Organizing Informal Labor in India: Alternate Perspectives.

AuthorElembilassery, Varun


Industrial production started in India more than 150 years ago. The first attempt to organize workers happened as early as 1918 in erstwhile Madras and current Ahmedabad. India have had many luminaries in the field of industrial management, labor studies and organizing workers including a former President of India. Labor movements have largely influenced the polity and civic arrangements in India. Despite all these achievements, the reach and impact of unionization, to a great extent, have been limited to formal workers that form a meager 8 percent of the national workforce. National Commission for Enterprises in Unorganized Sector (NCEUS) in 2005 estimated that the number of informal workers in India was 423 million of which 395 million belonged to informal sector and the rest belonging to the informal workers in formal sector. Women constituted one third of the workforce in informal sector and 61 percent of the urban informal sector were self-employed (Bhowmik, 2013).

The existence and growth of trade unions, the spread and effectiveness of labor movement, and fulfillment of India's socialist governance objectives largely depend on the upliftment of informal sector labor. Organizing the workers in informal economy as an area of immediate attention and urgent need has taken the center stage of labor studies due to its myriad reasons affecting the country and economy. It is increasingly becoming difficult to understand the complexity of characteristics, criteria and classification of informal and formal sector. Many terminologies are used interchangeably in the current literature, such as informal and formal employment, informal and formal sector, and organized and unorganized sector. NCEUS working papers on the definitional and statistical issues related to informal sector have thrown light and clarity into the classification and evolution of the concept of informal sector.

The purpose of this paper is to analyze the major challenges to organizing informal labor and propose new ways of adaptation to the unique characteristics of informal labor. The paper begins with the theoretical underpinning that legitimizes the existence of informal labor and the need for alternate perspectives. Further, definitional clarification is explained to establish the scope of this paper.

Theoretical Background

Julius Herman Boeke and Arthur Lewis espoused the theory of dual economy or dualism to explain the existence of two different economies or dual society in the same country characterized by different technology, development, and supply of labor. Any society which is not homogeneous will naturally have multiple social status or social system, which forms the basis for dual economy. Traditional or agriculture sector and modern or manufacturing sector are the two classifications envisaged by the theory of dual economy. The fundamental difference between these two sectors exists in the factors of production as well as in the nature of returns. Historically, land and labor has been the factors of production in agriculture sector while labor and capital constitute the factors of production in manufacturing sector (Jorgenson, 1961). The focus of these theories was to study and make available the surplus labor of agriculture sector for capital accumulation in manufacturing sector (Bhalla, 2009). Even though, many theories espoused by corporate denigrate informal labor and even consider as a threat to economy due to reasons like inferior quality of human capital, the idea of dualism legitimizes the existence of informal labor(Porta & Shleifer, 2008). Unlike the earlier times when dualism divided the country or economy into two different sectors, the modern equivalent of dualism is manifested in the forms of two types of labor existing in the same sector. With the advent of the concept of informal labor, the focus of dualism has shifted from low productivity and surplus labor, to better working conditions and vulnerability (Kannan, 2009), because the links between informality and vulnerable conditions are substantiated and straight (Unni, 2001). This essentially arises from the unique characteristics of informal labor and since the focus has now changed, the methods of collectivization need a relook.

The term informal income was first used by Keith Hart to explain the activities of self-employed migrants of Frafras tribe of Africa, who could not get jobs in the formal sector(Hart, 1971;1973). Till then the labor discourse had termed such migrants as unproductive or surplus labor (Mehta, 1985). Hart found out that the labor that is dependent on the informal income neither disappeared nor got income starved. They worked, earned and supported their families through informal means. Later when ILO World Employment Program used this concept widely in various country studies the term informal sector got recognition, meaning and importance (ILO, 2014).

As per NCEUS all private unincorporated enterprises constitute informal sector and includes all activities carried out by individuals based out of home or outside, employing others or alone, technically qualified or unqualified (Bhalla, 2009). Informal sector can be defined from both enterprise as well as employment perspectives. The main criteria of differentiation from an enterprise perspective are the limited number of employment opportunities and the status of non-registration. Accordingly, all enterprises can be summarized into any of the three categories namely formal sector, informal sector and households. On the other hand, the employment perspective primarily considers the nature of work and not the person doing the work. Here the same person can have multiple informal work or a combination of informal and formal work. Accordingly, informal employment can include workers employed in their own informal sector enterprise, contributing family members, employees holding informal job in formal sector, members of informal producers cooperatives and own account workers engaged in household production of goods for own consumption (Hussmanns, 2003). In summary, formal employment is by and large confined to formal sector enterprises, whereas informal employment can be seen in formal, informal and household enterprises.

The scope of this study is limited to the task of organizing workers in informal sector and in an Indian context. The dynamics and characteristics of formal and informal sector are very different and generalization would be difficult. Hence for...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT