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Informal Sector in India: Hub for Hope and Change

Informal Sector in India
The socio-economic landscape in India is largely informal. According to the International Labor Organization, close to an estimated 81 percent of all employed people in India are engaged in the informal economy, most of which is in the agricultural sector.

The Informal Sector in India

Contrary to popular belief, the informal sector in India has seen improvements in productivity and employment and, to some extent, wages. The informal sector contributes to the economy and also helps the formal economy; however, informal economy workers continue to earn lower wages, lack social security and have less protection than their peers in the organized sector. The informal sector attracts the workforce because it offers easy access; the formal sector, on the other hand, hosts barriers to entry that are often costly and tedious to get through.

The informal sector in India is socially regulated rather than state-regulated; however, the government is attempting to gather data and regularize the informal sector through the process of digitization. This will allow for effective regulation of cash transfers and provide the government with the tools to better understand the informal sector. By mapping the vast informal sector, the government will have more information about the real growth in India’s economy.

Women Workers in India

Around 94 percent of total women workers are employed in the informal sector, most of whom work as agricultural workers, construction labor and domestic help. Many women are able to gain entry and jobs in this sector, as there are no barriers with regards to skill. This then acts as a way for women to provide for their families. Women find it difficult to enter the organized sector, and their gender exposes them to political, economic and social discrimination, which is why they enter the informal sector.

There is hope that women’s participation in the workforce will reduce gender inequality and that integrating women into the labor force will allow for social and economic empowerment. However, there is a  lack of recognition of the role of women in both their homes and at work.

Equality, Gender and Children

It might appear that there is little gender discrimination in the informal sector, as it is commonplace to see women working alongside men, carrying heavy loads on construction sites or in brick kilns. However, closer examination reveals that amongst the more skilled and higher-paid jobs — such as that of masons, plumbers or carpenters — the workforce is predominantly male.

There are also concerns about the welfare of children —  women are often left with no option but to bring infants to the workplace, where they exist largely unattended. Non-governmental organizations are now setting up mobile creches so that the children of migrant workers receive some care; but this option is limited in its current status as an urban phenomenon, confined to the metropolises.

Goal for Growth

Women’s collectives are agencies which provide women with the space to grow and demand rights. This provides women with legal training to seek social services and adequate work conditions. In recent years we see greater activity here, especially in the field of legal aid, and women-only police stations make it easier for women to seek justice.

Some areas, however, remain untouched; domestic workers, for instance, have no written contracts, they enjoy no mandatory weekly off days nor any regulated working hours. Thus. one can see that there is a need to create regulations in the informal sector in India to measure growth, empower women and improve working conditions.

– Isha Kakar
Photo: Flickr

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Sustaining Graduation: Impoverished Women in India

Impoverished Women in India
The impoverished women in India can receive a new lease of life through the CGAP-Ford Foundation Program — an opportunity that gives women with little means the chance to become self-sustainable. This program was conducted in 2009 to elevate impoverished women in India to a standard livelihood.

Graduating to Sustainable and Sustained Living

Ultra-poor women are identified by the village community and are often given an asset such as running a grocery store or being in charge of a tailoring machine to live a sustained life. The Graduation Program aims to graduate impoverished women out of poverty into a sustained living.

The program was called ‘Targeting the Hard Core Poor’ (THP) which was piloted by Bandhan-Konnagar for 300 women in the districts of West Bengal, India. The program provided sustainable entrepreneurship opportunities through a sequenced support — a productive asset such as livestock or supplies for trade, technical skills training, savings support, temporary cash or in-kind support to tide over immediate consumption needs, and regular mentoring and coaching over 18-24 months.

These resources helped elevate the impoverished women in India to be engaged in sustainable livelihoods and ultimately graduate out of extreme poverty.

This program was initially used by BRAC in Bangladesh. Ten pilots were implemented in eight countries from 2006 to 2009 to capture lessons of best practice in the fields of social protection and microfinance. The graduation program is designed to understand how livelihoods, microfinance and safety nets can be linked to elevating poor women out of poverty.

Models for Elevation Out of Poverty

In the standard model of elevating people from below poverty line, the state provides a poor woman with employment for 58 days a year, under the 100-day job guarantee scheme at a daily wage of Rs169. The cost of this model is about Rs 20,00o over two years.

The alternative model is when the state provides a woman with an asset and monitors her progress while simultaneously giving her a daily stipend for her consumption needs and ensuring basic health care for the family. Such alternative programs help women come out of poverty much more equipped than rural job schemes suggests.

The researchers assessed the effectiveness of the graduation program for 21,000 impoverished women in India, Pakistan, Ghana and Peru, and compared it to the impacts of standard livelihood schemes.

Standard vs. Alternative

“Unlike the standard approach of handing the benefits, credit or cash, the attempt to set up entrepreneurial abilities among impoverished women in India leads to welfare,” stated Chandra Shekhar Ghosh, chairman of Bandhan, to a publication. Beneficiaries of the standard program tend to get government assistance whereas the alternative approach’s beneficiaries are not required to repay the cost of the asset.

The program report suggested that after five and a half years from the program’s end in West Bengal, beneficiaries who participated in the program saw a 46 percent increase in consumption as compared with households that did not receive the program.

“Indicators like total savings, the perception of economic security, and time spent productively for program beneficiaries also increased relative to the households that did not receive the programme. They also had improved food security, accumulated more assets, and had better access to credit,” states the report.

A Four-Fold Improvement

THP also demonstrated that for every rupee spent on the program, impoverished households saw Rs 4.33 in benefits — a four-fold improvement. The program is in its tenth year of implementation in India, and has been scaled up by Bandhan-Konnagar to nine states in India. Now, the program reaches over 61,000 beneficiaries with funding support from state governments, multilateral and CSR foundations.

Tangible Results

Bandhan distributed livestock worth Rs 4500 to 300 families below the poverty line and paid a daily stipend of Rs 21 a day so that they did not sell off their capital asset. At the end of the program, 94 percent of families could generate enough income to be eligible for credit through the microfinance wing.

The impoverished women in India have benefitted from the “Graduation Program” where these women monitor their progress through their entrepreneurial capabilities. This program has helped the impoverished women of India move up the ladder and become more independent.

– Preethi Ravi
Photo: Flickr

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Women in the Workplace in India: The Secret to Development

Women in the Indian Workplace
India is the world’s second largest populated country with over 1.3 billion people living within its borders. Of these 1.3 billion, 60 percent live in poverty. Indian poverty is further exacerbated by a growing income inequality. According to the British charity, Oxfam, only the top 10 percent of people in India own the majority of the country’s wealth (80 percent). This has real-world consequences; three out of every four Indians still live in small rural villages, and seven out of twenty are illiterate. These statistics present serious challenges for India’s development.

If the majority of India’s population is too poor to buy consumer goods, the economy will not be able to grow as quickly. Complex as the issue of poverty in India may seem, there is one relatively simple and effective solution; fully incorporate women in the workplace in India.

How Women in the Workplace in India Will Help the Economy

According to Catalyst, an international nongovernmental organization (NGO) that works to represent women’s interests in the workplace, women access higher education in India at the same rates as men (27 percent). However, the labor statistics are a different story. Only about 29 percent of Indian women work compared to 82 percent of Indian men. This leaves the Indian economy at a developmental disadvantage. If the rate of women in the workplace in India jumped to a mere 40 percent by 2025, India could add $700 billion to its GDP.

Unfortunately, according to The Economist, instead of increasing, the rate of female participation in India’s labor force has been decreasing in recent years. Since 2005, India’s labor force has dropped at least nine percentage points, despite overall population growth. This leaves India with one of the largest untapped worker populations in the world. If Indian women worked just as often as men, the nation would have over 200 million extra workers. According to The International Monetary Fund, this shift would grow the nation’s economy by 27 percent, effectively making India a developed country.  

Why Women in India Are Not Working

There are several factors influencing the drop in women in the workforce. Firstly and primarily, there is the issue of cultural bias against women working. In India, especially after the marriage, most women are expected to remain in the home. In fact, women working is considered a mark of a lower social status. This is why, as a whole, as Indian households become wealthier, fewer women are participating in the workforce.

Secondly, there is the issue of maternal responsibility. Indian mothers are expected to shoulder the burden of household duties on their own. Employers have to provide 26 weeks of paid maternity leave, but there is have no obligation at all to provide paternity leave. On top of this, employers are deterred by the requirement to provide childcare for women returning to work. When combined with the high expectation of caring for the family, these factors create a “motherhood penalty”  for working women.

Finally, regardless of gender, many traditional Indian jobs are disappearing because of industrialization. Because of Indian law, unlike in other developing countries, they aren’t being replaced by women-friendly factories. This scarcity further reduces the opportunities for women in the Indian workplace. A 2012 poll found that when jobs are harder to come by, 84 percent of Indians believe men are more entitled to have them.

How India Is Working To Include Women in the Workforce

The obstacles created by culture, politics and the economy may seem insurmountable, but various organizations have already been putting forth various solutions. The Prime Minister, Narendra Modi launched two programs on the anniversary of former, late, female leader Jayalalithaa. One provides working women with scooters, making their commutes to work easier and safer; the other plants 70 lakh trees to honor the 70 years since Jayalalithaa’s birth.

The Prime Minister also launched Make in India (2014) and Startup in India (2016) in order to not only invest in the people of India by helping to fund small businesses but also to provide jobs that these businesses would bring to India. Both of these initiatives provide opportunities for women to enter the workforce.

Furthermore, another government organization, Women Entrepreneurship Platform (WEP), was launched to encourage women’s participation in business by offering support and collaboration with industry partners while NGOs such as CARE India are mobilizing to support the country’s working women by empowering individuals to be role models for their communities.

In the future, in order to ensure the development of these organizations, India should continue to work to change the social norms that have surrounded women regarding work and maternal responsibilities. The Indian government should look deeply into their development plans and aid working women by changing policies that disproportionately harm them. Only when there is a more balanced amount of women in the workplace in India, can the country develop fully.

– Lydia Cardwell
Photo: Pixabay