Informality in Non-Cultivation Labour market in India with Special Reference to North-East India

Recent estimate of central statistics office for 2014-15 indicates that share of agriculture in GDP (market price) is about only 14.9 per cent, whereas it employs about 49.5 per cent of India’s total workforce. So moving out of agriculture is itself a desirable outcome for improving productivity in agriculture and also of the economy. But the question is “where will the workers of agriculture sector move to?” given the fact that Indian labour market is becoming more and more informal. Therefore, creation of decent jobs outside agriculture is one of the biggest challenges that confront policymakers. The present paper examines the trend and patterns of informal and formal employment in organised and unorganised non-agriculture sectors with special reference to North-East India. The paper, following National Commission for Enterprises in the Unorganized Sector (NCEUS) defined organised and unorganised sector by taking into account enterprise type and number of workers in enterprise. However, where both these information are missing, social security was taken as a yard stick to measure organised or unorganised sector. We applied logit regressions to find out what are the personal characteristics, household characteristics, and sectoral characteristics to determine the participation in informal sector, and examine whether these determinants are changing over time or not. The study is based on NSSO 2004-05 and 2011-12 employment and unemployment unit level data. The initial result suggests that in the non-agriculture sector, informal employment in unorganised sectors has declined from about 87 per cent to 85 per cent. Thereby it is suggesting, a rise in formal employment within non-cultivation sector. In addition, it is interesting to note that within informal employment in 2004-05 about 29 per cent are female but the corresponding figure for 2011-12 is about 24 per cent. This indicates that proportion of female participation in the informal economy has declined over the years. Similarly it is observed that informality for poorer household has declined for the study period. The logit regression result indicated that being a male reduced the odd of informality by more than 20 per cent in both the periods. Given the slow economic growth in the first half of the new millennium, married female labours were forced to join the informal sector; however, because of rising income in recent past they are not so keen to join the informal employment. Looking at the sectors, it is observed that, being a worker in construction sector and trade, hotel and transport sector increased the odd of joining informal sector many fold. This paper also examines these trends, patterns and determinants, with special reference to North-East region. Finally, the paper looks at the determinants of informality at the macro-level using panel data of the Indian states. The study finds a multitude of factors driving informality thereby implying that a multi-pronged strategy would be required to tackle the problem.