“Eight hours shall constitute a legal day’s labour from and after May 1st, 1886.” This resolution of the American Federation of Labour started being implemented 121 years ago. May Day is the celebration of the victory of the working class for an eight-hour workday and of the social and economic achievements of the international labour movement.

On May Day in 2007, India’s organised sector workers have to do it all over again because under globalisation they are losing what they had gained. Worse, for about 93 per cent of workers, the social and economic achievements of the Indian labour movement remain a chimera. Millions of workers work in insecure, dirty and dangerous jobs for little or negligible earnings. They are either unprotected or inadequately protected by labour law. They are generally denied social security, welfare and health covers. They remain largely without a voice and unrepresented because they are not organised in any form of trade unions or associations. Some often go unrecognised as workers. They are engaged in a constant struggle to survive, leaving them no freedom or space to organise and challenge dehumanising conditions. They often face exploitation and discrimination based on caste, ethnicity and gender.

Constitutional and legislative provisions

The constituent assembly of the Indian Constitution celebrated the lofty republican ideals of ‘liberty, fraternity and equality’ in a country where poverty, inequality, the worst kinds of caste oppression, exploitation and religious strife were hallmarks. They saw the Constitution as an instrument of social and economic revolution, yet to be achieved, and incorporated as its objectives social justice, equity, equality of treatment between men and women workers, a living wage and the social security of workers. In addition, a large number of legislations have been enacted in support of the Constitutional provisions for social security and insurance, employment, protection against unemployment, and exploitation at work.

These reflect a social compact among the state, the employer and the worker (the most articulate section) within a tripartite framework, and symbolise “the merits of consensus in decision-making processes of our nation. 

Whereas labour agreed to participate in the task of nation building, government, through the provisions mentioned above, assured the control of exploitation by regulating employment and the observance of labour rights including the right to organise, collective bargaining, non-discrimination, freedom from forced labour and child labour. On the other hand, it provided for the distribution of wealth through wage regulations, and social security for the workers.

Duality and consequences

Yet, six decades of India’s development unfolds a story. The fact that only 7 per cent of the estimated work force of about 402 million (Census 2001) enjoys the benefit of Constitutional and legislative rights at work, and are within the tripartite framework, cannot be accidental. It also exposes the naïveté of an argument that the traditional sector in India comprising artisans, petty traders, small producers, and a range of casual jobs would be absorbed into the modern formal economy. In reality, a majority of the Indian workers are in the unorganised or informal sector and are outside the framework of social and economic justice at work.

The duality — formal and informal — of economic sectors and the labour market benefited the Indian industry in many ways. It provided a large reserve of labour for the organised industry. This was always a tool in the hands of employers to reign in those who are within the framework. Second, it gave an opportunity for the large industrial firms to structure their organisation of production by having subordinated economic units and workers that serve to reduce input and labour costs. Third, studies including those done by World Bank point out that informal activities help entrepreneurs to avoid the costs, time and effort of formal registration and escape taxation as well as government rules and regulations which stifle private enterprise. In any case, it disproves the argument that informal activities are in the traditional sector and that poor traditional economies can be transformed into dynamic modern economies by a process of guided modernisation.

Globalisation and the informal sector

Globalisation and structural adjustment policies are contributing to the decline in formal employment and the informalisation of employment relations. These policies have resulted in privatisation, downsizing, outsourcing and flexibilisation of labour. Global competition encourages formal firms to hire workers at low wages with few benefits or to sub-contract (or outsource) the production of goods and services.

Globalisation has also emphasised the inter-linkages and interdependence between the formal and informal sectors largely part of a value chain controlled by a lead firm. Formal and informal, in most cases, can no longer be seen as mutually exclusive sectors.

How large is the informal sector

ILO has estimated (2002) that informal employment comprises one-half to three-quarters of non-agricultural employment in developing countries: specifically, 48 per cent of non-agricultural employment in North Africa; 51 per cent in Latin America; 65 percent in Asia; and 72 per cent in sub-Saharan Africa. If informal employment in agriculture is included, the proportion of informal employment increases significantly: from 83 per cent of non-agricultural employment to 93 percent of total employment in India; and from 55 per cent to 62 per cent in Mexico.

Informal work is increasing in developed countries too. Three categories of non-standard or atypical work — self-employment, part-time work, and temporary work — comprise 30 per cent of overall employment in 15 European countries and 25 per cent of total employment in the United States.

In all developing regions, self-employment comprises a greater share of informal employment (outside of agriculture) than wage employment. Specifically, self-employment represents 70 per cent of informal employment in sub-Saharan Africa, 62 per cent in North Africa, 60 per cent in Latin America, and 59 per cent in Asia.

According to NSSO 2004-05 estimates, in India, self-employment was the mainstay of about 52 per cent of the rural households. Among urban households, nearly 38 per cent of the urban households had income mainly from self-employment. The proportion of households depending on self-employment increased by 6 percentage points in rural areas and by 3 percentage points in urban areas between 1999–2000 and 2004–05.

Using 1993 International Conference of Labour Statisticians (ICLS) definition, the ILO suggests that the informal sector include all remunerative work — both self-employment and wage employment — that is not recognised, regulated, or protected by existing legal or regulatory frameworks, and non-remunerative work undertaken in an income-producing enterprise.

Women in Informal Employment Globalizing and Organizing (WIEGO) emphasises that in order to understand the informal economy, it is important to recognise that it is multi-segmented. The main segments of informal employment includes employers (owner operators of informal enterprises who hire others); employees (unprotected employees with a known employer); own account workers (owner operators of single-person units or family businesses or farms who do not hire others); casual labourers (wage workers with no fixed employer who sell their labour on a daily or seasonal basis); industrial outworkers (sub-contracted workers who produce from their homes or a small workshop); paid contributing members of cooperatives or producer groups: and unpaid contributing family workers (family workers who work in family businesses or farms without pay).

Gender and informal workers

Various studies have shown that women constitute more than two-thirds of the informal work. However, they tend to occupy a narrower range of less or non-remunerative occupations at the lower-end of the market (street vending, food processing, garment making, domestic work, etc.) Women’s employment is also affected by subcontracting under globalisation, household production units and work done at home.

Demand for Social Security

The ever-increasing spread of informal work, the escalating vulnerability of informal workers, rising informalisation of regular employments and the move by the state to renege on its social compact with labour has generated a universal demand for comprehensive social security for unorganised (informal) workers as a Constitutional right. Trade unions, peoples’ movements and NGOs in the forefront of this campaign feel that the government’s response to this demand is inadequate. They argue that the bill should be comprehensive, having provisions for the regulation of employment and social security. As a duty-holder, the state should clearly make adequate commitment of resource availability for the fulfilment of that right. The state should desist from privatisation of health benefits, should ensure the participation of Dalits, Adivasis and women in the decision-making processes, should not dilute the tripartite framework, and should not weaken the process by introducing schemes without the backing of statutory Board for the purpose. They are also clear that only a rights-based approach will enhance the participation and the voice of the informal workers.