Surbhi Kesar and Rosa Abraham are research fellows at Azim Premji University, Karnataka, India. Their research focuses on various areas of the informal labour sector. In this interview with Divanshu Sethi, they discuss the emergence of the informal labour in India, the impact on it during the Covid-19 lockdown, the unintended consequences of the labour relation in the Indian economy, and the ways to reimagine the labour structures in a post-pandemic world.
Before we get started about the COVID-19 crisis impact, could you explain the nature of informal labour in India? What it means and why does it exist?
Surbhi: It might be useful to distinguish between the concepts of the informal sector and informal employment. Informal sector comprises of enterprises that employ less than ten total workers. These are really small enterprises, and most of them are family enterprises that do not employ wage labour and production is undertaken mainly by household members. It is driven mainly to satisfy the consumption needs of the household. Such enterprises do not retain much money for investment and accumulation over time. Informal employment, on the other hand, refers to the nature of wage employment. Informal wage employment is mainly characterised by the absence of secure jobs and long term job contract or social security benefits. So these two combined comprise the informal economy. For the Indian economy, around 90% of the workforce are informally employed.
Following much of the literature on economic development, it has been expected that with economic development and growth the surplus pool of workers in the agriculture sector would transition to the modern segments of the economy (crudely speaking, this would have comprised the industrial sector and urban areas). However, despite growth, these bigger or the more modern sectors of the economy were unable to create enough jobs, and their employment elasticity remained low. As a result, a huge proportion of the workforce that was excluded from the agriculture sector as a result of low returns in the agricultural sector and was unabsorbed in the industrial sector due to its low employment elasticity, found employment in what came to be understood as the ‘informal economy’. These workers, due to lack of a viable alternative, were often forced to reproduce the same traditional structures of production within the industrial and the urban segments as well. An interesting article by T.G. Mcgee characterises this informal labour as the Peasant in the cities (An old 70s article) who end up re-creating the peasant system of production as in the rural areas within the cities. In some cases, this informal economy acts as the pool of surplus labour that keeps wages low and provides cheap wage goods for the formal sector. However, for the most part, for the Indian economy, the informal economy is huge, and not all of it is ‘needed’ by the formal sector and might often act as a drag on the development process.
Rosa: What we also see in India is that a lot of informal employment exists outside the informal sector. So you have large organised sector enterprises which hire workers without basic social security arrangements — most of them have no paid leave, contracts or even an identifiable employer, per se. They are similar to their counterparts in the informal sector, with the major difference being that they are hired by formal organisations. Further, with a dilution of labour laws and easy hiring and firing practices, the organised sector has fewer incentives to provide formal contracts to workers and would tend to increase this process of ‘informalisation’ even within the formal sector. So you have this informal arrangement being manifested in the formal sector as well. It is an increasing phenomenon in India and other parts of the world.
Is it unique to India?
Surbhi: While its size varies across economies and India has an abnormally high proportion of the workforce that is informally employed, it exists in large parts of South Asia, Africa and Latin America. So, no, it is not unique to India. Therefore, what is generally referred to as the non-standard employment has actually been the standard employment for most of the economies in the global south, i.e., the developing regions.
One of the reasons for the abnormally high informal economy in India is that the process of industrialisation for India was stalled quite early on. So that it never could develop an industrial sector which could absorb the formal sector.
The labour force, especially in the informal sector, was facing difficulties before the COVID-19 crisis due to the weak performance of the economy and already structural problems. Now through this shock, what will be the consequences on the labour relation in the economy?
Surbhi: We have to realise that this is not something that we were unaware of that could possibly happen in the event of a crisis. It is being argued that there is such a big crisis and therefore the informal workers are in such distress. However, the point is that these workers were always in extremely vulnerable conditions, so such extreme impacts on such vulnerable populations in events of a crisis is only expected. Due to the lack of secure jobs and long term job contracts, these workers were always on the brink and now they are being pushed off.
In terms of impacts specific to the crisis, several recent surveys and studies have shown interesting results. For example, a survey of around 4000 workers across 12 states conducted by our team at Azim Premji University found that 67% of those employed prior to the lockdown did not have any work during the lockdown. For those who retained employment, there was a drastic fall in earnings. In fact, around two-thirds of the surveyed households had money for less than two weeks worth of essentials. Another study by Vikas Rawal and Ankur Verma surveyed around 1300 mandis in India and showed that only 6% of wheat that was sold in the previous period had been sold in this period of the lockdown. Another report by the Standard Workers Action Network of around 11,000 workers finds that around 50% of them had only one day worth of ration, 90% were not paid by their employers.
However, I would like to reiterate that these cracks always existed due to lack of job and income security. So, being pushed off the brink as the crisis hit is an expected consequence.
Source: Computed from NSS 68th unit level data on employment unemployment, 2011-12 and Periodic Labour Force Survey, 2017-18
There was a mass interstate migration movement. What does it mean for the labour sector? What difficulties will come out? And will there be a lag in when people will come back to cities/states?
Rosa: There are two points I like to raise here. First, it is very important for us to realise the way we are viewing workers. The migrant worker crisis has brought to fold the idea of disposability of workers. The migrant worker moves to the city without any job security, income security, housing etc. and the moment the construction sites shut down, this migrant worker is disposed off, and they have to go back. There is no space in the city for the worker who is actually creating the city. And the other point about the lag. I think there are two sides to this problem. A bigger macroeconomic issue is that even if the lockdown ends, the likelihood of the economy to immediately return to the state it was in prior to the crisis seems bleak in the absence of a fiscal stimulus. The lag could be extremely large. The economy was any way in a downturn, and now we have been hit by this shock. So we don’t know when those construction worker sites will begin. And we are not sure whether there will be enough demand for labour in the first instance. The second issue is whether this trauma that migrant workers are undergoing is enough to keep them from returning and supplying their labour again. We need to keep in mind, even if they don’t want to, given the lack of livelihood opportunities they probably cannot afford not coming back. In my opinion, this lag will be more in terms of the demand for labour itself.
Surbhi: To add on the thread, there was an interesting interview with Chinmay Tumbe (faculty at IIM-A) where he described the cities as the source of economic security for the workers. So the cities are where they get their livelihoods in a sense. But the villages – their native places – is their source of social security. With the huge interstate migration movement, we also have these locked in migrants who are unable to go back. For them, they don’t have economic security and social security. This is a huge emotional and economic trauma that they have gone through. Both the ones who have been left behind and the ones who have managed to return home with much difficulty.
Most of the migration history has been distress driven. It has been driven out of a need to earn a livelihood which they cannot do in their native places. So, I would think that at least in the immediate term, when the economic security is not going to be forthcoming from these cities, this points towards the need to rejuvenate the rural sector of the economy. There is a need to amp up the funding for MGNREGA so that these workers are provided with some work, as well as supporting the social and physical infrastructure of those areas.
The crisis highlighted the fractures of the increase in “gig” economies and other unsecured work. Do you think there will be a re-imagination from society for these kinds of economies?
Rosa: To begin with, the gig economy in the Indian context is a very small proportion of the informal sector. And there have been reports to show how this gig economy has since crumbled under the crisis. At the same time, especially in urban areas, a large portion of the middle class is pretty much dependent on delivery workers and network of drivers to get their essentials to them. So yes, there is a possibility to reimagine these workers keeping in mind how they have become essential to our livelihoods. But it also needs to be one that is driven with an interest of the worker in mind. Making sure they have a secure labour relationship with the employers and having clear drawn out employee-employer relationships is the way forward.
Surbhi: Also, while there is a need to rethink these issues, it is not as if the job security for these workers existed earlier. There have been reports that have highlighted the low levels of earnings of the gig economies workers, especially the delivery personnel. The crisis has displayed the absence of a structural solution to the problem of employment. It has highlighted the vulnerabilities of these make-shift employment relations that economies such as ours have resorted to – and have often even celebrated – in the absence of such structural solutions. What we need are structural solutions to deal with these issues both in the presence as well as absence of this current crisis.
Workers in the gig economy have been suffering with precarious contracts before the pandemic. Brighton Pictures/Rex fictures
And because of the focus on healthcare, will there be a rise in the importance of the caring economy?
Surbhi: The point is that academics and policymakers have been arguing for the longest time that the expenditure on the health sector is just not enough. In a country like ours, where we do not have hospitals and hospital beds in most of the rural areas, our priority needs to be basic access to healthcare. Lately, there has been stress on insurance-driven policies for healthcare. However, we have to realise that in a country like ours, where the major lacuna is the access of basic health infrastructure to deal with common infections like influenza and cholera, etc., what we need is government spending to provide basic health facilities in all parts of the country rather than providing them insurance that they cannot make use of in the absence of health facilities. Insurance-based policies also put more pressure on the already limited urban healthcare system. Hopefully, this pandemic will make us realise the importance of the sector and help the investment in the areas that need to be prioritised.
In terms of the care economy, yes, there will be a rise in the importance of it. But will it become the focus? I am not too sure because the part of the caring economy that might become the focus could be market-based care work, such as the healthcare services. However, it is not likely to bring to fore the latent forms of care support that are not directly within the space of the market, including household work. Further, even within market-based care work, the emphasis varies widely based on the economic and social class. While healthcare workers are being appreciated (as they should be), you don’t see the same sort of emphasis on sanitation workers, who are as much a part of the frontline care services. Given this, I am not too hopeful of how much that would really change.
Rosa: I agree that this can be an opportunity to create an upheaval in the structure of labour relations in the labour economy. But the recent dismantling of major labour legislation across several states in the country indicates that this upheaval is certainly not happening in favour of workers.
It is a known fact that most of the workers in front line services are women. It is known even before the crisis that most of the caregiving roles are undertaken by women – they are burdened with huge domestic responsibilities. The crisis exposes this more. Do I see things changing post the crisis? I would certainly hope we do not return to the “normal” of a small state and non-existent labour laws and inequitable gender relations. But I don’t see at the moment that this kind of re-imagining is actually changing structural inequalities in place.
At the moment, the absence of a social safety net is causing problems, especially in the informal labour. What can be the unintended consequences of such inaction? How will it affect the gender relation in the labour market?
Rosa: There have been studies shown that people not only have previous loans they have to pay back but have to take new loans to face the urgent needs which are coming. Even among formal sector employees, you have huge withdrawals that were seen from the Employment Provident Fund. All pointing towards distress and there are likely consequences at the household level. So food intake would be the one which will be highly compromised, especially for women and children. It is also likely that we might see a withdrawal, especially again for girls from primary education when families are going through extreme distress, and they may not be able to pay school fees or afford to send them to school. They might want to send them for work or take care of household responsibilities since mothers may have to go to work. So there are these long term implications for the lack of social security nets and the kind of distress situation that families have been driven into in terms of what it implies for nutritional intakes, education, and children’s work status. It is also going to be that women (historically have a lower reported employment rate for women), post the crisis, might re-enter the workforce, which normally is a welcome thing, but this is going to be a clear distress driven kind of re-entry in these situations.
Surbhi: To add to it, one thing we often miss out on is that we tend to think only as an economic crisis in a narrow sense of lack of work etc. We miss out the intersections with social identity. We miss out that the impact is likely to vary across social identities, and not just gender but also caste. There is a lot of occupational segregation both in terms of both gender and caste in terms of what kind of work someone from a particular social identity is more likely to undertake. Given these issues, one also needs to be aware of the indirect consequence on the worker identity. We have been talking about how there has been some sort of convergence across caste categories but given that in India the economic categories map very closely with the caste categories — this might actually lead to a divergence even among different caste groups, and among these different social identities Therefore there will be a huge impact on the social domain of it and not just the economic.
To stress on the gender relation point. The care burden is failing proportionately much more on women, and that’s going to affect the kind of work — how productively they can work. We have been talking about the informal sector, but this gender relation is also affecting what is happening to people in more secure jobs as well. For example, there has been a lot of discussion on how while submissions to economic journals have increased dramatically over this past month of the lockdown across the world, the proportion of women submitting their work has been much lower which is a very clear indication of a more care burden on a particular gender.
Rosa: I am reminded of this conversation in those many webinars which has been happening. This person was talking about opportunities from the crisis, and one of the points that he talked about was that more people are allowed to work from home, indicating that women who traditionally are held back from entering work because they don’t want to leave their homes, now could potentially make use of this new kind of work arrangement. So this was an exuberant point he made, but you see in these kinds of conversations that it is still gender blind. Although it is spoken with the intention of being gender-sensitive. It is still gender blind because it does not recognise that women who could potentially want to join the office are still left with the burden of taking care of the house and childcare and all the other domestic work. So unless that is also addressed, employers are aware and sensitive of this, – the fact that women re-entering does not really mean anything in terms of how good this work is going to be or how much we want to promote this kind of re-entering of women into work.
Lack of social safety net will make many people in the developing world vulnerable. UNICEF/ Michael Phelps
With the COVID-19, there is an opportunity to look back and rethink some of the ways the labour sector has been structured. What ways would you like that direction to be?
Rosa: There is an opportunity for the labour sector to be structured in a way which is favourable for women both for those starting their work as well as re-entering into work after marriage/childbirth. And so this an opportunity to kind of engage with women in more productive and more decent work so to speak. But I am a pessimist, and I remain sceptical about whether this will happen. But also the other point is this has clearly thrown a spotlight on our essential workers which is our Anganwadi/ASHA workers/our doctors and nurses who are out there and doing crucial work. And now we are more aware of all the level of work that has been happening. But we also see the nature of their work in terms of their earnings and their contract. It is abysmal. It is so stark the kind of variations in earnings across these essential workers and other workers. Maybe this is an opportunity to use the spotlight to make a case for them for the betterment of their pay and employment arrangement.
Surbhi: To take a more macro picture on this. Yes, this does have an opportunity because we are faced with such a crisis, and existing ways of running the world is challenged. However, will we do anything that challenges the already existing inequalities remains a very pertinent question. For example, while the 2007-08 financial crisis posed a big challenge, there wasn’t any major restructuring that challenged the existing system. The structures just became more resilient. So post 1980s/90s there has not been a major structural change in the world economy, including India. Since the 90s, there has been an active strategic withdrawal of the state from providing these services. The withdrawal has accentuated in recent years in terms of increasing corporate tax cuts and further reducing the state’s financial capacity. Therefore, what we really need is re-imagination and re-focusing on things that really matter and one has to realise that what has been happening for the past few years has not been working out for most of the population. India has now become one of the most unequal countries among the large economies. What we need are some structural reforms that are geared towards reducing equality, are environmentally sustainable and work not just for the top 1 per cent but the 99 per cent!
Surbhi (L) and Rosa (R)
What areas of research are you working on at the moment?
Rosa: I have been working on the informal sector, particularly with informal employment in the formal sector. But I am also interested in women and their interactions with the labour market. The role of statistics and how this captures work, and the politics of data interest me. I have been involved in a labour market survey at the Centre for Sustainable Employment. Surbhi and I and along with the team at CSE are working on a survey to look at how COVID-19 is impacting employment and livelihoods in different profiles of workers across the countries — to capture what are the transitions in work which has been happening, what are the loss in earning, and the medium-term implications of the crisis on the workers and their households.
Surbhi: Other than the survey that Rosa mentioned, I am working and interested in understanding the process of capitalist development in labour surplus economies and the role that the informal economy plays in that process. I am working on a project to understand the process of structural transformation in less developed economies. Other than that, I am co-writing a book on decolonising economics which engages with the colonised nature of Economics as a discipline and how the kind of knowledge that gets produced and accepted is essentially determined by the structures of power.
For our readers, could you recommend books or articles to understand the informal nature of the Indian economy?
Surbhi: One of the most important contributions of the past decade has been by Kalyan K. Sanyal on Rethinking Capitalist Development – a book – which is an amazing theoretical intervention to understand the informal economy. There is a lot of work by Barbara Harriss-White. Then there is the classic by Jan Breman – Footloose Labour: Working in India’s Informal Economy. To take a more global perspective, I would suggest Planet of Slums by Mike Davis – which has interesting takes about India as well. Review of radical and political economics is soon coming out with a special issue on informality – I would definitely recommend. It has an interesting de-colonial perspective for understanding the informal economy.
Rosa: I would recommend some non-academic works. One is a book by Aparna Karthikeyan called Nine Rupees an Hour: Disappearing Livelihoods of Tamil Nadu. She profiles these different types of livelihoods in the state of Tamil Nadu and how these livelihoods have disappeared over time. It is a fascinating book to understand the informal economy. Another book I enjoyed is called Karno’s Daughter: The Lives of An Indian Maid. It is a memoir about her domestic help. One of the most visible informal workers are domestic help, and the book is a wonderfully written portrayal of the centrality of their work and the many roles they play.