INFORMAL AND INFAMOUS, YET INFLUENTIAL!

It is estimated that near to half of the world’s jobs are satisfied by the informal sector and in

India almost 85% of the jobs are informal, weighing in around 50% of Gross Domestic

Product (GDP). Approximately 15% of the GDP is contributed by the informal sector in

member countries of the Organization for Economic Co-operation and Development

(OECD). Even to draw these aggregate estimates, a clear conceptual understanding was

required to identify the sector first and thereafter bring the people into the forefront of policy

and civic discussions.

Deviating from its general understanding, the informal sector is not necessarily characterized

by low-skilled laborers or poor returns on business but rather comprises a huge spectrum

of skills. There are many small establishments of trade and commerce, which with the

revenue generated set up many more similar units without operating as one large unit, hence

being unorganized but not disorganized. There are jobs that require the bare minimum skills

and not much training say construction work, street vending, domestic labor, etc. which make

it difficult to accommodate the huge population dependent on the informal sector. There are

also few advance skilled jobs such as weaving or metal work which might require the

individuals to undergo brief training and work in industrial clusters. Though it is regulated

through the regional chambers of commerce and trade, the sector still turns out to be

vulnerable to its volatile earnings, low levels of revenue, lack of assets, recognition, and

access to social protection.

Skills are blindly quantified based on the number of degrees a person is entitled to and this

stands as an inadequate measurement when it comes to the skills of workers in the informal

sector. Consequently, they are portrayed as unskilled thereby unproductive, and do not

receive social respect for being significant participants of a productive economy, which they

are otherwise eligible for.

Not just economically, but these informal business units are also contributing to the Green

GDP in their penny-wise ways by optimizing the consumption of resources. As a result their

carbon footprint or the amount of green-house gases emitted into the environment through

production activities is also very negligible as compared to their formal counterparts. It also

implies that they opt for sustainable practices instead of depending on fossil fuels to carry out

the manufacturing process. Providing aid in the form of infrastructure upgrades,

modernization, and upskilling would go a long way in benefitting the sector and making it

globally competitive. Many initiatives can be taken to improve their livelihood in minute

ways such as designing homes with green roofs for cooling; organizing workers into groups

so as to earn easy access to resources, capital, and skills; and providing safety wear such as

gloves.

Healthcare and housing as suggested by the UN’s Sustainable Development Goals (SDG) too

is the necessary safeguard that needs to be advocated to solve humanity’s greatest challenge.

Apart from the structural difficulties, there is also the scare of climate change which might be

unfavourable for the sector. Big firms generate enough revenue to incorporate sustainable

methods of production into their businesses. Informal units on the other hand do not produce

any industrial waste like the established firms but also do not possess enough wealth to

switch to sustainable modes of production. Instead of day-to-day activities can be observed to

find areas where they might need small improvements so as to make their lives more

healthier and sustainable.

The size of India’s informal economy is one of the largest in the world as it supports almost

400 million livelihoods and is the backbone without which the formal economy would be

crippled. An exhaustive and systematic skill mapping has to be introduced to openly

acknowledge the rich informal sector and the spectrum of skills it has in store to offer. One

such good suggestion of a public policy is to introduce Recognition of Prior Learning to

expand the enrolment into official certification courses. Sector-specific rescue plans can also

be implemented such as skill training for construction workers, reasonable infrastructure

services to home based workers, secure places for street vendors. Coming to the composition

of labour, the number of women employed in the informal sector is more as compared to the

formal sector. Such participation can be further improved by social collectives such as Self

Employed Women’s Association (SEWA) and Working Women’s Forum organize poor

women into secured jobs, provide business guidance and extend low-cost credit. Post Covid

many countries like India, Indonesia, Bangladesh and Nepal have realized the need for social

assistance. They provided wage support and health insurance coverage to senior citizens,

frontline health workers, low-income workers and community health workers. The idea of

work in such sectors being stereotypically characterized by illegality, unfair competition, loss

of economic gain, social insecurity, and environmental degradation, should be discarded. It

should rather be identified for its entrepreneurship sills, resilience, resource efficiency, waste

management skills, innovation, and flexibility.