The Emerging Dynamics of Informal Employment

Abstract

Informal employment accounts for a significant proportion of the workforce in less-developed economies, particularly India, and has grown steadily in the past two decades. Using unit-level data from three consecutive employment and unemployment surveys conducted by the National Sample Survey Office (NSSO) in 2004–5, 2011–12 and 2018–19 (PLFS), we investigate the emerging dynamics of formal and informal employment in Maharashtra, India. This article highlights: a significant increase in the share of women performing unpaid domestic work; uneven distribution of the status of employment in rural and urban Maharashtra; the burgeoning size of the working poor, who earn barely enough wages to obtain a decent living; and inadequate coverage of formal employment in the economy. From a policy perspective, we argue that the state should aim at restructuring employment status and labour laws by infusing more skill to trigger an upward spiral of higher productivity, which will catapult the economy to a desirable trajectory, as well as facilitate and foster inclusive growth.