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Scope and Objective

Session Number: Session 5a (Parallel) “ Measuring the Informal Economy in Developing Countries ” September 24, 16:00-17:30 Informal Sector and Informal Workers in India Ajaya Kumar Naik. Scope and Objective. Objective of the paper: to study informal sector employment Informal employment

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Scope and Objective

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  1. Session Number: Session 5a (Parallel) “Measuring the Informal Economy in Developing Countries”September 24, 16:00-17:30Informal Sector and Informal Workers in India Ajaya Kumar Naik

  2. Scope and Objective • Objective of the paper: • to study • informal sector employment • Informal employment • across sectors, states, industry group etc in India using the new definition of informal sector and informal worker proposed by National Commission for Enterprises in the Unorganised Sector (NCEUS) • to show • that the new definition is more suitable to study the informal sector. • Data Sources • 5-yearly “Employment- Unemployment” surveys of NSSO conducted in 1999-2000 and 2004-05

  3. Historical perspectives • Keith Hart introduced the term in September 1971 at a conference on urban employment in Africa (Wage vs. self employed) • ILO employment mission to Kenya in 1972 with its report “Employment Incomes and Equality” • 15th ICLS Resolution evolved a conceptual framework and guidelines for the collection of statistics on informal sector • 1993 SNA

  4. International definitions • SNA 1993 and 15th ICLS: • the informal sector consists of units engaged in the production of goods or services with the primary objective of generating employment and income to the persons concerned. • These units typically operate at a low level of organization, with little or no division between labour and capital as factors of production and on a small scale. • Labour relations - where they exist - are based mostly on casual employment, kinship or personal and social relations rather than contractual arrangements with formal guarantees. • The informal sector forms part of the household sector as household enterprises or, equivalently, unincorporated enterprises owned by households • (there are few basic differences in the definition between SNA and ICLS) • Market/use of labour/terminology of sector)

  5. Indian perspectives • No single definition of informal/unorganised sector in India • Researchers adopted different criteria to identify informal sector • Different organizations of India like NSSO, DGET, CSO used varying definitions of informal/unorganised sector depending on the specific requirements of each organisation

  6. Definitions • NSSO: • Manufacturing • enterprises not covered under ASI (less than 10/20) • Services • enterprises, except those run by the Government and corporate • Informal sector survey in 1999-2000 (non-agricultural enterprises) • proprietary or partnership (excluding ASI) • National Accounts: • Excluding the coverage of organized sector. • DGET, M/Labour: • Units with over 25 workers and all public sector units - organised

  7. NCEUS definition-approach

  8. Definition • “The informal 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”. • all workers in the agricultural sector except those in plantations have been regarded as informal sector workers in agriculture • (generally informal sector is for non-agriculture, but NCEUS has included this)

  9. Informal Worker • informal job status were excluded • An enterprise based definition of the informal sector will not be able to capture all aspects of the increasing “informalisation” of employment, leading to various forms of informal employment even in the formal sector NCEUS • “Informal workers consists of those working in the informal 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”

  10. Conclusions • The concept of informal sector and informal workers proposed by NCEUS is more appropriate in the context of Indian statistical system and it better compatible with international definition of informal sector.

  11. Few statistics • In 2004-05 394.90 million workers in informal sector in India • contributed 86% of total workers. • Over the year the proportion of rural informal sector workers decreased and the opposite happened in urban areas. • The proportion of informal sector workers in the agriculture sector declined over the years but in industry and services sector the proportion of informal sector workers increased between 1999-2000 and 2004-05. • There is positive and significant correlation between inform sector employment and the incidence of poverty in the states. The percentage share of informal sector workers in the poor states is more than developed states.

  12. Informal workers • In 2004-05, the estimated number of informal workers was 422.61 million and it was 361.74 million in 1999-00. • Informal workers consist of 92.38% of total workers in India in 2004-05. • Within • Informal sector workers • 99% are informal workers • Formal sector workers • 47% are informal workers • This indicates that casualisation or the amount of contractual labour increases in the formal sector

  13. THANKS

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