Article: Decoding the growing percentage of vulnerable employment in India

Employee Relations

Decoding the growing percentage of vulnerable employment in India

A recent report by the International Labour Organization, World Employment Social Outlook Trends 2018, has revealed that the percentage of vulnerable unemployment is growing globally and significantly in India.
Decoding the growing percentage of vulnerable employment in India

In what is an important revelation for the Indian job markets today, the International Labour Organization (ILO), has disclosed that globally, vulnerable employment is on the rise. The report titled the World Employment Social Outlook Trends 2018 that examines the current state of the labor markets, assessing the most recent developments and making global and regional projections of unemployment, vulnerable employment, and working poverty1, reveals that in 2017, around 42 percent of workers (or 1.4 billion) worldwide were estimated to be in vulnerable forms of employment, and this share is expected to remain particularly high in developing and emerging countries, at above 76 percent and 46 percent, respectively. While the current projection suggests that the trend is set to reverse, with the number of people in vulnerable employment projected to increase by 17 million per year in 2018 and 20192, in India, the numbers will soon reach a point where it roughly affects three out of four workers.

So what is vulnerable employment and why should its growing numbers be a cause for concern? Vulnerable employment, as defined by the UN, is the sum of the employment status groups of own-account workers and contributing family workers. These are groups are less likely to be part of or have access to formal work arrangements, and are therefore more likely to lack decent working conditions, adequate social security and a ‘voice’ through effective representation by trade unions and similar organizations.3 Vulnerable employment is often characterized by inadequate earnings, low productivity and difficult conditions of work that undermine workers’ fundamental rights. 

ILO’s Director-General, Guy Ryder, in a press statement stated that “Even though global unemployment has stabilized, decent work deficits remain widespread: the global economy is still not creating enough jobs. Additional efforts need to be put in place to improve the quality of work for jobholders and to ensure that the gains of growth are shared equitably.”

The Indian context

The report notes that in India, around 77 percent of Indian workers will be engaged in vulnerable employment by 2019. The figure, though alarming, is not a recent development. It is in tune with what labor experts in India have been cautioning against for years now — the increase in the creation of vulnerable forms of employment and the excessive dependence on the informal sector jobs.

In comparison to the Indian subcontinent, other regions within Asia are faring far better. The share of vulnerable employment in total employment in South-Eastern Asia and the Pacific (which includes Cambodia, Indonesia, Singapore and Australia) is expected to stay steady at 46 percent till 2019, while the percentage for Eastern Asian countries (China, Japan, Taiwan) is slated to remain at 31 percent. Within the developed economies, vulnerable employment figure is to remain under 10 percent.

The findings of this report by ILO are crucial as they point to the quality of jobs being created in the country. According to what the report mentions, a large proportion of the jobs being created is of poor quality and is expected to remain so. The report also notes that "while there has been strong job creation in some Information and Communications Technology (ICT)-intensive services, notably in India, a significant portion of the jobs created in the services sector over the past couple of decades have been in traditional low value-added services, where informality and vulnerable forms of employment are often dominant."

And this has been irrespective of unemployment being stable in the region. The ILO report projects the unemployment rates to stay steady at 3.5 percent till 2019. Thanks to its rapid labor force growth, Southern Asia (including India) is expected to account for close to 90 percent of the total employment growth in Asia and the Pacific in 2018. 

But despite such efforts, there have been relatively poor efforts to improve the working conditions of many within the workforce. Although there has been a renewed focus on capping unemployment rates, a significant portion of the working population finds itself working as ‘own account workers’.  That is what according to UN constitutes as vulnerable employment — a definition many thinks is too narrow to express the complexity of Indian labor markets. Many labor experts and economists in India define ‘vulnerable employment’ as encompassing contractual workers in the organized sector as well as workers in the unorganized sector.

Decoding the effects

The rise in vulnerable employment is not a healthy sign for the Indian economy especially. In addition to pushing a significant percentage of the working population into jobs that are unregulated and contractual, it will have many secondary effects.  

Due to the increasing percentage of vulnerable employment, disparities across demographic groups are bound to increase, out of which, gender disparities are of a particular concern. The ILO report highlights this aspect and adds that in South Asia, vulnerable employment rates among women are 8 percentage points higher than those of men. This would mean women have a higher chance of being employed in unregulated jobs with little or no negotiation mechanism available. The rise in vulnerable employment among women would create further barriers in providing them access to good quality jobs within the organized sector. Therefore, the growth in the number jobs has to be monitored to ensure it creates financial inclusion and empowerment of the working individual.  

Another important aspect to this, according to the report, is the increase in dependence on the service sector and sectoral composition of employment. The report notes that service sector jobs will be the main driver of future employment growth, while agriculture and manufacturing employment will continue to decline. Since vulnerable and informal employment are prevalent in both the primary and the secondary sectors of the economy, the projected employment shifts across these sectors may have only a limited potential to reduce decent work deficits, if not accompanied by strong policy efforts to boost job quality and productivity in the service sector.

The growth of jobs has been a heavily contested issue within the Indian economy, with many policies in place that seek to boost economic productivity and increase employment opportunities. But it has to be ensured that a shift towards an increase in employment also means that the dependence of the workforce on vulnerable job opportunities go down, and in this, the quality of jobs created becomes an important factor. However, the high dependence of workers on informal jobs — it affects around 90 percent of all workers in India — still remains a big challenge to the positive push to grow the number of jobs, and it still continues to undermine the prospects of further reducing the working poor. 





3. UN WOMEN Indicator vulnerable employment-UN Women

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Topics: Employee Relations, Life @ Work, Talent Management, #Jobs

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