- Introduction and overview of the country
In this paper, I am going to provide and analyse the informal sector in India. Before hand, it is important to properly have an overview knowledge on India’s history, geography, demography and economy.
History: The National portal of India states that “India is one of the oldest civilizations in the world with a kaleidoscopic variety and rich cultural heritage” (NIC, 2019). India is one of the countries with huge varieties of religion, tribes and languages. India is a former colony of the United Kingdom until they got “their independence from the British the 15th August 1947” (NIC, 2019).
Geography: India is located in the southern Asia and it is one of the largest countries in the world. For instance, the National portal of India states that, “India is built on 3.3 million square kilometres with Afghanistan and Pakistan to the north-west; China, Bhutan and Nepal to the north; Myanmar to the east; and Bangladesh to the east of West Bengal. Sri Lanka is separated from India by a narrow channel of sea, formed by Palk Strait and the Gulf of Mannar. In addition, India occupies a major portion of the south Asian subcontinent and India is the 7th largest country in the world” (NIC, 2019). India is well located around countries that are among key players in today’s economy, which is considered as a plus for India in term of possibility of growth. Therefore, India is well blessed in term of geography and is worth studying to fully understand India.
Demography: India is the second largest countries in the world and it has high growth rate. For instance, the National portal of India reports that “India is 1,210,193,422 (623.7 million males and 586.4 million females) with the average annual exponential growth rate stands at 1.64 per cent during 2001-2011. In addition, the average birth and death rate is respectively 18.3 and 7.3 in 2009; the average life expectancy rate is 65.8 years (Males); 68.1 years (Females) in the period 2006-2011” (NIC, 2019). Accordingly, India is still growing and at this rate of growth proper attentions need to be given to its populations as the right management can bring the best of high number of its citizens vis versa if it is poorly managed. The first step to that proper management is through education. For instance, according to the provisional results of the 2011 census of India, the National portal of India reports that “the literacy rate in the Country stands at 74.04 per cent, 82.14% for males and 65.46% for females” (NIC, 2019). These results explain that one third (1/3) of Indian are illiterate and there are rooms to make it ideal in order to reach total literacy level in India.
Economy: India’s economyhas experienced an economic reform from Neoliberalism to liberalism, which led India to face rapid development. For instance, Verma and Sundar reports that, “the new economic policy, introduced in 1991, marked a decisive shift from heavy regulation to liberalisation, privatisation and globalisation (LPG)” (Verma and Sundar, 2019). Thus, this new era has taken India into another phase of growth, but it comes with challenges. As of today, India is one of the semi-periphery countries in the world. For Instance, the National portal of India reports that, “India has become self-sufficient in agricultural production and is now one of the top industrialised countries in the world and one of the few nations to have gone into outer space to conquer nature for the benefit of the people” (NIC, 2019). Therefore, India is an example to follow by many developing countries that are struggling to be self-sufficient in agricultural production, which is very crucial in the development of any nations. India is now upgraded into an industrialised country and they are excelling in the global level. India’s strength lay on their youthful demographic. Moreover, India’s economy is dominated by informal sectors.
Recruitment practices
First of all, The National Commission for Enterprises in the Unorganised Sector (NCEUS) define Informal sector as “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” (Naik,2009). India is still a developing country, with high number of populations living nearly the poverty line. Relatively, one average households ‘income is not enough to take care of the necessities of his/her family. Thus, low wages push individuals or households to engage in the sale and production of goods and services as second means of income to fill in the gap. This explain why statistics show that, “India is an emerging economy with 457.46 million workers in 2004-05 and the estimated number of informal sector workers in 2004-05 was 394.90 million in India contributing 86 percent of total workers (Naik, 2009). India has formal and contractual sector as well; however, these positions are held by only the elites and/or few highly educated individuals. Thus, the informal sector does do benefit Indians more than the formal if one look close look at it.
How can a newly arrived international organizations legally and efficiently hire local people in the country with the government website being down?
According to Abraham “In fact, the hiring of formal workers by these formal enterprises (FE) has declined over the years. Instead they have increasingly hired informal workers, creating a new form of informal employment, i.e. informal employment in formal enterprises (henceforth IFE). This trend, i.e. the informalization of the formal sector, indicates the growing tendency of large, formal firms to hire workers under vulnerable and insecure employment arrangements. Labour laws in India have also implicitly facilitated the informalization of the labour force (Chakraborty, 2015)” (Abraham, 2017). If aiming for the local people in this situation, there are initiatives taken by the government of India such as Make in India, Digital India, Startup India, Skill India to use technology to facilitates the search and hiring for local people looking for work in their categories of work especially the blue collars jobs at an affordable price to all. For instance, My Story reports that, “With these initiatives, smartphone revolution and launch of ‘Jio’ lowering the internet pricing plans; people belonging to BoP or Informal Sector can make use of technology such as job portals or job apps to connect with a potential employer and vice versa. Now job search or hiring related to the blue-collar sector can be simple, smart and much cheaper than ever” (Jobs, 2018). These initiatives are very useful for both job seekers and Human resource managers (companies) as it facilitates the search for both parties. This initiative can be the game changer for number of Indians, with no exception in their economic classes, seeking to work in formal sectors. The platform is well organized that there are categories of blue-collar jobs listed based on each individual needs and skills. For instance, My Story mentioned, “full fledge blue collar job portals, Blue Collar Job Portals catering to Specific Categories; Blue collar service provider and Informal as well as Formal Jobs Portal” (Jobs,2018). Nevertheless, the international organizations in questions will have the workforce they need and the task remaining for the HR practitioner in this project is to select the right candidates for the position to fill.
- Selection practices
In our selection practices for the right employees in our informal sectors for formal (IFE) positions in our international organisation, there are characteristics that we look into to. For instance, correlation between gender and level of educations is what the HR manager in this case will base on to operate. Moving forward with those that qualify, there are additional screening tests that need to be undertaken as there are limited positions to fill. For instance, Abraham reports that, “In the case of IFE, men with higher secondary education, or graduate education were significantly more likely to be IFE, by 3 and 13 percentage points respectively. For women too, education increased the probability of IFE and these impacts were significant from middle-school education onwards. Therefore, the educated labour force in urban areas was increasingly likely to be informally employed in formal enterprises” (Abraham, 2017). As a result, in the urban India, regardless of the gender division, higher education opens up more doors to be employed in formal companies. However, there are limit to the gratification of higher education as it may end up being a curse to the holder of these degrees. For instance, Abraham states that, “there is likely to be a problem of overqualified individuals in the labour force who are either unemployed or discontented with the nature/quality of their jobs, a phenomenon that has already become a reality in Kerala (Rasheeda & Wilson, 2014)” (Abraham, 2017). As a result, Higher education is not only the way out from informal sectors to formal companies as there are cases that show otherwise.
- Miscellaneous information
The informal sector growth rate is higher in some states and some industry groups than others. Relatively, one would assume that the informal sector is higher in the rural area than the urban area; Yet, in India reports have shown that the urban area has a higher rate of informal sector than in the rural area. For instance, NCEUS reports that “Over the year the proportion of rural informal sector workers decreased and the opposite happened in urban areas. It is observed between the study period of 1999-00 to 2004-05 that the growth rate of formal sector workers in rural areas in all categories is higher than growth rate in informal sector workers but the reverse happened in urban area. The growth rate of urban informal sector is higher than formal sector workers. 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” (Naik, 2018). Indeed, the urban areas in India is facing growing number of informal sectors over the rural areas because life is more expensive in the city with lot of competition over a formal job posted unlike in the rural areas. Unfortunately, the city is congested with tonnes of people competing among each other in aim of obtaining a better life. Consequently, the high cost of living in the city, push individuals to seek for a second job to increase their monthly income. For instance, Shaw states that, “It is quite clear that earnings from most of these secondary jobs do not constitute a ‘living wage.’ Though they help raise total monthly income, in reality such low wages of informal sector service workers point to the spreading of poverty among them” (Shaw, 1985). Eventually, working two to three jobs to make end meet will along the years will affect their health and end up with nothing to show for as the pay is barely enough to cover their family’s monthly expenses.
All in all, the informal sector in India is the back bone of India’s economy. Nowadays, India is among one of the top industrialized countries in world. Thus, does it mean that India’s success is partly due to the hard and cheap labour of informal sectors’ workers? Nevertheless, the informal sector will eventually decrease along with time as there is already means of technology (websites and apps) that are available out there for everyone and anyone regardless of the states and/or industry groups one’s belong to. In addition to that, there are trends in the workforce in India, where Informal employees are offered positions in formal sectors. However, some sort of higher education is a must in order to be selectable for positions in formal sectors. Thus, the international organizations that need local staff, will be easily reachable and proceed with the hiring processes legally and efficiently without relying on the government website.
- Bibliography
Abraham, R. (2017). Informality in the Indian Labour Market: An Analysis of Forms and Determinants. The Indian Journal Of Labour Economics, 60(2), 191-215. doi: 10.1007/s41027-017-0096-x
Bhalla Sheila (2007), “Policy Paper On Definitional and Statistical Issues Relating to Unorganised and Workers in Informal Employment”, NCEUS
Chakraborty, A (2015). Reforming Labour Markets in States. Economic and Political Weekly, 50 (20): 52- 57.
Jobs, J. (2019). Top 25 Job Portals to Hire Blue-Collar Employees in India. Retrieved 28 October 2019, from https://yourstory.com/mystory/2525071e87-top-25-job-portals-to
Naik, A. (2019). Retrieved 23 October 2019, from http://www.iariw.org/papers/2009/5a%20naik.pdf
Shaw, A. (1985). The informal sector in a Third World urban economy: A case study of Calcutta, India. Bulletin Of Concerned Asian Scholars, 17(1), 42-53. doi:
10.1080/14672715.1985.10414415
Verma, A., & Sundar, S. (2019). International and Comparative Employment Relations. Retrieved 28 October 2019, from https://uk.sagepub.com/en-gb/eur/international-and-comparative-employment-relations/book244121