According to Nasscom, India (also known as the world?s back office) employs only a fraction of its population in the IT and outsourcing industry?only 2 million of its more than 500 million workers. So, which sector employs the majority of India?s population? The just released joint study of ILO and WTO indicates that a whooping 93% of India?s workforce is employed in the informal sector?the largest percentage of working population for any country in private unregistered enterprises. The informal economy has won the numbers game in India on the basis of 2004 data. Women workers account for about one-third of the total informal workers in India and the informal sector constitutes about 60% of the net domestic product. The levels of informality vary substantially across countries, ranging from as low as 30% in some Latin American countries to more than 80% in certain sub-Saharan and South Asian countries. The informal economy is highly segmented by location of work, sector of employment and, across all these segments by social group and gender. But the majority of the informal workers share one thing in common i.e. the lack of formal recognition and protection, which makes them susceptible to poverty traps, besides hampering the economy?s dynamic efficiency. The study estimates that the countries analysed will lose up to 2 percentage points of average economic growth due to their informal labour markets structure. The global recession has negatively affected workers everywhere. However, little attention has been paid to the informal economy. There is a misconception among people that the informal economy serves as a cushion for formal workers during periods of economic transition. However, in practice there is no cushion to fall back on and the workers have no option but to keep operating. To both reduce poverty and increase growth, an innovative policy response for the informal economy is the need. Spending programmes like NREG are one way out. But the government should reform labour laws at the earliest. It will help control the yawning fiscal deficit.
?jaya.jumrani@expressindia.com
