This Week in Asia

India's informal workforce has no money, more problems - despite Modi's promises

Yasar Arafat, 23, has a bachelor's degree in engineering, and dreams of being like Tesla founder Elon Musk, some day inventing a product that will help mankind.

For now, he is employed by Swiggy " an online food delivery service in New Delhi valued at over US$1 billion " as one of its drivers, working 10 hours a day and earning roughly 14,000 to 15,000 rupees a month (US$196-210).

Arafat is among the millions of young Indians increasingly struggling to find a job that meets their aspirations. An average of 4.5 million people join India's labour force each year, but a 2017 International Labour Organisation survey found that 92 per cent of the workforce " now totalling 426.1 million people " are in the unorganised or informal sector. This means they have no benefits or fixed income.

Their jobs range from construction to domestic help to agricultural labour, but even such jobs seem to be dwindling going by a recently leaked official report that revealed unemployment in India to be at a 45-year-high of 6.1 per cent. Unemployment figures in India count those who are jobless for most of the year, so even workers who do ad hoc work or jump from one temporary job to another are considered to be employed.

A report by the think tank Centre for Monitoring Indian Economy earlier this year said India lost about 11 million jobs between December 2017 and December 2018.

"A large number of people are entering the labour force but at the same time the job growth rate has fallen and that is the reason for the rising unemployment, particularly for the educated youth," said Santosh Mehrotra, economist and professor at the Jawaharlal Nehru University's Centre for Informal Sector and Labour Studies.

Rinku Chaudhary, 21, works as a delivery executive at Swiggy but wants a better job " and thinks the government should help. Photo: Marina Chaudhary

Arafat is among the 8.15 per cent of Indians who are graduates, but even with a degree from the Jamia Hamdard University in New Delhi, he struggled to find work after graduating last year. He says he went to many job interviews in telecommunications and other industries.

"I couldn't clear the interviews. I think there are not enough jobs any more. Many of my friends too are still looking for jobs," Arafat said, adding he was still looking around for something "better" " preferably a job in the information technology sector.

Job competition among young people in New Delhi " India's capital and home to about 29 million people " is rife, especially since migrants from poorer areas are seeking their fortunes there.

Mohammad Sameer, 23, works at a steel pickling factory in Delhi. Steel pickling is the process through which impurities and stains are removed from the steel surface using a liquor containing acid. He is paid 7,500 rupees a month for a daily eight-hour shift, and says there is no job security in the work he does. "We are employed through middlemen. Sometimes, if we get even five minutes late in reporting to work, they fire us without any notice," Sameer said.

Mehrotra from Jawaharlal Nehru University says India's large informal sector has worsened poverty and inequity. A 2018 Oxfam report revealed that 1 per cent of India's population holds 73 per cent of the wealth. While India has different minimum wages in different states for unskilled, semi-skilled and skilled workers, many reports and activists say they do not apply to workers in the informal or unorganised sector as most of these employees do not even exist on paper.

"People in the informal sector are self-employed or work in small enterprises using low-level technology which leads to low productivity and hence low wages. They are caught in a low-level equilibrium trap," Mehrotra said.

Mohammad Sameer, 23, works in a steel factory in the Wazirpur industrial area of Delhi, where he says there is little job security. Photo: Marina Chaudhary

He adds that if a very high share of enterprises are small and informal, which is the case in India, their productivity is low " which means low contribution to the gross domestic product and overall income of the economy. "Lastly, the tax to GDP ratio remains low for small firms which are not registered and individual informal workers, which leads to a loss in the state's tax revenues " which means less money for public services like roads, electricity, health care, education."

But there are companies that have benefited from the informal sector, most notably sharing economy firms.

Dileep Kumar, a 35-year-old driver with ride-sharing service Uber, claims he was lured into the job by high incentives that were then reduced one by one. Uber India responded to Kumar's claims by saying that "earnings are not one size fits all and individual driver earnings vary widely".

"Driver earnings have evolved over time and while some drivers do earn less than three years ago, we believe that driver earnings in India are attractive for the majority even after reductions in incentives and drivers' costs are taken into account," it told the South China Morning Post.

According to a news report, Uber has over 450,000 drivers while Ola, the Indian cab-hailing service, has over 1 million. While Uber and Ola engage in a corporate slugfest to win the bigger market share in India, it is the drivers who lose out " with fewer incentives and low rates.

Dileep Kumar, an Uber driver, was part of multiple strikes and protests demanding better conditions from Uber and Ola " to no avail. Photo: Marina Chaudhary

Kumar moved to Delhi from Bihar about 20 years ago. He started driving with Uber three and a half years ago, and says he cannot even afford to pay for the car he bought for his job. He bought a Maruti Suzuki Wagon R in 2016 for which he continues to pay 10,500 rupees per month, which can be up to two-thirds of his monthly income.

"I have not paid the tuition fee of my child for four months. Every container in my kitchen is empty. Today, after many days, I have bought enough vegetables for the house," he said, adding that he was looking for a different job.

Kumar was part of multiple strikes and protests in 2017 demanding better incentives, fare increases and employee benefits from Uber and Ola " all of which proved unsuccessful. Now, with India going to a general election in May, Kumar said he would be holding the government of Prime Minister Narendra Modi to account.

"Modi has done nothing for us. We voted for him in 2014 but we won't make that mistake again. Uber and Ola drivers will vote for the Congress party in 2019," he said, referring to the main opposition party led by Rahul Gandhi.

In 2014, Modi came to power riding on a wave of multiple promises of development, most prominent of which was creating 10 million jobs for the youth. India has vast untapped potential in terms of its youth, a segment of the population needing good employment opportunities that the government has not yet been able to ensure.

Uber and Ola drivers will vote for the Congress party in 2019 instead of Modi, according to one Uber driver. Photo: EPA

According to a 2014 United Nations report, 356 million people in India are between the ages of 10 and 24, and 34.33 per cent of India's total population will be between those ages by 2020.

"From farmer distress to the challenges of providing jobs for our growing youth population, employment, unemployment, and underemployment are fundamental issues for the upcoming election," said Sabina Dewan, executive director of JustJobs Network and senior visiting fellow at the Centre for Policy Research.

According to her, the government should make necessary public allocations to support sectors that absorb more labour, such as infrastructure, agricultural and non-agricultural rural livelihoods, and wages should be aligned with productivity gains.

"There should be a long-term focus on building human capital through good quality education, skills and on-the-job training. The large scale of underemployment and rising unemployment mean that it is going to be some time before we see India's labour market improve," Dewan adds.

Swiggy delivery man Rinku Chaudhary, 21, who wears a leather jacket and a nonchalant smile, says his allergies are worsened whenever he is on duty between 6pm and 4am. He earns 15,000 rupees a month and blames his job status on his lack of a university degree. But he asks: "Shouldn't it be the job of the government to ensure decent employment for all?"

This article originally appeared on the South China Morning Post (SCMP).

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.

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