Hold your breath, all ye seekers of the informal sector Holy Grail! If the NSS does repeat the 1999-2000 integrated survey in its 61st round (2004-05), there is the prospect of studying changes over time. The downpour of such information is bound to trigger a fresh wave of interest in this sector, which till now has been confined to detailed surveys of individual cities like Ahmedabad, Mumbai and so on. A bigger canvas can now be attempted.
Well, it is now official. The informal sector which refers to employment which is completely outside the pale of institutional protection like regulated working conditions and trade unionism accounted for 69 per cent of non-agricultural employment in India in 1999-2000. In manufacturing, this segment absorbed 82 per cent of the workforce in 2000-01. Dualism thus continues to be an abiding reality of Indias labour market.
The big question is whether or not it is getting accentuated over time. A major strand in the literature dating back to the 1970s and early 1980s when the International Labour Organisation, World Bank among others stimulated a lot of research interest in the informal sector followed the Harris-Todaro models which argued that the rural-urban wage gap (adjusted for the probability of employment) drew in rural migrants to the cities.
Such job seekers who streamed in, sought better paying jobs in the organised sector like government service or factories where employment conditions are protected. But as such opportunities are scarce, they have to spend time waiting doing casual odd-jobbing or some form of self-employment in the unorganised sector. This led to the argument that in a situation of excess labour, the unorganised sector bore the brunt of adjustment.
This line of thinking had a straightforward implication for secular changes notably, that when organised sector job growth is less, more job seekers would perforce seek refuge in the unorganised sector as the luxury of remaining unemployed for long periods of time simply does not exist in an India-type of economy. In other words, the relative importance of the unorganised sector would grow rather than shrink over time.
In a similar vein, Planning Commissions task force on employment opportunities highlighted the deceleration of organised sector employment during the 1990s due to slowdown in public sector employment growth. Private sector employment growth was good, but not enough to offset that of the public. Given the limited growth potential of organised sector employment over the next decade, the unorganised sector was expected take up the slack.
Does the evidence for the 1990s bear this out A rough characterisation of the unorganised sector in NSS data (prior to the 55th round) is the status distribution of the work force in terms of the self-employed plus casual wage labourers. The regular wage employees and employers are presumed to be more organised. Between 1993-94 and 1999-2000, the urban unorganised sector on this basis was roughly unchanged at 60.6 per cent and 59.9 per cent, despite a rise in urban unemployment over this period.
As this is a decade of reforms, this stable pattern deserves more attention. The proportion of the self-employed in urban India remained stable and so was the proportion of casual wage labourers. Arguably, such a time frame of 1993-94 to 1999-2000 is too narrow for inferring trends, but even if we go back to 1977-78, there is a broad stability to the proportion of urban self-employed till 1999-2000.
As for the casual wage labourers, there is a slight upward drift at the expense of regular wage employees. However, this growing casualisation is much more significant in rural than urban India. This pattern is also consistent with the expectation of those who argued (including this writer) that dualism also exists within the organised sector as industry uses a varying mix of permanent and temporary or casual wage labourers.
The 1999-2000 survey, however, added a lot more descriptive detail to this discussion of earlier NSS data. To be sure, the share of own account or self-employed and wage workers account for 85 per cent of the informal non-agricultural workforce, but the remainder include a category called dependent producers or home workers. A single question on place of work enabled street vendors and those at construction sites to be netted in.
This is important as 54 per cent of informal workers had such non-conventional work places. Out of these, 9.8 per cent worked in the streets, while 9.2 per cent worked in construction sites. Half of the female informal non-agricultural workers worked from their own homes while a similar proportion of males worked in conventional work places. By contrast, only a quarter of females had conventional places to work in this sector.
These tabulations have been cross-classified with consumer expenditure to derive linkages between informal sector employment, poverty and gender. Some initial findings by Professor NS Sastry of the Council for Social Development are useful in this connection. They show that jobs in the urban informal sector are linked with higher poverty ratios than those in the rural sector; that higher poverty is observed among households sustaining on employment in the informal sector with only one female adult worker compared with those with only one male worker and so on.
Doubtless, such an abundance of information can sustain a renewed surge of academic interest in the informal sector, besides improving the statistical base to measure the gross domestic product and industrial production. Till now there has been a general sense that such numbers were gross underestimates though the exact margin was a subject of much speculation due to our ignorance of the true contribution of the unorganised sector. The hard rain of latest NSS data should remove the veil of ignorance on these matters and contribute to a meaningful debate.