URBAN EMPLOYMENT IN INDIA: TRENDS & TRAJECTORIES Marty Alter Chen Lecturer in Public Policy, Harvard Kennedy School International Coordinator, WIEGO Network “Inclusive Cities in India” Workshop June 7-8, 2011 New Delhi

REMARKS TODAY Employment Challenge in India Urban Employment in India Exclusionary Cities = Threat to Urban Livelihoods Inclusive Cities = Alternative Paradigm

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

UNDERLYING ASSUMPTIONS The vast majority of the Indian workforce is informally employed, even in urban areas 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

EMPLOYMENT CHALLENGE # 1: QUANTITY OF EMPLOYMENT Employment growth rate = 2.85% per annum ( ) o < growth rate of unemployment (3.3% p.a.) o mostly in informal employment, including informalization of wage employment in the public and private sectors Unemployment = very high among urban youth ( yrs.) o 20% - young urban men o 30% - young urban women Underemployment = real concern ocommon among informal workers – who represent 93% of total workforce + 80% of urban workforce

EMPLOYMENT CHALLENGE # 2: QUALITY OF EMPLOYMENT Shift in Type of Employment owage employment: on decline oself-employment: significant increase (52.5% of total employment in ) Fall in Real Wages: from 1999 to 2005 Low Self-Employment Earnings – around half of all self- employed in thought their work was not remunerative o40% of rural self-employed – earned less than 1,500 rupees per month o33% 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)

URBAN WORKING AGE POPULATION (15+) (%) Male Female All Economically Active 79* 24** 54** Unemployed 4 7** 4 Employed 96* 93 96* Economically Inactive Notes: * = up 1 % point or less since ** = up 2 % points or more since Unemployed & Employed = percentage of Economically Active Source: based on data tabulations by G. Raveendran

URBAN EMPLOYED BY EMPLOYMENT TYPE, STATUS & UNIT (%) AG FE IE HH Total Total Urban Employed * 3* 100 Formal 4* Informal 96 38** 99 99** 80** Urban Wage Workers * 55 Formal 5* Informal 95 38* 96 99* 66* Urban Self-Employed 6* 2* 38** 0 45** Employers 4* 22* 5** 0 5* Own Account Workers Contr. Family Workers 44* 23* 22* 0 25* Notes: AG = agriculture, FE = formal enterprise, IE = informal enterprise, HH = household * = up 1 % point or less since ** = up 2 % points or more since Sub-Categories = percentage of each Category Source: based on data tabulations by G. Raveendran

URBAN EMPLOYED (Male & Female) BY INDUSTRY GROUP & EMPLOYMENT TYPE (%) Male Female F I F I Agriculture <1 6 <1 18* Manufacturing * Home-Based * 70* Construction <1 9 <1 4 Trade <1 24 <1 10 Street Traders * Non-Trade Services * Transport Domestic Workers 0 1 <1 28* Total Urban Employed * Note: F = formal, I = informal * = higher percentage of female, than of male, workers Sub-categories = percentages of Categories Source: based on data tabulations by G. Raveendran

THREATS TO URBAN LIVELIHOODS: EXCLUSIONARY URBAN POLICIES Context: urbanization + urban renewal + de-industrialization of cities Urban Livelihoods: o impacted by municipal policies, regulations, + practices – more so than national policies o overlooked or undermined by municipal authorities + urban planners o excluded from + eroded by urban renewal schemes Key Urban Informal Groups – key threats to livelihoods o street vendors: bribes + confiscation of goods + evictions o construction workers: mechanization -> displacement o transport workers: bans on certain types of transport o home-based producers: lack of basic infrastructure services + single-use zoning regulations o waste pickers: lack of access to waste + exclusion from solid waste management

INCLUSIONARY URBAN POLICIES: PROMISING EXAMPLES Street Vendors o Warwick Junction, Durban, South Africa – participatory, consultative process + infrastructure and technical support services to natural market of 6-7,000 vendors o India – Supreme Court judgment + national policy + recent Supreme Court ruling calling for national law Waste Pickers o Brazil and Peru – national policies in support of waste pickers o India - National Environmental Policy (2006) + National Action Plan for Climate Change (2000) recognition of waste pickers’ contribution to environment/carbon reduction + right to collect and recycle waste o Pune Municipality, India - ID cards to waste pickers + contracts to waste pickers for door-to-door collection of waste

INCLUSIVE CITIES: GUIDING PRINCIPLES India is a hybrid economy – both modern-traditional and formal- informal – and should remain so. The contribution of the informal economy to both economic and employment growth should be recognized 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 The size, composition, and contribution of the informal economy needs to be fully counted in official statistics and fully valued by policy makers

INCLUSIVE CITIES: VISION “The challenge is to convince the policy makers to promote and encourage hybrid economies in which micro-businesses can co-exist alongside small, medium, and large businesses: in which the street vendors can co-exist alongside the kiosks, retail shops, and large malls. Just as the policy makers encourage bio diversity, they should encourage economic diversity. Also, they should try to promote a level playing field in which all sizes of businesses and all categories of workers can compete on equal and fair terms.“ Ela Bhatt Founder, SEWA

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

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