Widening Exclusion: Informalisation in the Indian Economy

1
Widening Exclusion Informalisation in the
Indian Economy

• Ravi Srivastava

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Emp. In Organised Manufacturing (ASI)
3
Organised Sector Employment (DGET)
4
of Emoluments Wages to GVA in Org. Man.
5
Share of Unorganised Sector in Employment and
Value Added All India (DGET, CSO)
Year Share of Unorganised Sector in (per cent) Share of Unorganised Sector in (per cent)
Employment Gross Domestic Product
1 2 3
1977-78 92.2 68.1
1982-83 92.0 66.4
1987-88 92.2 63.0
1990-91 92.2 63.8
1993-94 92.7 62.3
1999-2000 93.0 59.2
2002-03 - 56.7
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NCEUS definition

• Unorganised Sector
• The unorganized sector consists of all
  unincorporated private enterprises owned by
  individuals or households engaged in the sale and
  production of goods and services operated on a
  proprietary or partnership basis and with less
  than ten total workers
• Unorganised Worker
• Un-organized workers consist of those working
  in the un-organized sector or households,
  excluding regular workers with social security
  benefits provided by the employers and the
  workers in the formal sector without any
  employment and social security benefits provided
  by the employers

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Total workforce in agriculture and
non-agriculture sector by activity status in
1993-94, 1999-2000 and 2004-05 (million)
Activity Status Agriculture Non-agriculture Total
1993-94 1993-94 1993-94 1993-94
Self-employed 143.19 60.94 204.13
Regular wage workers 3.31 47.83 51.13
Casual employee 91.84 27.22 119.06
Total 238.34 135.99 374.33
1999-2000 1999-2000 1999-2000 1999-2000
Self-employed 137.28 70.93 208.21
Regular wage workers 3.46 55.59 59.05
Casual employee 96.93 32.57 129.50
Total 237.67 159.09 396.76
2004-05 2004-05 2004-05 2004-05
Self-employed 166.18 92.07 258.25
Regular wage workers 2.83 66.72 69.55
Casual employee 89.91 39.75 129.67
Total 258.93 198.54 457.46
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Growth rate of workforce in agriculture and
non-agriculture by activity status between 50th,
55th and 61st NSSO Round
Activity Status Agriculture Non-agriculture Total
1993-94 and 1999-2000 1993-94 and 1999-2000 1993-94 and 1999-2000 1993-94 and 1999-2000
Self-employed -0.70 2.56 0.33
Regular wage workers 0.75 2.54 2.43
Casual employee 0.90 3.03 1.41
Total -0.05 2.65 0.97
1999-2000 and 2004-05 1999-2000 and 2004-05 1999-2000 and 2004-05 1999-2000 and 2004-05
Self-employed 3.89 5.35 4.40
Regular wage workers -3.91 3.72 3.33
Casual employee -1.49 4.07 0.03
Total 1.73 4.53 2.89
1993-94 and 2004-05 1993-94 and 2004-05 1993-94 and 2004-05 1993-94 and 2004-05
Self-employed 1.36 3.82 2.16
Regular wage workers -1.40 3.07 2.84
Casual employee -0.19 3.50 0.78
Total 0.76 3.50 1.84
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Employment in the Organised Unorganised Sector,
1999-00 2004-05
  Unorganised sector Organised sector Total
Figure (million) Figure (million) Figure (million) Figure (million)
1999-2000 342.64 54.12 396.76
2004-05 394.90 62.57 457.46
Percentage of sector to total Percentage of sector to total Percentage of sector to total Percentage of sector to total
1999-2000 86.36 13.64 100.00
2004-05 86.32 13.68 100.00
10
Employment Growth Rates by Economic Activity and
Sector
Economic Activity Unorganised Sector Organised Sector Total
Industry 6.13 4.79 5.73
Services 4.48 1.70 3.67
Non-agriculture 5.17 3.02 4.53
Total 2.88 2.94 2.89
Source NSSO 55th 61st Round Survey
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Employment Growth Rate between 2000 and 2005 as
per DGET
Major Industry Group Private Public Organised Private Public
Argiculture, hunting etc. 1.69 -0.71 0.85
Mining and quarrying -0.50 1.88 1.69
Manufacturing -2.46 -5.89 -3.21
Electricity, gas and water 3.63 -1.89 -1.63
Construction -2.98 -3.54 -3.53
Wholesale and retail trade 2.59 2.45 2.54
Transport, storage communications 3.96 -2.21 -2.05
Finance, insurance, real estate etc. 7.88 1.67 3.13
Community, social personal services 1.10 -1.09 -0.75
Total -0.45 -1.39 -1.10
Source DGET
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Employment Growth Rate between 1999-2000 and
2004-05 as per ASI
  Manufacturing Total ASI Sector
Total Worker 0.57 0.68
Total Persons Engaged 0.83 0.99
Source ASI summary results for factory sector
1999-2000 2004-05
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Employment Elasticity between 1999-2000 and
2004-05
Industry Group Unorganised sector Organised sector Total
Agriculture 1.50 0.19 1.09
Industry 1.07 0.69 0.87
Services 0.72 0.19 0.48
Non-Agr. 0.84 0.37 0.62
Total 0.71 0.36 0.48
Source Employment data taken from NSSO 55th
61st Round and GVA estimated by NCEUS using
Modified Method of apportioning
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Estimated number of workers by sector and type of
worker in 1999-2000 and 2004-05 (million)
  Informal workers Formal workers Total
1999-2000 1999-2000 1999-2000 1999-2000
Unorganised sector 341.28 1.36 342.64
Organised sector 20.46 33.67 54.12
Total 361.74 35.02 396.76
2004-05 2004-05 2004-05 2004-05
Unorganised sector 393.47 1.43 394.90
Organised sector 29.14 33.42 62.57
Total 422.61 34.85 457.46
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Estimated number of non-agriculture workers by
sector and type of worker in 1999-2000 2004-05
(m.)
worker Informal workers Formal workers Total
1999-2000 1999-2000 1999-2000 1999-2000
Unorganised 109.37 1.06 110.43
Organised 17.58 31.08 48.66
Total 126.95 32.13 159.09
2004-05 2004-05 2004-05 2004-05
Unorganised 140.65 1.42 142.07
Organised 25.89 30.58 56.47
Total 166.54 31.99 198.54
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Percentage distribution of non-agriculture
workers by sector and type of workers to total
non-agriculture workers
worker Informal workers Formal workers Total
1999-2000 1999-2000 1999-2000 1999-2000
Unorganised 99.04 0.96 100.00
Organised 36.13 63.87 100.00
Total 79.80 20.20 100.00
2004-05 2004-05 2004-05 2004-05
Unorganised 99.00 1.00 100.00
Organised 45.85 54.15 100.00
Total 83.89 16.11 100.00
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Comparison of Organised Sector Employment (lakhs)
    Manufacturing Manufacturing Manufacturing All All All
    Formal Informal Total Formal Informal Total
ASI 99-00 ---- ---- 81.8 ---- ---- ----
  04-05 ---- ---- 83.8 ---- ---- ----
DGET 99-00 ---- ---- 67.4 ---- ---- 280.9
  04-05 ---- ---- 57.2 ---- ---- 264.6
NSS 99-00 68.8 62.5 131.6 336.7 204.6 541.2
  04-05 60.6 100.6 160.6 334.2 291.4 625.7
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Growth rate of workers by sector and type of
worker between 1999-2000 and 2004-05 ()
Sector Informal workers Formal workers Total
Unorganised sector 2.89 1.10 2.88
Organised sector 7.33 -0.15 2.94
Total 3.16 -0.10 2.89
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Employment growth rate between 1999-2000 and
2004-05 by major industry group and sector
Major Industry Group Organised Sector Organised Sector Organised Sector
Major Industry Group Informal worker Formal worker Total
Agriculture 2.46 1.89 2.20
Manufacturing 9.98 -2.68 4.11
Electricity 5.53 2.82 3.16
construction 7.15 2.47 6.58
Trade 1.57 -10.98 -3.68
Hotels 12.96 1.64 8.44
Transport 4.96 -0.22 1.26
Finance 21.75 3.07 5.49
Real estate 17.50 14.97 15.94
Education 16.66 3.22 6.22
Health 15.66 1.69 4.89
Non-agriculture 8.05 -0.32 3.02
Total 7.33 -0.15 2.94
Source NSSO 55th 61st Round Survey
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Employment Growth Rate of Informal and Formal
Workers by Economic Activity, 1999-00/2004-05
Economic Activity Informal Workers Formal Workers Total Workers
Industry 6.66 -0.60 5.73
Services 4.71 0.12 3.67
Non-agriculture 5.58 -0.09 4.53
Total 3.16 -0.10 2.89
Source NSSO 55th 61st Round Survey
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Growth rate of organised sector informal-formal
workers by sex and industry group between
1999-2000 2004-05
Sex   Industry Services Non-agriculture
Male Informal 13.45 9.92 11.61
Male Formal -1.80 -0.82 -1.10
Male Total 3.33 1.15 1.88
Female Informal 15.41 15.32 15.35
Female Formal -1.84 1.75 1.19
Female Total 6.24 5.52 5.67
Persons Informal 13.74 11.39 12.42
Persons Formal -1.81 -0.36 -0.75
Persons Total 3.65 2.01 2.53
Source NSSO 55th 61st Round
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Growth rate of organised sector informal-formal
workers by area and industry group between
1999-2000 2004-05
Area  Workers Industry Services Non-agriculture
Rural Informal 14.22 13.64 13.88
Rural Formal -2.45 -0.72 -1.13
Rural Total 4.20 2.65 3.09
Urban Informal 13.49 9.96 11.58
Urban Formal -1.57 -0.19 -0.58
Urban Total 3.42 1.69 2.26
Rural Urban Informal 13.74 11.39 12.42
Rural Urban Formal -1.81 -0.36 -0.75
Rural Urban Total 3.65 2.01 2.53
Source NSSO 55th 61st Round
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Incremental employment between 1999-2000
2004-05 (lakh)
Major Industry Group Organised Sector Organised Sector Organised Sector
Major Industry Group Informal worker Formal worker Total
Agriculture 3.72 2.55 6.27
Manufacturing 38.09 -8.75 29.33
Electricity 0.39 1.36 1.75
construction 16.54 0.79 17.33
Trade 0.98 -4.97 -3.99
Hotels 2.49 0.21 2.70
Transport 3.04 -0.33 2.71
Finance 2.79 2.61 5.39
Real estate 3.00 4.12 7.12
Administration 1.09 -10.27 -9.18
Education 13.11 8.67 21.78
Health 3.24 1.16 4.40
Non-agriculture 83.14 -4.99 78.15
Total 86.86 -2.44 84.42
Source NSSO 55th 61st Round
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Percentage distribution of incremental employment
between 1999-2000 2004-05 (lakh)
Major Industry Group Organised Sector Organised Sector Organised Sector
Major Industry Group Informal worker Formal worker Total
Agriculture 4.41 3.02 7.43
Manufacturing 45.12 -10.36 34.74
Electricity 0.46 1.61 2.07
construction 19.59 0.94 20.53
Trade 1.16 -5.89 -4.73
Hotels 2.95 0.25 3.20
Transport 3.60 -0.39 3.21
Finance 3.30 3.09 6.38
Real estate 3.55 4.88 8.43
Administration 1.29 -12.17 -10.87
Education 15.53 10.27 25.80
Health 3.84 1.37 5.21
Non-agriculture 98.48 -5.91 92.57
Total 102.89 -2.89 100.00
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Increase growth rate of employment in the OS,
by activity type
Activity Status Informal workers Formal workers Total
Increase in employment between 1999-2000 2004-05 (million) Increase in employment between 1999-2000 2004-05 (million) Increase in employment between 1999-2000 2004-05 (million) Increase in employment between 1999-2000 2004-05 (million)
Self-employed 0.23 0.59 0.82
Regular wage employee 6.01 -1.09 4.92
Casual labour 2.07 0.00 2.07
Total 8.31 -0.50 7.82
Growth Rate between 1999-2000 2004-05 () Growth Rate between 1999-2000 2004-05 () Growth Rate between 1999-2000 2004-05 () Growth Rate between 1999-2000 2004-05 ()
Self-employed 8.95 6.46 7.01
Regular wage employee 12.42 -0.75 2.53
Casual labour 3.99 0.00 3.99
Total 8.05 -0.32 3.02
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Growth of Regular Wage Employee by type of work
and sector between 1999-2000 2004-05
 Sector Industry Services Non-agriculture
Unorganised sector Informal 5.25 6.19 5.94
Unorganised sector Formal 6.55 5.7 5.99
Unorganised sector Total 5.34 6.17 5.94
Organised sector Informal 13.74 11.39 12.42
Organised sector Formal -1.81 -0.36 -0.75
Organised sector Total 3.65 2.01 2.53
Total worker Informal 8.96 7.61 8.06
Total worker Formal -1.39 -0.14 -0.48
Total worker Total 4.2 3.51 3.72
Source NSSO 55th 61st Round
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Average Daily Earning of Workers in the Age Group
15 to 59 Years (1993-94 Prices)
Agriculture Agriculture Non-Agriculture Non-Agriculture
Category Status 1999-00 2004-05 1999-00 2004-05
Rural Male Regular 44.2 41.1 90.8 88.2
Rural Male Casual 25.5 27.8 37.5 39.5
Rural Female Regular 31.0 31.5 91.3 51.6
Rural Female Casual 18.0 19.3 23.5 25.8
Urban Male Regular 92.9 52.1 106.5 101.4
Urban Male Casual 30.0 28.1 39.3 38.2
Urban Female Regular 38.9 39.6 97.3 76.5
Urban Female Casual 19.4 17.2 24.7 23.7
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Growth rate of Average Daily Earning of Workers
in the Age Group 15 to 59 Years (1993-94 Prices)
Category Status Agriculture Non-Agriculture
Rural Male Regular Salaried -1.44 -0.58
Rural Male Casual workers 1.74 1.04
Rural Female Regular Salaried 0.32 -10.79
Rural Female Casual workers 1.40 1.89
Urban Male Regular Salaried -10.92 -0.98
Urban Male Casual workers -1.30 -0.57
Urban Female Regular Salaried 0.36 -4.70
Urban Female Casual workers -2.38 -0.82
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Wages of Regular Workers (US. IW/OS, FW/OS),
2004-05
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Conclusion

• Only one time period results available at present
  from the NSSO. Issues with the base year (99-00).
• Variance with alternative estimates. Both size
  and growth of employment in Organised Sector is
  larger.
• While under coverage may be one issue, more
  significant issue related to informal workforce.
• Growth in informal workforce, including sizeable
  numbers of regular workers low paid without
  protection but a pointer to changing functional
  and skill requirements.
• Institutional and labour rigidities have not
  deterred the OS from increasing employment of
  flexible labour.
• Along with the Unorganised Sector issues, quality
  of employment and lack of employment and social
  protection emerging as a significant issue.