Skills Development in the Informal Economy: A Case Study from South India.

AuthorKoops, Benjamin


Despite strong economic growth of the Indian economy in recent years, the International Labor Organization (ILO) classifies 92 percent of employment in the Indian labor force of 480 million people as informal employment (ILO, 2015; Mitra, 2015). Work in the informal economy is typically characterized by a low degree of social protection and a nonapplication of labor legislation (ILO, 2013). In order to improve labor market outcomes in India, international organizations strongly advocate to improve not only the education system for young learners, but to also focus on skills development programs for informal workers (see, for example, World Bank, 2008). To be effective, it is evident that these training programs shall be relevant for both the informal workers and the labor market. We argue that much more fundamental research work is needed in the Indian context to understand the actual training needs of the informal workers.

In this paper, we follow the approach of the micro-perspective. We aim to gather considerably valuable information by addressing the research questions from the perspective of informal workers, with due regard to their backgrounds and opinions. This shall be a useful and inevitable complement to the analysis of statistics and theoretical concepts in regard to the informal economy and skills development to set up effective programs. In the present case study, we attempt to complement statistics for the informal economy in Tamil Nadu that do exist (see, for example, National Skill Development Corporation [NSDC] 2012) with our research insights.

Hoerner (2000) argues that researchers shall first attempt to understand the cultural and historical contexts before suggesting improvements. This is particularly relevant in the Indian context and the Indian informal economy, which is characterized by a large degree of heterogeneity. In our application of Hoerner's concept, we evaluate education levels, local traditions, work behaviors and general attitudes of the researched group as the basis to understand how they actually learn.

Specifically, we analyze self-employed small-scale mechanics in two semi-urban regions in Tamil Nadu, namely Thanjavur and Vellore. An in-depth case study based on qualitative interviews with informally employed mechanics is the basic data for our analysis. Our questions of interest are: How do informal small-scale mechanics acquire their skills? What skill set do they possess? What relevance do different forms of learning have for them? What problems do they face in receiving better learning outcomes? Which are the existing structures to improve the skills for them?

The general approach of the research corresponds to a study of Pilz, Uma and Venkatram (2015), in which the authors examine learning patterns of street food vendors in two Indian cities. With regard to learning patterns of mechanics, a comprehensive study of Barber (2004) exists, in which the author made extensive use of observations in a workshop in North India. Also, Sodhi (2014) analyzed the situation of 100 motor mechanics in Ludhiana-Punjab. All three studies found a certain amount of work based learning, mostly informal learning and the formation of tacit knowledge and competences (see for details below). However, we find studies on the informal economy from the informal workers' perspectives are limited to a small number of research projects. Therefore more empirical data is needed to fill the research gap and to generate more reliable empirical data. The present study seeks to provide complementary perspectives to develop a comprehensive understanding of skill development and learning in the informal economy in India. For a good overview of the informal economy in India, we refer the readers to the studies of the World Bank (2008) and Chen and Doane (2008). For statistical figures of the informal economy in Tamil Nadu, the NSDC (2012) provides detailed information about socioeconomic factors for each district.

Definition of Formal, Non-Formal & Informal Learning

In order to build on extant theory that explains characteristics of different learning patterns and to categorize our findings, we first introduce three distinct concepts of learning:

Formal learning takes place in education and training institutions, leading to recognized diplomas and qualifications

Non-formal learning takes place alongside the mainstream systems of education and training and does not typically lead to formalized certificates. Non-formal learning may be provided in the workplace and through the activities of civil society organizations and groups. It can also be provided through organizations or services that have been set up to complement formal systems

Informal learning is a natural accompaniment to everyday life. Unlike formal and non-formal learning, informal learning is not necessarily intentional learning, and so may well not be recognized even by individuals themselves as contributing to their knowledge and skills. (Commission of the European Communities [EC], 2000)

We placed our analytical focus on informal learning processes, as we assume these to be the main learning processes that are relevant for the informal economy (as per ILO, 2012). It is important to understand that, following this concept, we assume that the learners are not in a position to explicitly narrate their learning processes. Thus, we needed to make use of research methods that are consistent with this notion.

Our evaluation of case studies focuses on the following dimensions for reasons elaborated below: (a) informal apprenticeships, (b) the social environment and (c) the motivation to learn since we specifically evaluated these dimensions.

(a) Informal apprenticeship is generally viewed as the typical form to train young individuals in the informal economy (ILO 2012). The ILO (2012) defines informal apprenticeship as follows:

"Informal apprenticeship relates to a system by which a young learner (the apprentice) acquires the skills for a trade or craft in a micro- or small enterprise learning and working side by side with an experienced craftsperson. Apprentice and master craftsperson conclude a training agreement that is embedded in local norms and traditions of a society. Costs of training are shared between apprentice and master craftsperson."

Informal apprenticeships can clearly be distinguished from vocational education and training (VET) programs, which are embedded in formal institutions, are structured and lead to recognized certificates (Sodhi & Wessels, 2016). Scholars associate informal apprenticeships with a lot of challenges and problems, which include that the quality of the program is typically not monitored, that learners do not receive certificates (ILO, 2013) and that continued learning is not enhanced, as informal apprenticeships typically do not make use of theoretical knowledge and largely rely on practical applications (UNESCO, 2012). Furthermore, Barber (2004) argues that deficiencies in reflective practices lead to minor learning outcomes and the lack of problem-solving skills for new challenges result in low productivity of the workers. However, there are inevitable benefits, such as its accessibility, as no entry requirements typically exist and the fact that the transfer of knowledge to the learner is very relevant to generate income. Furthermore, informal apprenticeships often provide subsequent employment to the apprentice (ILO, 2012; Barber 2004).

(b) In analyzing informal learning patterns, this paper assumes that the entire social environment is a potential source for (particularly informal) learning (Pilz & Wilmshoefer, 2015). However, it considerably depends on the abilities and (c) the motivation of the individual person, whether this potential can be exploited (Pilz, Uma & Venkatram, 2015; Pilz & Wilmshoefer, 2015). Consequentially, we evaluate these dimensions in detail.

Methodology & Sampling

We followed the approach of a case study, in which we conducted in-depth qualitative interviews with ten small-scale mechanics. In addition to these interviews, we carefully observed the working environment, the mechanics' working conditions and their work duties as well as their social interactions. By applying the concept of a case study, we believe to have gathered valuable information on topics that are studied only rudimentary by other scholars, particularly from the informal workers' perspectives. The research strategy is explorative in nature, which means that we posed open questions and let the individuals narrate their responses to our research questions.

The study makes use of semi-structured, qualitative interviews. This method was followed due to its ease of access to the surveyed persons. The respondents had considerable time to narrate about their daily routines, work duties and social environment so that we could examine informal learning processes. We applied semi-structured questionnaires to cover all relevant topics. By doing so, we could flexibly react to circumstances and pose follow-up questions to gather a better understanding of particular responses.

It is surely challenging to thoroughly evaluate learning processes by our methods of interviews and short observations. This is particularly due to the nature of informal learning: individuals often do not recognize what they learned or how they learned and thus, cannot explicitly express potential learning outcomes (Pilz, Uma & Venkatram, 2015; Pilz & Wilmshoefer, 2015). This inherent knowledge of an individual is termed tacit knowledge (Polanyi, 1966). Notwithstanding these shortcomings, we believe that our case study generated sufficient information on learning outcomes and processes.

The majority of the interviews were conducted face-to-face and individually. While translating from Tamil into English, potential problems were expected in the form of incomplete or imprecise transfers of information. In order to mitigate...

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