“…twenty years of schoolin’/and they put you on the day shift/ Look out kid/you’re gonna get hit…” Bob Dylan
Aneel Simran
F
inance Minister Nirmala Sitharaman has the Indian job scene all worked out. She explained it to the media after her meeting with Customs department officials. (Indian Express September 2). The data that most Cassandras cite to show up India in the boondocks only reflect jobs in the formal sector alone. What about the informal sector she asks? NSSO data do not reflect scenarios in the informal sector which according to her is a pity, aglaring omission on the part of the agency. “Indian informal sector employment has not been appropriately or exhaustively documented. “When we are referring to data from government sources like the NSSO it talks only about the formal sector and not about the informal. In India the nature of our economy was that it is in the informal sector where majority of our employment is. If there is stress in the respective sectors I am willing to hear.”
Does that make any sense? Quite apart from the syntax of that quote (and we must admit the reporter may have left out some parts of her observations on the subject) it seems as if she had collapsed time so it is difficult to guess from her views if she thinks the informal sector had played a part and now no longer does or it is the other way around? The “nature of the economy was that…” and it is no longer? Yet the next clause brings us to the exciting present “…it is in the informal sector…. where most of our employment is to be found.
This is not just semantic quibbling. Her remarks reflect confusion on time and economic performance; has the last five years had an impact on job creation? Has the economy altered enough to create more jobs in the formal sector? The FM seems to think not; most of the jobs are still in the informal sector which by her own account we do not have a measure of since her own department does not collect data; never has.
And the most surprising is the sub-text, the interstitial assertion. Official data may sound dismal because they reflect formal-sector job losses. But, and listen up! The informal sector, which has never been quantified, is holding up! In ignorance is bliss because it is the ‘post-truth’ so favored by leaders across the globe impatient with facts or the truth. But this ‘post-truth’’ does not reflect too well on a government that promised so much: good times ahead! And we are now to believe that those good times pivot on jobs in the informal sector? Jobs that do not pay minimum wages, unskilled jobs as in agriculture, construction sites, temporary jobs in manufacturing, at call centers. Is that what will make India proud? That it has a vast swathe of jobs, the largest in fact, and thriving to boot, in the sector that most policymakers would like to see transformed by the neon lights of modernity?
Is that what the constituents of the ‘demographic dividend’ must look forward to after twenty years of schooling?
The FM tells us that the informal sector has not been quantified even in the past. Is it so? (Let’s leave aside the question that is lit at this point: why did not your government do it all these years?) fact is that in August 2007 the National Commission for Enterprises in the Unorganized Sector chaired by Arjun Sengupta plumbed the depths of informal labour and the conditions in which it operated with a view to legislating anamelioration of those circumstances. The “Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector” followed a slew of other inquiries and reports into social security for unorganised workers (2006) National Policy on Street vendors (2006) and comprehensive legislation for Minimum Conditions of Work and Social Security for Unorganised Workers in July 2007, just a month before the report under review.
With a broad brushstroke the committee pointed out that 92 per cent of the total workforce of 437 million was in the unorganized sector.
The estimate was arrived on the basis of the latest available set of data from the Sixty-first Round of the National Sample Survey in 2004-05. These were supplemented with data from other sources such as the Special Survey of Farmers carried out by the NSS in 2003.
Unorganised workers, informal workers, were defined as those who do not have employment security, work security and social security. “These workers are engaged not only in the unorganised sector but in the organised sector as well. This universe of informal workers now constitutes 92 percent of the total workforce”. That is, workers earning less than Rs20 a day in 2007.
And who constituted the bulk of the unorganized workers? Eighty-eight percent of the Scheduled castes and Scheduled Tribes; 80 per cent of the OBCs and 84 per cent of Muslims. Only 0.4 per cent of the workers received any social security like Provident Fund, most of them were in agriculture. Noteworthy was the fact that in this period of five years to 2005 the entire increase in employment in the organized sector was informal in nature.
For most of them, conditions of work are utterly deplorable and livelihood options extremely few. In 2007, with India’s GDP cresting the waves of global growth, the committee noted with despair, “Such a sordid picture coexists uneasily with a shining India that has successfully confronted the challenge of globalisation powered by increasing economic competition both within the country and across the world….” {Report on Conditions…)
So the data on the unorganized sector were gathered to give policymakers a sense of the dimension of poverty and marginalization among India’s working classes. The committee finished its agenda in 2009 and then the UPA government introduced the Unorganised Sector Workers Social Security Bill in Parliament in 2007 that became an Act the following year.
One did not hear the sounds of a radical change in the conditions of informal sector labour. The introduction of the Unorganised Workers’ Social Security Act (UWSSA) in 2008 was a pioneering initiative but a decade later “the social-security needs of workers in the unorganised sector remain unfulfilled due to massive structural and statutory drawbacks.” (Social Protection…)
The first Modi government did no better. Its brainchild, Atal Pension Yojana (APY) launched in 2015 is meant to be a contribution-based pension plan that enables workers to obtain an amount between Rs. 1,000 and Rs. 5,000 per month after retirement, so long as they contribute to the scheme for over 20 years or more. The APY had by January 2018 reached only eight million workers accounting for less than two percent of India’s unorganised workforce, and this too, despite the scheme’s “expansion strategies.” (Social Protection…)
A study by the Confederation of Indian Industry in 2014 using data till 2012 found no change in the extent of informality of labour barring one: the degree of informal labour within the formal sector had increased. The authors A. Srija andS. Shirke looked at the composition of employment in the organized sector vs. the unorganized sector between 2004-05 and 2011-12 and found changes that should have made policymakers sit up.
In the formal sector employment did rise: from 13 per cent t to 17 per cent.
“But this increase…was informal in nature (48 per cent in 2004-05 increased to 55 per cent in 2011-12) while the share of organised formal employment decreased (52 per cent in 2004-05 decreased to 45 per cent in 2011-12).
On the other hand, in the informal sector, the share of formal employment “marginally increased from 0.3 per cent to 0.4 per cent” during the same period and if it is of any relief to policymakers the extent of informal employment declined from 99.7 per cent to 99.6 per cent. (Srija and Shirke, table 1)
Although informal labour in agriculture remains high at around 90 per cent, the sector’s contribution to employment had fallen seven per cent points in 2011-12 from 58.50 per cent in 2004-05. The manufacturing sector in the organised sector compensated with an uptick but the increase as the data show was also on account of a spurt in informal employment. The structural transformation that could be evidenced from a decrease in employment in the unorganized sector did not play out according to the script of the development discourse as the West had written it: the organized sector, a higher stage of evolution happily absorbed the practices of informal labour from a ‘backward’ sector!
To glimpse the future, look back, in dismay. The Bureau of Labor Statistics of the US Department of Commerce conducted a study of factory employment and compensation in India’s organised sector that provided some useful insights of growing trends in employment in India up to 2005.
Based on Annual Survey of Industries data between 1999 and 2005, the study found factory level earnings to be $0.91 an hour, roughly 3 per cent of compensation costs of manufacturing employees in the US.
Adjusting for difficulties in comparison across years and representative trends because not all registered companies report data, the BLS still found in 2005 that factory employment had increased 5 per cent over 1999 and that they comprised 74.2 per cent of all organised manufacturing employment.
What kind of employment? Contract labour. Such forms of employment had more than doubled between 1999 and 2005 to 28 per cent of the total workforce.
The 66th round of the National Sample Survey covering a later period found 18 million more casual workers as against 6.4 million regular workers over the five years after the period BLS covered. Unemployment was falling but the kind of jobs being created— “contractual” or “casual”— were harbingers of a new order that would be legitimised on the grounds of efficiency and “labour rigidities” obstructing free flow of capital.Contract workers in the formal economy, like their brethren in the informal sector, would not be privileged with social insurance or other benefits enjoyed by regular permanent employees in the formal sector and most importantly, characterised by uncertain tenures and lack of collective bargaining.
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Evidence from around the world suggests that informal labour is catching on big in the formal sector of the advanced economies of the world. Known variously as temporary (temp), casual or contract employment, such are the terms of engagement that have been characteristic of employment in the informal—backward–sectors in India for decades, and denounced as signifiers of its primitive stage of economic growth: temporary or uncertain tenures of employment, lack of social security benefits such as Provident Fund, health benefits and social insurance, and, a bilateral arrangement that admits of no recourse to outside parties for grievance redressal.
In contemporary capitalism the taxonomy of informal labour sets the post-modern character of “progress”in the blinding colours of shareholder value and consumer satisfaction. In this phrasing of capitalist modes of production labour processes continue to be collectivized (in shop floors or assembly lines in warehouses) but the consciousness of the worker as a class, a collective dialectic of Capital, is splintered and atomized into ‘informal’ units of surplus value extraction.
This atomization process began with the collapse of unionization of labour allover the advanced economies in the late 1980s following the ascendency of the Thatcher-Reagan discourse of de-regulation and break up of unionized labour across industries; such will fully ideological acts were posed as outcomes of an historical necessity that would define capitalism’s ‘post-modern’ phase. The fall of the Berlin Wall and of the Soviet Union hastened that splintering of working class consciousness and ‘new’ terms of engagement by capital with labour. De-regulation, modification of labour laws, crackdown on and dissolution of labor unions set the stage for not just a ramp up in informal labour practices but a paradigmatic shift: temporary work was now adorned with the cloak of historical necessity as an alternative to permanent employment: our hands are tied, the neo-liberal cried out in a throwback to the old telos of inevitability: ‘progress’ demanded managed flexibility in job markets.
In effect the normative strategy meant a roll-back of the twentieth century’s cherished battles for worker rights, a struggle that had shaped modernism itself. The message was screamed out loud and clear by policy wonks, media‘s useful idiots and our leaders in the developing economies:
‘There is No Alternative.’. Temporary is the new Permanent.
Consider the most advanced economy in the world. In a study of what they called, “alternative work arrangements” in the United States, Lawrence F. Katz of Harvard University and Alan B. Kreuger of Princeton found “a substantial rise in the incidence of alternative work arrangements for US workers” in the ten years to 2015 “with a particular increase in the share of workers being hired through contract firms.” Significantly, they found little change in the proportion of temp or on-call workers or contract work between 1995 and 2005. The spurt occurs in the following ten years when alternative work arrangements spike from 10 per cent to 15 per cent in 2016
“A striking implication of these estimates is that all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements” (p 7. Emphasis in original)
And the trend is growing towards what some observers call “nonstandard” work arrangements. In 2018 the American Employment Law Project, a worker advocacy group cited the evidence from the U.S. Bureau of Labor Statistics survey of the previous year of one out ten American workers, 15.5 million in “nonstandard” jobs that paid less than formal full time work with lower quality of working conditions: most of them being blacks or Latinx. (NELP…}
“The use and misuse of nonstandard work arrangements—the subcontracting and ‘temping out’ of work, the practice of just-in-time scheduling, and the reliance on independent contractors, some of whom are misclassified as such—shifts economic risk away from employers and onto workers, whose livelihoods become more acutely subject to the vagaries of markets,”Maya Pinto, senior researcher and policy analyst with the National Employment Law Project.(NELP…)
The situation is no better across the Atlantic in the European Union where temp employment (informal labour) had risen to 16 per cent in 2010 and rising.
Temporary jobs accounted for around 14.6 per cent of total employment in the EU in 2017 with variations across member states.(Eurostat)
A 2011 study by Christopher Elhert and Sandra Schaffner of temp workers in the EU pointed to the deleterious health effects of such temp jobs “Flexibilization”they note is the buzzword in most EU countries bent on reducing “labour rigidities” and youth unemployment but, they carry costs and negative effects: “Less job stability can lead to less job satisfaction and reduced mental health. Furthermore, there can be a stigmatization of workers in these jobs.”
That sounds like echoes of Arjun Sengupta’s definition way back in 2007 of informal labour and their work conditions:
“The employees with informal jobs generally do not enjoy employment security (no protection against arbitrary dismissal) work security (no protection against accidents and illness at the work place) and social security (maternity and health care benefits, pension, etc.) and therefore any one or more of these characteristics can be used for identifying informal employment” (Report on…p3).
The new discourse on temporary work as historical necessity has been welcomed with great alacrity by Indian employers in the formal organised sector both as a legitimization of extant but incipient practices noticed as early as 2005 and as a panacea for their headaches with labour laws that to their dismay still protect worker rights.
“Temporary Staffing”or “Staffing” in short even has a formal organization lobbying for multiple staffing agencies that have opened shop in India. The Indian Staffing Federation collects data on flexible employment in India and per its data, “India’s flexible workforce grew at a compound annual growth rate of 16.3% to 3.3 million in 2018 compared with 2.1 million in 2015, making it the fifth-largest market worldwide in flexi-staffing in 2018. Growth is expected to accelerate to 22.7% between 2018 and 2021 and take the total number of ‘flexi-staffers’ to 6.1 million by 2021.”(SIA…)Here’s what the legitimization of informal or contractual labour practices sounds like according to the CEO of Ransted India, a major staffing firm, Moorthy K. Uppaluri:
Economic volatility is a reality today and organisations need to be more flexible to accommodate market changes. The staffing market in India is already large considering the population in the labour pool and is poised for rapid growth. In the years to come, Indian staffing market will be the largest in the world…according to industry reports, the temporary workforce is likely to account for 10% of India’s formal sector employment by 2025. India has one of the largest flexi[ble] staffing workforce numbers in the world, next only to China and the US.”(Randstad…).
While the staffing industry waxes eloquent on the virtues of flexible employment for the Indian economy (not to forget for their own bottom lines), the conditions of work are not as hunky-dory as made out to be. Oxfam India’s second report on inequality, acknowledging the rise in contractual employment in India notes the insecurity that goes with it:
“There has been a sharp increase in the employment of informal workers in the organized sector, particularly in the private organized sector. The share of contract workers to all workers being employed was less than 20 percent in the beginning of this century.But within a decade it increased to more than one-third. Contract workers not only suffer from the insecurity of tenure but are also paid less with no social security benefits.” (Oxfam, pp3-4)
Counterpoints to the gung-ho enthusiasm for flexible employment among firms engaged in its spread are growing. In January this year Radhicka Kapoor and P.P. Krishnapriya of ICRIER ,examined the spread of informal labour in thee organized sector as “contractualisation.”
Official ASI data showed employment in the organized sector increased from 7.7 million at the turn of the century to 13.7 million a decade and half later. But, the authors point out, more than half of this increase was accounted for by the increasing use of contract workers. The share of contract workers in total employment they assert, “increased sharply from 15.5 per cent in 2000-01 to 27.9 per cent in 2015-16, while the share of directly hired workers fell from 61.2 per cent to 50.4 per cent in the same period. Furthermore, the average growth rate of contract employment at 8.39 per cent has outstripped the growth of regular employment at 3.22 per cent over the last decade.” (ICRIER, p 2).
So far this seems par for the course, a confirmation of the assessment by staffing agencies and the lobbyist the ISF. But then, they sketch us the underbelly of this changing scenario, this informalisation of the organized sector employment:
“The increasing use of contract workerswho are not employed directly by the employer, but by an intermediary or contractor on short term contracts, reflects significant informalisation of the organised workforce. These workers can befired easily,have little or no job security and enjoy far fewer benefits in terms of health, safety, welfare and social security compared to directly employed workers.Given the deplorable conditions under which they work, a rapid increase of such jobs is unlikely to meet the challenge of productive job creation” (ICRIER, p 2).
What explains the popularity of contractualization in India’s employment landscape? The neo=liberal discourse of labour rigidities that hamper employment, that incentivise employers towards automation is the discourse that has been embraced by official policy and peddled assiduously by lobbies such as the ISF and staffing agencies both in India and abroad. This has prompted a widespread policy initiative amongst governments in developing countries to amend laws that afforded protection for worker rights and mandated provisions for job security and a wide swathe of benefits empowering workers across industries.
The neo-liberal discourse demonized these legislations into rigidities and obstacles to employment; developing countries had no option but to modify such laws: “There is No Alternative!” became the reigning principle for de-regulation in countries that needed laws to protect the vulnerable, (and this included the youth), the “demographic dividend” from the depredations of capitalism.Policy wonks unwilling to face popular wrath or union power discovered an alternative in contract labour.
Such has been the accepted wisdom.
The authors the ICRIER report contest the discourse that protective labour legislations incentivize contract labour in the organized sector in India. States that have amended labour laws to make them more amenable to employers, they point out have also witnessed a spurt in contract labour. They also point out that capital-intensive industries have witnessed spikes in contract labour more than labour-intensive industries which, economic common sense would reason should have happily jumped at the prospect of replacing permanent with temp workers.
Kapoor and Krishnapriya think there are reasons other than inflexible labour laws for the spurt in contract labour in capital-intensive industries in the organized sector. Perhaps the real wage differential between permanent and contract workers might help explain the popularity among employers for contract/temporary labour. But then the differentials have been narrowing: in fact “Real wages of contract workers grew at 1.92% p.a., while those of directly hired workers remained stagnant.” Additionally, they grew at a more rapid pace than wages of permanent employees precisely in the period of rapid growth in this form of employment.
How so?
“One possible explanation is that the presence of contract workers in a firm’s workforce enables the firm management to curb the bargaining power of the directly hired workers and depress their wages. Contract workers act as an alternative workforce, which firms use to their strategic advantage, to suppress the wage demands of their unionized workforce”
This strategy works well when wages of permanent workers are determined by the bargaining power of permanent workers, a power that is whittled away at by the growing presence of contract labour hired at higher wages. The employer wins both ways: the cost of higher wages for labour that is dispensable by being temporary or contracted through a third party is mitigated by the permanent emasculation of the collective strength of permanent employees.And as the authors tell us:
“Our empirical analysis using the plant level data from the ASI for the time period from 2000-01 to 2013-14 supports this hypothesis.”
Back in 2007 Arjun Sengupta attempted to contextualize the informal sector in India by locating it in a dualism that “has significantly moved away from the textbook division of agriculture and non-agriculture (often referred to as traditional and modern) sectors and [that] has been replaced by the informal and formal dichotomy, cutting across the sectors.” (Report on…p12)
This new dualism posed its own challenge: “to transform the informal sector and reduce the gap between the formal and informal.” A conscious strategy was needed, he felt, of’levelling up’ the informal sector rather than ‘levelling down’ the formal. For Sengupta this upward movement constituted the crux of the idea of “progress” in the West. As he wrote:
“This has been the historical experience of the now developed countries that enjoy high levels of income and human development. Public policies and instruments are therefore required to be shaped and tuned for such a process of ‘levelling up’. The costs of dithering or delay could be socially and politically unacceptable in an electoral democracy of unequal voters.”
But this idea of progress as experienced in the developed countries was itself a notion that had done its time. Even as he was framing that groundbreaking report in 2007, the developed countries led by the United States were already defying the idea of progress as a linear movement up the ladder of history. Time was turning on itself as those labour markets were being infused with doses of informality,“temping.”By 2005, the American economy led the way to the flexibilization of labour worldwide.
It would seem as if the Sengupta committee was critiquing informal labour practices in the developed countries that had, according to him, “levelled up.” They had, in their earlier stages of modernist growth; but in the post-modernist phase of the 21st century, historical Time had turned on itself so that the past had become the future: work conditions in the developed world are now levelling down to those that existed in late nineteenth and early twentieth century industrialism.
The new formal has become the old informal as “temping” or “nonstandard” work spreads across the developed economies of France, Germany, the United Kingdom, not to mention lesser European nations such as Spain and Poland, China and India.
Is the clock of history turning back? To a time of enslaved workers forced into permanent precarity, atomized, their splintered selves used as foils to beat back compensations and the hard won rights of permanent workers, the solidarity of working life, its consciousness of common purpose? Will the formal endorsement of informal labour practices displace work itself as a right and a transformative experience, turning it into a doled out privilege, always contingent, temporary and arbitrary and alienating, its subjects reduced to infantile dependence?
“Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector.” August 2007 http://dcmsme.gov.in/Condition_of_workers_sep_2007.pdf Social Protection to Mitigate Poverty: examining the Neglect of India’s Informal Workers. Sananda Satpathy. Observer Research Foundation. Confederation of Indian Industry https://www.orfonline.org/research/44173-social-protection-to-mitigate-poverty-examining-the-neglect-of-indias-informal-workers/ Srija and Shrinivas Shirke.An Analysis of the Informal Market in India.Special Feature. 2014. Confederation of Indian Industry Lawrence F Katz and Alan B. Kreuger: The Rise and Nature of Alternative Work Arrangements in the United States: 1995-2015. March 29 2016 NELP: “America’s Nonstandard Workforce faces Wage, Benefits Penalties, According to US Data”.National Employment Law Project. June 7 2018. https://www.nelp.org/news-releases/americas-nonstandard-workforce-faces-wage-benefit-penalties-according-us-data/ Eurostat: How common is temporary employment in your country? https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20180523-1 Christoph Elhert and Sandra Schaffner: Health Efffects of Temporary jobs in Europe. 2011 https://pdfs.semanticscholar.org/f2bb/aebe0f594471bf28b74f5d5764a9add32866.pdf SIA: Staffing Industry Analysts: India—Flexible Workforce expected to Double by 2012: Indian Staffing Federation. https://www2.staffingindustry.com/row/Editorial/Daily-News/India-Flexible-workforce-expected-to-double-by-2021-Indian-Staffing-Federation-50304 Randstad: https://www.randstad.in/about-us/randstad-in-the-news/randstad-in-the-news/india-staffing-market-set-to-become-worlds-largest-says-randstads-regional-ceo/ Oxfam India: “Mind the Gap: The State of Employment in India”. 2019 https://www.oxfamindia.org/sites/default/files/2019-03/Full%20Report%20-%20Low-Res%20Version%20%28Single%20Pages%29.pdf Radhicka Kapoor and P.P. Krishnapriya: “”Explaining he Contractualisaion of India’s Workforce. January 2019. ICRIER. New Delhi 2019
Aneel Simran casts his beady eye on the swampy intersection of politics and economics after spending a lifetime measuring the holes in safety nets stitched together by shoddily tailored legislations. He plans to put together an annotated volume of these holes once he has counted them up. He is also contemplating a novel to be called That Void.
Thank you for this! Precarity also brings with it infantile regressions, humiliations, risk-taking that impact generations into the future. Understanding the political economy of unorganized labor, hopefully leads to organizing against this trend.