Union Membership And Earnings In India Informal Economy
Introduction:
Over three-fourths of India’s labour force works within the informal economy. Amongst non-agricultural workers, the share of the informal workforce has grown from 68 percent in 1999-2000 to 84 per cent in 2009 -10 (ILO, 2012). Globally, the informalization of work has been assumed to lead to the demise of organized labour, but evidence from India indicates that large and growing numbers of informal workers belong to officially-recognised trade unions. In this paper, I review the literature on collective organization amongst informal workers and analyze large-n national employment survey data to examine unionization in India’s informal economy.
Women and socially disadvantaged groups are less likely to belong to unions, while better-educated workers have higher odds of being union members. Widespread informality in India is unlikely to disappear. India’s high GDP and urban growth in recent decades have not been associated with a concomitant expansion in formal employment. Formal manufacturing and services employ a small proportion of Indian workers, and, as elsewhere in the world, technological changes as well as a mismatch in skills have resulted in large numbers of “surplus” workers.
The 50 million or so unskilled workers who will join India’s urban workforce in the coming decade will most likely be absorbed in the informal economy. Given the magnitude of the informal workforce in India, governmental efforts to secure broad-based improvements in living standards must address working conditions and prospects for informal workers. Based on my findings, I argue that labour organization within the informal economy will play a critical role in this regard, by pushing the state to intervene in support of workers, enact and enforce legislation and implement welfare programmes for informal workers.
The informalization of work:
A growing informalization in the workforce has been observed in recent years in both rich and poor countries, related to the re-organization of production from a factory-based Fordist system to one that involves global networks of sub-contracting. Sub-contracting, particularly in labour-intensive industries with varying demand such as garments, allows firms to reduce costs by producing inputs ‘justin-time’ rather than accumulating stocks of finished goods.
Labour organization in the Informal Economy:
While much scholarship on the informal economy has focused on its relationship to global capitalism, examined the effects of state regulation, or investigated the workings of local informal economies, worker organization within the informal economy has received limited academic attention. The existence of organized, collective action within the informal sector challenges core theoretical propositions about the nature of informal work.
Concepts and Definitions:
The Informal Economy Sector:
For purposes of analysis, I distinguish between informal and formal sector workers. While this distinction does not reflect theoretical advances in the literature, where the formal/informal sector dichotomy has been critiqued, it is useful for analytical purposes and captures the dimensions of the informal economy important for this study.
Informal Employment:
As per the operational definition employed by the ILO employees are considered to have informal jobs if their employment relationship is, in law or in practice, not subject to national labour legislation, income taxation, social protection or entitlement to certain employment benefits (advance notice of dismissal, severance pay, paid annual or sick leave, etc.)
Informal Workers:
I construct my sub-sample of informal workers based on the above definition. Informal workers are defined according to ‘status of work’ and include
(i) self-employed workers, who own and operate one-person business, alone or with the help of unpaid workers
(ii) owner-employers of household or small enterprises
(iii) paid dependent workers in household enterprises
(iv) casual wage workers
(v) irregular workers including contract workers, home-workers and temporary and part-time workers working in formal or informal enterprises with less than 20 workers.
Self-Employed Workers/Own-Account workers:
“Self-employed workers”, who constitute the bulk of the informal workforce, are conceptually ambiguous. In common usage, self-employed workers are assumed to have autonomy (they decide how, where and when to produce) and economic independence (in terms of choice of market, scale of operation and finance).
Employment Characteristics:
These refer to the work relations and employment conditions of informal workers. These are categorised according to modes of payment (regular pay, daily wages or piece-rates); contract types (no written contract, short-term or long-term) regularity of work (temporary or casual work, full time or part time work; primary or subsidiary work); place of work (in factories or workshops, at home, in the street, or without a fixed location).
Informal Worker Organizations:
Informal Worker Organizations considered in this analysis are those formally registered with state authorities. Registered trade unions or associations may be affiliated to larger central trade unions or independent, organized by industry, work status, locality or community, gender segregated or mixed. The survey data does not, however, capture these distinctions.
Conclusion:
My analysis of national survey data finds a statistically-significant relationship between union membership and earnings in India’s informal economy, at the national level and across different categories and classes of workers. Membership in trade unions is associated with significant earnings advantages, suggesting that informal worker unions may play a similar role to formal unions in improving the material conditions of their members. Informal worker associations, as suggested by the literature, may play a role in lobbying the state to set or enforce minimum wage regulations. In occupations such as street vending, construction work or transport, membership in unions is related to gaining access to more remunerative work opportunities.
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