•Providing social welfare to informal sector workers

The ReformistsTeam co-ordinator:Grishma Goyal

Team Members:Priyanka DasDwijiri RamchiaryThanzeel NazerShyam Sundar

The First Indian National Commission on Labour (1966-69) defined „unorganisedsector workforce as –“those workers who have not been able to organize themselves in pursuit of their common interest due to certain constraints like casual nature of employment, ignorance and illiteracy, small and scattered size of establishments”. Over 94 percent of India's working

population is part of the unorganisedsector. In local terms, organised sector or formal sector in India refers to licensed organisations, that is, those who are registered and pay sales tax, income tax, etc. These include the publicly traded companies, incorporated or formally registered entities, corporations, factories, shopping malls, hotels, and large businesses. Unorganised sector, also known as informal sector or own account enterprises, refers to all unlicensed, self-employed or unregistered economic activity such as owner manned general stores, handicrafts and handloom workers, rural traders, farmers, etc.

•Enterprises in the informal economy are facing obstacles that are sometimes similar to those experienced by formal enterprises. However, informal enterprises are much more vulnerable in relation to these problems.

Problems of Informal

Sector

Infrastructure issues

Economic issues

Institutional issues

Infrastructure issues

– Poor infrastructure such as transport, storage facilities, water, electricity.

– Lack of working premises.

– Poorly developed

physical markets.

Institutional issues– No access to formal training and, as a result, lack of skills in particular as regards basic economic skills and managerial expertise.– Lack of formal schooling sometimes even resulting in illiteracy.– Limited access to land and property rights.– Limited access to formal finance and banking institutions.– Too restrictive or cumbersome taxation systems and labour laws.– Excessive government regulations in areas such as business startup, in particular as regards cumbersome, time demanding and costly procedures for business registration.– Lack of access to official social security schemes.– Lack of information on prices, viability of products, etc.– Fewer market opportunities due for instance to non-compliance to international standards.

Economic issues– Excessive registration and transaction costs of starting or operatingbusinesses.– Lack of opportunities for bulk purchase of inputs.– Low incomes or lack of regular income as household consumptioncompetes for the use of business earnings.– Lack of working capital: credit has to be obtained from informalsources such as friends or relatives or non-banking financialagencies with unfavorable terms.– Insufficient funds do not allow for further investments.

Suggesting Policy reforms

- Reducing the number of business licenses,permits, approvals.

- Streamlining administrative processes.

- Adopting uniform taxes.

- Enhancing access to capital.

Policy Reforms continued…….

Cities in India see a major influx of rural labor in search of jobs (rural labor is primarily dependent on agriculture which is seasonal in nature inmost parts of the country) , those who don’t findthemselves jobs in the formal sector end up in the informal sector

Potential of the backward regions from where out-migration takes place should be tapped. Investment in the development of the region in areas such as irrigation facilities, dry land farming with emphasis on horticulture and allied activities which would create employment.

Formalizing the practice of Contractual Labour.•Compare the compensation structures of the dispatched workers and the formal employees and adjust any discrepancies in compensations and benefits, if necessary, to meet the “equal pay for same work” rule.

•Review the existing labor dispatching contracts and prepare new labor contracts for those dispatched workers who need to be convertedinto regular hires when their dispatching contracts expire.

Protection of Domestic workersDomestic workers are among the most abused and exploited workers in India. Domestic Workers Convention 2011 as adopted by ILO sets minimum standards for domestic workers, India should ratify to them. According to us, RWAs can maintain records of the domestic workers in each locality, which will be the first step towards their minimum security ( as registered workers), and these workers can pool in a certain percentage of their wages to avail loans whenever required. Health, medical benefits can beextended to them by transferring funds to their bank accounts using their adhaar card number.

The root causes of the informal economy are multifaceted, legalization alone is not enough to promote decent work. Strong and effective judicial, political, economic and other market and non-market institutions and equitable access to these institutions are essential. Informal workers and enterprises also need access to resources, information, markets, technology, public infrastructure and social services; they need a "level playing field" (similar rights, facilities and access) vis-à-vis those in the formal economy. Those who are particularly disadvantaged or discriminated against may need special measures. For the poor without property rights, measures to ensure that the legal system records property and titles assets of the poor in standardized, simple and cost-effective ways would enable them to transform their assets into productive capital and investments. Most importantly, those in the informal economy need representation and voice as a fundamental right and an enabling right to enhance their access to a range of other rights at work. It is also important to promote good governance and to reduce the costs to governments of informality and informalization. Often, informal workers and entrepreneurs are subject to harassment, bribery and extortion practiced by corrupt officials and face prohibitive costs and complexity of bureaucratic procedures for setting up and operating enterprises.

Challenges….. Formalising informal sector (Contract Labour) entails huge

amount of capital as well as time investment.

High degree of decentralization in the administrative units of political institutes in India leading to delayed decision-making.

On-going debate and lack of consensus on which categories of workers should be included within the ambit of the unorganised sector.

Almost next to impossible to determine the extent of black market as it is pervasive on the Indian economy

Social security is not applicable for informal sector workers cause of their exclusion from banking systems.

Conclusion…The amount of black money injected every year in our

Indian Economy is unaccounted for and is too pervasive as we know it. Thus, reforming the informal sector is a task that will require persistent efforts and revised intellectual engagement in coming up with sustainable solutions.

More than 90% of our economy is thriving on the informal sector ( vice-versa the informal sector is parasitic to our economy), and hence a radical approach will not work, neither will a slow approach suffice. Macro Solutions have to be figured out no matter how impossible it may seem, it has to be figured out in a way that the effects trickle down to the micro levels.