Nearly 81% of India’s Employed Population Is in Informal Economy

About 80.9 per cent of India’s employed population – with 80.7 per cent men and 81.6 per cent women – is earning livelihood in the informal economy, the International Labour Organisation (ILO) has said in a report.

The report titled “Women and men in the informal economy: A statistical picture” (third edition) provides comparable estimates on the size of the informal economy from more than 100 countries.

With only 6.5 per cent working in the formal sector, India stands much ill-famed among its four South Asian competitors – Pakistan, Sri Lanka, Bangladesh and Nepal. Among these countries, infomalisation of the labour is highest in India and Nepal. Bangladesh with 48.9 per cent, Sri Lanka with 60.6 per cent, and Pakistan with 77.6 per cent are performing much better than India in the South Asian region.

Apart from this, the number of youth aged between 15 and 24 engaged in the informal sector is 98.3 per cent, and is increasing compared to the percentage of adult workers, which is 67.1 per cent. Out of 68.2 per cent of the total employed population, nearly 1.3 million, in the Asia-Pacific are employed in the informal economy.

“The higher the education level, the higher the chance to obtain formal employment; 31 per cent of tertiary-educated workers are in informal employment compared to 90 per cent of workers with primary education,” said the report.

However, the report says that informality in the employment sector is a worldwide phenomenon. Two billion or 61.2 per cent, of the world’s employed population aged 15 or more work informally. The prevalence of informal employment varies in different regions. Among the five main regions, the vast majority of employment in Africa (85.8 per cent) is informal. Asia and the Pacific (68.2 per cent) and the Arab States (68.6 per cent) have almost the same level of informality. In the Americas (40.0 per cent) and Europe and Central Asia (25.1 per cent), less than half of employment is in informal sector.

Excluding agriculture, the global level of informal employment falls to 50.5 per cent, but non-agricultural informal employment remains high in three regions: Africa, the Arab States, and Asia and the Pacific.

Ninety-three per cent of world’s informal employment is contributed by the emerging and developing countries.

Globally informal employment is a greater source of employment for men (63.0 per cent) than for women (58.1 per cent). While, women are more exposed to informal employment in most low and lower-middle income countries, they are more often found in the most vulnerable situations.

“Informal employment is related to the level of economic development. Informality rate among developed countries is usually well below 40 per cent with an average of 18.3 per cent, while informality rates among developing and emerging countries have a higher variation with an average of 69.6 per cent. Women are more likely to be in informal employment than men in countries with the lowest level of GDP per capita. In sub-Saharan Africa, Latin America and most low- and lower-middle income countries, a larger proportion of women’s employment than men’s is informal employment,” adds the report.