The informal sector isn't well-understood

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 The informal sector isn't well-understood

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Read more on - Polity | Economy | Schemes | S&T | Environment

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• A new world: The disrupted economies will ensure that the post-COVID world won't be the same as earlier, and social inequalities will be glaring. Suddenly, there is no celebration around globalisation anywhere. 
• Three shocks: The US-China trade war, the EU Brexit uncertainties, and the near collapse of WTO were shocks to globalisation. The internet too seems to be breaking into various walled pieces. Clearly, post-COVID won't be pre-COVID at all!
• Indian economic model: The fundamental weaknesses of India stand exposed badly due to Covid. While the GDP was growing, some were inside the growth bus, but most outside. Those outside (just clinging to the bus) were thrown off it when it braked due to the pandemic.
• Informal sector: Most economists agree that the informal sector that employs 95% of Indians is a big problem area. Its formalisation is critical, if the lives of Indians is to be improved. But what exactly is the form of this sector?
• Trends in Indian informal sector: In developed countries, informal workers are less than 20%, but in all developing countries, that number is 90% or more. As per W Arthur Lewis, labour flows from agri into industries, and informal to formal, where they then enjoy the security of formal contracts.
• Change happening: Today, labour is moving from industry to services and large firms are informalising as well. Indian policymakers must observe these trends and devise policies accordingly.
• Large and small: Wrong policies will force the small to change themselves to suit the interests of large firms, and not the real vice-versa that should happen. The real and diverse challenges of informal enterprises must be heard properly.
• Wrong assumption: Labour laws may be criticised by big firms as a hindrance in downsizing (firing people), but for informal sector, that is not true at all. Why? Because many in informal sector are self-employed workers (without any more employed). 
• Lazy way out: Economists turn informal enterprises into numbers, to make counting them easy, but that only shows the size, not the real diversity and challenges. Time to get real. Time to learn the real issues and solve those.

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