URBAN EMPLOYMENT IN INDIA: RECENT TRENDS & FUTURE PROSPECTS

1. URBAN EMPLOYMENT IN INDIA: RECENT TRENDS & FUTURE PROSPECTS Marty Alter Chen Lecturer in Public Policy, Harvard Kennedy School International Coordinator, WIEGO Network Workshop on Employment - Global & Country Perspectives NYU Stern School of Business & Indian Council for Research in International Economic Relations September 26-27, 2011

2. REMARKS TODAY • Employment Challenge in India • Urban Employment in India • Inclusive Cities and Urban Livelihoods • Rethinking Employment Policies

3. OVERARCHING CONCERN India is a fast-growing economy BUT… • employment is not growing as fast as output • deep pockets of poverty persist • inequality is growing

4. BASIC ARGUMENT • The vast majority of the Indian workforce – both urban and rural - is informally employed • Informal employment tends to be associated with lower earnings and higher risks than formal employment • Increasing earnings and reducing risks in the informal economy are key to reducing poverty and inequality • Yet exclusionary urban policies tend to decrease earnings and increase risks in the informal economy

5. # 1 – Employment Challenge in India

6. EMPLOYMENT CHALLENGE # 1:QUANTITY OF EMPLOYMENT • Employment growth rate = 2.85% per annum (1999-2005) • mostly in informal employment, including informalization of wage employment in the public and private sectors • Unemployment • low rate overall (4%) • but higher for women (7%) than men (4%) • and very high among urban youth (20% young men, 30% young women) • Underemployment = real concern • common among informal workers – who represent 93% of total workforce + 80% of urban workforce

7. EMPLOYMENT CHALLENGE # 2:QUALITY OF EMPLOYMENT • Shift in Type of Employment • wage employment: decline • self-employment: significant increase (52.5% of total employment in 2004-5) • Fall in Real Wages: from 1999 to 2005 • Low Self-Employment Earnings – aroundhalf of all self-employed in 2004-5 thought their work was not remunerative • 40% of rural self-employed – earned less than 1,500 rupees per month • 33% of urban self-employed – earned less than 2,000 rupees per month Source: NSS surveys cited in Ghosh et al 2007, Paul et al 2009

8. # 2 – Urban Employment in India Two Story Lines: Formal vs .Informal Employment Male vs. Female Employment

9. URBAN WORKING AGE POPULATION (15+)2004-2005 (%) MF T Economically Active 79 24 54Unemployed4 7 4 Employed969396 Economically Inactive 21 76 46 Note: Unemployed & Employed = percentage of Economically Active Source: based on data tabulations by G. Raveendran

10. URBAN EMPLOYED BYEMPLOYMENT TYPE, STATUS & UNIT2004-2005 (%) AGFEIEHHTotal Total Urban Employed 9 30 58 3 100 Formal4 62 1 1 20 Informal 96 38 99 99 80 Urban Wage Workers 3 29 21 3 55 Formal 5 62 4 1 34 Informal 94 38 96 99 66 Urban Self-Employed 6 2 38 0 45 Employers 4 22 5 0 5 Own Account Workers 52 55 73 0 70 Contr. Family Workers 44 23 22 0 25 Notes: AG = agriculture, FE = formal enterprise, IE = informal enterprise, HH = household Sub-categories in italics = percentage of each category in bold Source: based on data tabulations by G. Raveendran

11. URBAN EMPLOYED (Male & Female) BYINDUSTRY GROUP & EMPLOYMENT TYPE2004-2005 (%) Male Female FI FI Agriculture <1 6 <1 18* Construction <1 9 0 4 Manufacturing 5 19 2 26* Home-Based 1 17 7* 70* Trade <1 24 <1 10 Street Traders 3 27 0 59* Non-Trade Services 14 21 13 28* Transport 18 39 5 3 Domestic Workers <1 1 <1 41* TOTAL URBAN EMPLOYED 21 79 15 84* Note: F = formal, I = informal * = higher percentage of female, than of male, workers Sub-categories in italics = percentages of categories in bold Source: based on data tabulations by G. Raveendran

12. FOUR GROUPS OF URBAN INFORMAL WORKERS(2004-5) % of Urban Employment% of Urban Informal Employment TotalMaleFemaleTotalMaleFemale Domestic Workers 4 1 14 5 2 17 Home-Based 13 9 31 16 11 38 Workers Street Vendors 7 7 7 9 9 9 Waste Pickers .05 .05 .05 .1 .1 .1 ALL FOUR 24 17 52 30 22 64

13. # 3 - Future Prospects

14. URBAN EMPLOYMENT IN INDIA:FUTURE PROSPECTS • Urbanization in India: share of India’s population living in urban areas • 2000: 28 per cent (290 million) • 2008: 30 per cent (340 million) • 2030: 40 per cent (590 million) Source: McKinsey Global Institute 2010 • Urban Planning in India: • in the past: general tolerance for informal livelihoods & settlements • today: growing intolerance of informal livelihoods & settlements

15. EXCLUSIONARY URBAN POLICIES :THREATS TO URBAN LIVELIHOODS • Urban Livelihoods: • impacted by municipal policies + regulations + practices – more so than national policies • overlooked or undermined by municipal authorities + urban planners • excluded from + destroyed by urban renewal schemes • Key Urban Informal Groups – key threats to livelihoods • home-based producers: lack of basic infrastructure services + single-use zoning regulations • street vendors: bribes + confiscation of goods + evictions • waste pickers: lack of access to waste + exclusion from solid waste management

16. INCLUSIONARY URBAN POLICIES: PROMISING EXAMPLES • Street Vendors • Government of India - Supreme Court judgment + national policy + recent Supreme Court ruling calling for national law • Bhubaneshwar Municipality, India - designated vending zones + licensing in consultation with federation of street vendors • Waste Pickers • Government of India - National Environmental Policy (2006) + National Action Plan for Climate Change (2000) recognize waste pickers’ contribution to environment/carbon reduction + right to collect and recycle waste • Pune Municipality, India - ID cards to waste pickers + contracts to waste pickers for door-to-door collection of waste

17. INCLUSIVE CITIES:GUIDING PRINCIPLES • India is a hybrid economy – both modern-traditional and formal-informal – and should remain so. • The size, composition, and contribution of the informal economy needs to be fully counted in official statistics and fully valued by policy makers. • Informal workers, activities, and units should be included in the modernization of the economy. • Informal workers need to have representative voice in rule-setting and policy-making bodies.

18. INCLUSIVE CITIES:WHY? WHY NOW? • Why? • key pathway to reducing urban poverty + inequality • chance for India to distinguish itself • Why Now? • “window of opportunity” - in the wake of the global economic crisis • “moment of urgency” - fast-changing exclusionary cities

19. # 4 – Rethinking Employment Policies

20. RETHINKING EMPLOYMENT POLICES • Beyond jobs + good jobs = employment + livelihoods • Beyond employment + unemployment = underemployment + quality of employment • Beyond labour markets = financial markets + markets for goods & services • Beyond labor market policies/regulations = policies/regulations re goods & services + government taxation & expenditure/procurement • Beyond employer-employee relationship = commercial relationships • Beyond supply & demand: focus on institutions • market transactions & commercial relationships • sub-sector or value chain dynamics • sector policies, including urban planning & policies