Prof. M.K. Bhat
The Constitution of India article 39(D) holds equal compensation for equal work but in practice this law seems nowhere in India’s informal job market. India’s job market comprises of formal and informal workers. The National commission for enterprises in the unorganised sector (NCEUS) defines informal worker as ‘those working in the unorganised sector or households, excluding regular workers with social security benefits, and the workers in the formal sector without any employment and social security benefits provided by the employers and the formal employment has been defined by ILO as jobs that provide at least one social benefit like pension. They account for only 9.7 percent of India’s workforce, or 47.5 million.
The formal workers enjoy better; salary, work environment, social security etc and have a proper job contract while as the informal job market is characterised by low wages, poor work conditions,no social security, limited bargaining power, long hours of work,lack of formal recognition and regulation with minimal adherence to labour laws. The majority of this work force is in agriculture followed by service sector and construction.The number of registered unorganised workers in India in 2024 stood at 154.02 million in agriculture followed by 28.44 million in the form of domestic and household workers, construction had 26.57 million,apparel 18.68 million etc.They work on the whims and fancies of their employer and have to bear exploitation to survive. Their plight got exposed during the Pandemic 2019 when they had nothing to rely upon.They comprise more than 90% of the total workforce in the country and produce nearly fifty percent of the GDP, but are least bothered about. The pay commission recommendations hardly touch them.Most of these workers don’t even get minimum wages, proper work environment carries no meaning for them and have no claim about their job as they have no job contract. Employers exploit their need and accordingly fix their wages and other things.92.4% informal workers in India have no written contract, paid leave and other benefits.
The majority of informal sector workers are women and backward class people.As per e-shram portal more than 74% of the workforce comprised of scheduled caste, scheduled tribe and other backward classes.61.72%of the registered workers on the platform are between the age of 18 and 40 while as 22.12% are between the age of 40 and 60 years. Females make up 52.81 %of the registered workers while as male are 47.19%.They are paid much less than their counterparts in the formal sector.Out of 27.69 million informal workers enrolled, on e-shram portal over 94% earn less than 10,000 per month. The income gap between formal and informal workers is no good sign for any healthy economy.
Good economics stands for the good of all rather than discrimination on the bases of where you put your hard work.The real economic progress of an economy like India can be best calculatedby the occupational transition from informal to formal job market. Globally more than 2 billion workers earn their livelihoods through informal employment. The ratio of formal workers in total work force is more in developed countries while as reverse is the case in developing and poor economies.The informal job market contains 90% of total employment in low-income countries and it stands at 67% of total employment in middle-income countries while as its ratio in high-income countries stands as low as just 18% of total employment.
It may be worthwhile to point out here that the informal job market does not involve only the unorganised sector of Indian economy but it has due share in the organised sector too in the form of casual workers,contract workers etc.In terms of employment share the unorganised sector employs 83% of the work force and 17% is in the organised sector. The biggest test for the economy is how quickly transition from informal to formal jobs takes place.The economic growth shall correspond to an escalation in jobs and employment conditions for the majority of workers else the development remains confined to certain people alone.
The main reason for a big informal job market in India is the insufficient creation of employment opportunities by modern manufacturing and service industries, which is far below the number of workers moving out of agriculture and traditional livelihoods. As a result, these workers often resort to taking up odd jobs in petty retail, street vending, or construction, leading to a higher prevalence of casual labour and self-employment. The growing industrial competition has also given further rise to informal job market because companies outsource things to reduce costs and outsourced contractors keep workers on adhoc basis. The labour-saving techniques applied by industries for cost cutting- adds to their number and in order to survive unemployed people compromise and contribute without being counted as regular.The low agriculture productivity accompanied with off season also attributes in the swelling of informal job market. The education system generating unskilled workers further swells this market.
The problem of informal workers has also aggravated due to the problems in the MSME sector. There are 65-70 million MSMEs employing 2-3 persons per unit. Pandemic along with the slowdown in demand for goods internationally has led to the closure of as many as 10 million of these units, rendering 25-30 million workers jobless. The work force has to live so they are compelled to work as informal workers.
The firms in the informal sector dodge taxes and cultivate benefits by showing less number of workers despite the fact that in recent times several efforts have been made by government to formalise the economy mention can be made of GST, Digital payment system and the enrolment of informal sector employees on multiple government portals such as e- shram’ with an aim to enrol all informal workers into social security schemes.
The government has also come out with various schemes for the formalisation of informal workers in recent years mention can be made of Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Shram Maan-dhan, Atal Pension Yojana, Mahatma Gandhi National Rural Employment Guarantee Act, Mahatma Gandhi Bunkar Bima Yojana,Deen Dayal Anthodia Yojana, Pradhan Mantri Kaushal Vikas Yojana,Pradhan Mantri Svanidhi : Micro credit scheme for street vendors etc
While there has been a gradual improvement in the quality of employment over the last two decades still the presence of the informal workers remains high and the various steps continuously taken by the government in recent years to formalise the informal job market have started to bear fruits.It is worthwhile to mention here that since September 2017 to July 2024 over 6.91 crore people have joined Employees Provident Fund Organisation (EPFO). This means that nearly 7crore people have transitioned to more secure formal jobs This talks of governments seriousness towards pushing informal workers towards formal jobs. Registering in EPFO will automatically mean fixed salary,employer contributionto EPF account will be a safety, life insurance,withdrawal at the time of emergency or pension after the completion of 10 years will further strengthen the worker.
The formalisation of informal job market will help a lot to reduce the unnecessary pressure for getting formal jobs.It will be a good attack on the corruptionin employment and will help in bringing out informal workers from the vicious circle of poverty and misery.
(The author is Professor (M.A.I.T) Guru
Gobind Singh Indraprastha University, Delhi)
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