The Squalor of the So-Called Informal Sector

By N. GUNASEKARAN

The “informal sector” could be defined negatively as the absence of the characteristics that belonged to the “formal sector,” such as security of the job, regularity of work, better earnings and existence of non-wage long-term benefits, protective legislation and union protection. Across Asia, the informal sector is growing in many ways with the changes in work practices and the changing relations of workers with the managements who practice labor flexibilization. All these changes ultimately contribute to the vanishing of the opportunities for decent work and the job security for the workers.

A recent report of India’s National Sample Survey Organization revealed that 75.2 million people were employed in the informal sector, with 43.7 million in the services sector, including trading units. About 36 million people were employed in 19.7 million units classified as manufacturing enterprises. While this kind of production has been contributing for the overall growth in many countries in Asia, the workers in these informal sectors were very much living under severe poverty.

Quite often the propaganda machine of the ruling elites congratulate the governments for achieving greater Gross Domestic Product (GDP). However, in many Asian countries, despite respectable rates of per capita GDP growth, the insecure jobs in the informal sector have been the only source of employment for the major work force.

While the growth of organized sectors has long been stagnant, it was a fact that the expanding informal sector had created new employment opportunities, but the quality of employment is very poor with inadequate wages, poor working conditions and absence of social protection.

The International Labor Organization (ILO), in its report, Global Employment Trends for Youth 2017, stated that about 19 in every 20 young men and women were working in the informal economy in developing countries, while 76.7% of working youth were in informal jobs globally. And, 39% of young workers in the developing world, including Asia – 160.8 million youth – were living in acute poverty, earning less than $3.10 a day.

The problem of unemployment was also serious. Unemployment among youth in South Asia was 10.9% in 2017, hence the youth had no other way but to accept the jobs in the informal sector.

The ILO report showed that India, Tanzania and Zambia all had “an extremely low prevalence of formal wage employment.” In these countries “fewer than one in ten young workers” were in wage employment with a contract. While giving facts about India the report said: almost half of all young workers are employed as wage laborers, without a written contract,”

Labor migration is another kind of informalization of labor force. The issues of migrant workers had become crucial particularly in Southeast Asia which has both labor-sending and labor-receiving states. Across the Association of Southeast Asian Nations (ASEAN) countries, there are an estimated 7 million migrants. Malaysia, Singapore and Thailand are receiving over 96% of total intraregional migrants, from Cambodia, Indonesia, Laos, Malaysia and Myanmar.

Most migrants in ASEAN are low-skilled workers, working mainly in the domestic care and construction sectors. They are most vulnerable since they are lower-skilled and less educated.

To protect migrant rights, and combat exploitation, ASEAN countries gave commitments in the 2007 Cebu Declaration, including establishing human resource development programs and pursuing capacity-building practices. But the ruthless exploitation of migrant workers has never stopped. Again, the Manila Consensus in November 2017 committed for achieving greater protection of migrant rights. But the governments, in their pursuit for serving both the domestic and international corporate capital, have not treated the issue of migrant rights as an important priority on their agenda.

In the name labor reforms, governments in Asia have been further curtailing their rights and income level of the informal workers. They are introducing labor legislation, which sanctions big businesses to practice all kinds of “flexibilization.” For instance, in Japan the Abe government  is working out a set of labor bills, dubbed “The Revolution In The Way [People] Work”  or alternatively “work-style reform.”

These bills recommend ways to restrict work hours of employees and aim at distributing the wages for non-regular workers. The government hopes the labor law changes will increase productivity and make Japanese businesses more competitive globally. This is meant to achieve nothing but corporate capital accumulation at the expense of the interests of labor.

In sum, lifetime employment has virtually collapsed, in both developed and developing nations in Asia. In the aftermath of the 2008 global financial crisis, freelancing had become an alternative option for workers. Japan, being affected seriously by regular recessions, had about 11.22 million freelancers, about 17% of the nation’s working population.

Under the neoliberal paradigm, the states had withdrawn from providing social protection for the informal workers. Only the powerful movement of workers in the informal sector could pressurize the states to pay attention on the welfare of the workers through upgrading their skills and capabilities, supporting microenterprise and self-employment, and creating new models for social protection.

N. Gunasekaran is a political activist and writer based in Chennai, India.

From The Progressive Populist, April 1, 2018

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