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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.
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