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

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

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

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

# 1 – Employment Challenge in India

EMPLOYMENT CHALLENGE # 1: QUANTITY OF EMPLOYMENT Employment growth rate = 2.85% per annum ( ) o mostly in informal employment, including informalization of wage employment in the public and private sectors Unemployment o low rate overall (4%) o but higher for women (7%) than men (4%) o and very high among urban youth (20% young men, 30% young 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: 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

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

URBAN WORKING AGE POPULATION (15+) (%) M F T Economically Active Unemployed Employed Economically Inactive Note: 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 Formal Informal Urban Wage Workers Formal Informal Urban Self-Employed Employers Own Account Workers Contr. Family Workers 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

URBAN EMPLOYED (Male & Female) BY INDUSTRY GROUP & EMPLOYMENT TYPE (%) Male Female F I F I Agriculture <1 6 <1 18* Construction < Manufacturing * Home-Based * 70* Trade <1 24 <1 10 Street Traders * Non-Trade Services * Transport Domestic Workers <1 1 <1 41* TOTAL URBAN EMPLOYED * 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

FOUR GROUPS OF URBAN INFORMAL WORKERS (2004-5) % of Urban Employment % of Urban Informal Employment Total Male Female Total Male Female Domestic Workers Home-Based Workers Street Vendors Waste Pickers ALL FOUR

# 3 - Future Prospects

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

EXCLUSIONARY URBAN POLICIES : THREATS TO URBAN LIVELIHOODS 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 + destroyed by urban renewal schemes Key Urban Informal Groups – key threats to livelihoods o home-based producers: lack of basic infrastructure services + single-use zoning regulations o street vendors: bribes + confiscation of goods + evictions o waste pickers: lack of access to waste + exclusion from solid waste management

INCLUSIONARY URBAN POLICIES: PROMISING EXAMPLES Street Vendors o Government of India - Supreme Court judgment + national policy + recent Supreme Court ruling calling for national law o Bhubaneshwar Municipality, India - designated vending zones + licensing in consultation with federation of street vendors Waste Pickers o 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 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 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.

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

# 4 – Rethinking Employment Policies

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 o market transactions & commercial relationships o sub-sector or value chain dynamics o sector policies, including urban planning & policies