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Why a multi-dimensional informal labour market cannot have a unilateral policy-making approach

Why a multi-dimensional informal labour market cannot have a unilateral policy-making approach

In response to the recent migrant workers crisis, massive relief efforts have been launched to rehabilitate and re-employ the informal working section. While the Atmanirbhar scheme lays considerable focus on this section of workers, National Bank for Agriculture And Rural Development (Nabard) has initiated a short-term skill development programme exclusively for the reverse migrants.

However, the truth is, the pandemic has only shed light on a problem that plagued India for decades. Even when the country’s economic growth was high, a study by UNU-Wider reveals that between 2004 and 2012, most of India’s poorest and low-skilled continued to be trapped in “dead-end” work status with inferior pay and living conditions. Inadequate skill development opportunities and low prospects of job continuity limited their chances of upward mobility.

Making our way out of this impasse will need a well thought out calibration. One that takes into account the complex construct of the informal labour market and the operating business models of the industry that employs them. Today the labour policies treat the informal workers as a homogenous unit. Whereas the truth is it is a multi-dimensional market.

A look at the job retention pattern reveals the striking variance across sectors. In a recent study conducted by LabourNet, we found that jobs in quick service sectors like restaurant and hospitality or sales promoter in retail typically last for no more than three months. On the contrary, entry level  positions in manufacturing sectors for roles such as helpers continue in a job anywhere between six to nine months. In beauty industry, however, the longevity of a helper is much shorter. So, it is the uniquely placed economic logic of an industry that determines the longevity of workers in a particular job role. However, we look at this as the issue of attrition rather than that of job continuity.

To treat the entire informal labour market in a unidimensional manner will cause us to miss critical nuances in policy-making both at the individual, industry as well as at the government level. Certain industry segments do not require retention of workers for a long period – their business models are built on new worker streams entering their ecosystems. Longevity of a worker for such industries can be detrimental to their business logic. 

What this implies is that the state needs to devise its skill certification policies as well as wage and social security measures aligned to the business models of a given economic sector.  

Today a large proportion of the discourse around skill mapping and certification is premised on the assumption that longevity or retention aspect of employees across industries are alike. Career progression efforts are also designed based on this supposition. So are the labour laws, wage bench-marks as well as social security measures are framed keeping in mind an identical worker retention and longevity pattern. This assumption is not backed by data. 

The starting point for a viable retention strategy of the informal workers starts with skill development and aligning it to the industry’s business logic. It has to start early when the worker is young and trainable. Interventions need to begin at the secondary education level. This will enable the stakeholders driving the skilling effort to track and identify the proclivity of a child from early days. By the time they arrive at a point where they are likely to drop out of education, the system should be able to determine which kind of industry the child is likely to get into. Accordingly the skilling roadmap should be customised with their interests deeply integrated into it.

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