was walking around a black 'informal settlement' (nice name for slum) in Joburg - now why would I do something so stupid, eh!! What I thought to myself was that the only difference in that in South Africa, these grasshoppers come to visit the ants from time to time. In India they don't. The strange thing is that crime is not seen as the outcome of deliberately created social inequality. Re-distribution of wealth is not an accident. It is the result of cold blooded strategic thought. The South African government is trying to fight the grasshoppers by tougher crime fighting measures. All well, except that unless the reason is addressed, the effect will not disappear. Mercifully in India, our grasshoppers are fatalistic and blame their situation on some crimes committed in a past life, so the ants can continue to live well and cruise along in shiny cars and cast a few paisa at a child while waiting for the traffic signal to change.