Gender, informality and poverty1

JEEMOL UNNI and UMA RANI

THE Task Force on Employment Opportunities set up by the Planning Commission (2001)
pointed out two structural features that made the employment situation in this country different
from others between the organized and unorganized sectors and between wage and
self-employment. Both these features make it more difficult for the economic policies of the GOI
to have a direct and quick impact on the economy. The positive impact of economic growth may
reach the organized sector and wage employed workers faster while making the process of the
percolation of the benefits to the rest of the economy more difficult.
A large proportion of the workforce is in the unorganized or informal sector. These workers are
engaged in economic activities with lower productivity resulting in lower incomes. They are also
engaged in activities with less stable employment contracts (including the self-employed) and
fewer social security benefits. While the wages and salaries of the formal sector workers are
periodically revised to counter inflation, no such benefits accrue to the large proportion of
workers in the unorganized sector.
In this paper we shall argue that it is not informality per se, but the nature of work and its relation
to poverty that makes the crucial difference between men and womens economic situation in the
informal economy. Women are more vulnerable, particularly in the changing economic context,
due to their poor endowments in education, skill and capital. These more or less structural
disadvantages create a nexus between gender, informality and poverty which women find
difficult to overcome.
Using the residual method1 we estimated that approximately 370 million workers were engaged
in the informal economy in 1999-2000. Non-agricultural workers in the informal sector
(excluding agriculture, fishing, forestry etc.) were estimated at 134 million. This implied that the
informal economy constituted nearly 93% of the total workforce and 83% of the non-agricultural
workforce.
A gender disaggregation of the informal workforce showed that about 252 million male and 118
million female workers were engaged in this sector, including agriculture. The informal segment
in the non-agricultural sector alone engaged 107 million men and 27 million women. The women
workers constituted about 32% of the workforce in the informal sector, including agriculture, and
20% of non-agricultural workers alone. Among all non-agricultural workers, the proportion of
men and women in the informal economy was 82.9 and 85.6% respectively. That is, there was
little difference in the overall significance of informal work by gender.
1
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accessed on 10 July 2017
Self-employed and casual workers: A distinct feature of the work force in India is a very large
component of self-employed workers. In 1999-00 nearly 53% of the total workforce was
self-employed, with a larger proportion of women workers (56%) being in both rural and urban
areas. Further, one-third of the work force was casual workers, again a higher proportion (37%)
being women. Regular jobs with stable contracts and greater degree of formality constituted only
14%, again with women being worse-off (only 7%) on this count as well.
In the non-agricultural sector, a larger proportion of the workers (34%), had regular salaried jobs,
that is, they were in relatively stable employment. However, only one-fourth of the women had
regular jobs; hence in the non-agricultural sector women were more likely to be in the informal
sector as self-employed or casual workers. Overall, the majority of the workers were engaged in
unstable activities with no regular contracts and social security benefits. There was thus a clear
link between gender and informality in the labour market.

Home-based workers, homeworkers and street vendors: As indicated earlier it is not just
informality that puts women in vulnerable positions. It is their dominance in certain kinds of
invisible work such as home-based work, subcontracted homework or outwork and street
vending. The recent labour force survey in India canvassed a question on the place of work that
helps us to estimate the dimension of such work. About 23% of the non-agricultural workers in
India were home-based or working in their own dwelling. Home-based workers were an
overwhelming 57% of the workforce among women.
Homeworkers: Homeworkers or outworkers are persons working at home, or on premises of
their choice other than that of the employer, to produce goods or services on a contract or order
for a specific employer or contractor. They constitute a part of the home-based workers. We had
observed a higher proportion of women in self-employment in the non-agricultural sector in
1999-00. While 23% of all non-agricultural workers were home-based, about 36% of
self-employed non-agricultural workers were home-based, with about 25% men and 67%
women.

Among these home-based workers nearly 38% undertook production under some form of
specification from an outside agency, that is, they were homeworkers. Nearly 49% of the women
home-based workers were undertaking production under some form of subcontracting
arrangements, while only about 29% of the men were so engaged. Self-employed workers
located in premises other than their home also undertook subcontract work. Women were
predominantly undertaking such contractual activities. The contract under which these activities
were conducted differed and one of the more exploitative forms was of piece-rate work. About
79% of women and 63% of the men home-workers were paid on a piece-rate basis (NSSO
2001b, Table 16).
Street vendors: It is difficult to obtain empirical data on street vendors. The occupational
classification at the three-digit level, however, has a specific code (431) for street vendors,
canvassers and new vendors. In 1999-00, the NSSO estimated2 about 1.15 million3 street vendors
in urban areas, of whom about 18% were women. They constituted only about 1.6% of the urban
non-agricultural workforce. Further, about 7% of the workforce did not have any fixed location
of work while about 3.4% had a fixed location on the street. Such workers were mainly men. It
needs to be clarified that all workers on the street or mobile were not street vendors. Many such
workers, mainly men, were transport workers engaged in plying buses, trucks, auto-rickshaws,
cycle rickshaws, animal and hand drawn carts. Vendors, transport and other workers on the street
face constant threats, harassment and eviction by police and local authorities.
It is clear that the women workers in non-agriculture, particularly the self-employed workers, are
more likely to be working at home. They are also more likely to be engaged in sub-contract work
on a piece-rate basis. Both these factors their location of work and the nature of the contract
arrangements make these women open to exploitation as workers. This large proportion of
women in home-based sub-contract work is a classic recipe for poverty. One of the main areas
where poverty is generated is among such home-based workers in the manufacturing sector.

The analysis above showed that women workers were more likely to be in the informal segments
of the economy compared to men. A larger proportion of them were in economic activities
without stable contracts and steady incomes, that is in self-employment and casual work rather
than regular salaried employment. Women in the informal sector were less likely to have a
designated business place. All this indicates a clear link between gender and informality, which
leads to women at work being in more vulnerable situations than men.
The data on income and earnings in the informal economy disaggregated by gender are more
difficult to obtain from the official statistics. It is therefore difficult to empirically clearly
demonstrate the link between gender, informality and poverty. It has, however, been observed
that average wage rates are lower for women among the casual workers (Sundaram 2001). Using
the poverty norm4 as a cut-off point we computed the proportion of workers who were poor by
gender, location and activity status. Overall 31% of the workers were poor. In general a larger
proportion (35%) of the female workers were poor (Table 1).

TABLE 1
Percentage of Poor Among Workers by Activity Status, Gender and Location, 1999-00
Activity Status Rural Urban All Areas

Male Female Male Female Male Female All

 All Workers

Self-Employed 24.2 26.9 30.0 42.3 25.3 28.6 26.4

Regular 14.4 18.4 16.4 19.4 15.6 19.0 16.2

Casual 42.3 47.2 52.9 61.3 43.7 48.3 45.4

All 29.9 34.7 28.3 38.7 29.5 35.2 31.3

Non-agricultural
Workers

Self-Employed 25.0 33.8 29.0 40.9 27.0 36.6 29.2

Regular 11.8 15.0 16.4 25.4 14.7 22.0 15.9

Casual 30.0 39.0 49.8 55.5 37.6 45.6 39.0

All 22.7 31.4 26.8 34.5 24.8 32.9 26.4

Source: NSSO,
2001a.

A larger proportion of the self-employed and casual workers (26 and 45%), were also poor
compared to the regular salaried workers (only 16%). This was true for all workers and workers
in non-agricultural activities. Taking self employed and casual workers as constituting informal
employment this clearly demonstrates that these workers are more likely to be poor. In
non-agricultural activities in rural areas and among all workers in urban areas the gender
difference was more marked. The highest proportion of poor workers was found among the
casual workers in urban areas, with women casual workers being the most vulnerable to poverty.
Another way of analysing the links between informality, gender and poverty is to compare men
and women among the poor workers to their share in the total workforce. Since womens work
participation in India is much lower than that of men, the proportion of women among the poor
workers would also be lower. Hence, we need to compare the share of women workers among
the poor workers with the share of all women workers in the total workforce.
Among all workers while 31% are women (Table 2), the share of women among poor workers is
nearly 36% (Table 3). Similar gender differentials were observed among the total and poor
workers in rural and urban areas. Among the total informal workers, 32% were women (Table 2).
While we do not obtain direct estimates of poor workers in the informal economy, we use the
proxy of self-employed and casual workers for informal workers. We found that a much larger
proportion of poor self-employed and casual workers, 36 and 38% respectively, were women
(Table 3).
Among the total non-agricultural workforce while 19% were women (Table 2), 24% of the poor
non-agricultural workers were women (Table 3). While 19% of the informal non-agricultural
workers were women, 28% of the poor self employed workers were women. Therefore, while the
share of women in the total and informal workforce was not overwhelming, especially in the
non-agricultural sectors, their share among the poor informal workers was larger.

Quality of employment: In India the growth of employment has not kept pace with the growth of
population and labour force, particularly in the nineties (Unni 2001). About 60% of the
workforce continues to be employed in agriculture. The growth of non-agricultural employment
was faster than that of population and labour force, though at a declining rate during this period.
Another feature of the structure of employment in India is the large proportion of persons
without jobs that is employment with relatively stable contracts.
Open unemployment in India is relatively low, while the greater problem faced by the majority
of the workers is that of under-employment, or employment at low levels of income. This is
because most of the population is too poor to remain unemployed and is forced to undertake
some economic activity to survive. At the micro level,5 on average we observed that 301 days of
work were available to the workers with women workers being more vulnerable and obtaining
only 285 days of work.
The most vulnerable were the casual and piece-rate workers in terms of number of days of work,
obtaining only about 255 days of work in the year. Women workers were especially vulnerable
across these groups. The average days refer to the number of days on which the worker found
work and is not standardized for an eight-hour day. It also includes multiple economic activities
engaged in by the worker. These numbers hide the underemployment faced by the workers.
The percentage of persons reporting open unemployment was higher in our sample than the
national average of 7.3% in 1999-2000 (Sundaram 2001). About 19% of the workers6 reported
open unemployment and on an average these workers reported 129 days of unemployment. The
insecurity in the labour market faced by the women workers in not finding enough work to meet
the subsistence needs of the households is clearly reflected in their larger proportion facing open
unemployment (23%).
The insecurity of work among the casual and piece-rate workers is further reflected in the high
proportion facing unemployment at some time during the year, 36% and 25% respectively.
While casual workers reported 137 days of unemployment, the seasonal nature of agricultural
activity is brought out here by the large number of days (134) of unemployment. However,
women workers in self-employed agriculture faced comparatively less open unemployment
because women workers in these households combine cultivation and animal husbandry, which
is mainly an activity undertaken by women.

The quality of employment in the informal economy can be judged by the income earned. In the
informal economy the level of income differs by gender and kind of activity that the worker is
involved in. The average annual income per worker for all workers was Rs 14208. The women
workers annual individual earnings were lower (Rs 12192) compared to men (Rs 16704).
Across the activity status, piece-rate workers had the lowest incomes (Rs 7488), lower than
casual workers, self-employed and definitely the salaried regular employees.
Most of these piece-rate workers were women employed in home-based work in the
manufacturing industry, concentrated in specific industries like agarbathi making, bidi rolling,
garment and kite making, most of them with very low incomes and in relatively low skilled
occupations. They continue to be engaged in home based work despite such low incomes in the
absence of better alternatives, due to lack of education and skills, and also due to the burden of
domestic responsibilities.
Gender segregation of occupations partly explained the relatively higher incomes for men.
Across the self-employed category we observed that while women were involved in selling or
petty trade, men were engaged in selling, tailoring, carpentry, personal services and garage
mechanics. Similarly, across the salaried employees we found that women were engaged in
community and health services, which were relatively low paid jobs. Men were engaged in
public services as clerks, peons, drivers in public and private companies and government
organizations, which were comparatively better paid and more secure.
Comparison of annual household incomes across the gender of the head of the households,
showed lower incomes among the female-headed households (Rs 30960) compared to
male-headed households (Rs 35568). While the average household income was above the
poverty line, a large proportion of households (44%) were poor, obtaining incomes below the
poverty line. Among all households, a higher proportion of self-employed non-agriculture and
casual labour households were below the poverty line. The nature of these activities, with no
fixed employer or stable contracts, does not entitle them to any social security benefits. This
further contributes to their low incomes and makes them more vulnerable.
Women workers face further disadvantages due to household and childcare responsibilities at
home, which penalize them in the labour market for not being available for fixed-time work.
This becomes a key factor in womens weak position in terms of earnings and occupations. It is
sometimes claimed that labour markets adapt so as to allow women to combine paid work with
unpaid work for example, part time work and home-based work. But, this kind of adaptation is
one-sided more designed to allow the productive economy access to workers whose entry into
the labour market is constrained by domestic responsibilities than to give weight to the
contribution that womens unpaid work makes to the productive economy (Elson 1999: 613).
With all these constraints women tend to be relatively more engaged in irregular work (29%)
than men (17%). This further lowers the levels of their individual incomes. Across the individual
income groups, it was observed that as the income level rose, the proportion of workers having
irregular work declined (Figure 1) and this trend was similar across gender. Thus, part-time,
irregular work was a major factor contributing to womens lower incomes; to a large extent this
was due to the double burden of work. Irregular work therefore becomes both a cause and a
consequence of low incomes and poverty of women in the informal economy.

In order to make up for poor income and irregular work, a higher proportion of women
undertook multiple economic activities. This is a form of security, both work and income, and
compensates for both lack of and the low productivity of their existing work. Such work also
allows them to manage their dual responsibility in a much more efficient manner. About 27% of
the workers were engaged in multiple activities during the course of the day, while nearly 40%
undertook multiple activities during the year. A larger proportion of women engaged in multiple
activities in a day (37%) and during the year (45%) compared to men.

Irregularity of Work by Individual Income Groups

Apart from having irregular work a large proportion of women salaried employees also faced the
problem of having unstable contracts at work and lack of fringe benefits like paid holidays, sick
leave, health insurance, workers compensation, retirement benefits and so on. A large
proportion of these women in the urban areas were employed as domestic workers, in cleaning
and caring, while in the rural areas they were employed in community and health services. The
salaried comprised 9% of the workers, with a higher proportion of men (12%) compared to
women (6%). Across gender only 3% of the men and 8% of the women had no contracts at all.
Women workers were more likely to have verbal contracts (56%) rather than written ones (37%).
This shows the precarious nature of work in which the women were involved.

Thus, informality of work and gender related constraints combine to result in irregular work,
multiple activities, low productivity work such as piece-rate outwork, and all this implies poverty
for the women and their households. However, women in poor households contribute
substantially to the economic resources of households and their material standards of living. It is
worth noting that women make this financial contribution despite the fact that a large proportion
of their employment is in the form of part-time or informal work. They are low paid, less secure
and less protected by legislation or trade union organization. Women partly seek such work
because of the unpaid care work they do, the prime constraint being the needs of the children.
What might appear secondary from the point of view of the labour market is, however,
enormously important from the point of view of families and the society at large. It is argued that
some of these differences can be explained by structural factors that include under investment in
womens human capital, others by social and institutional norms that assign reproductive
responsibilities almost exclusively to women and underplay their economic roles (Mehra and
Gammage 1999: 546).

Formality and informality of work is a continuum and per se does not create poverty. It is the
nature of economic activities due to the poor endowments of workers that creates vulnerabilities.
Education and skills: Women, it is often claimed, are less productive because they are less
educated and less dynamic, and because they take more time off to deal with family
responsibilities. A very small proportion of the women workers were professionally trained or
had higher secondary education. The majority of the women who were educated had studied
either till primary, middle or high level. At the micro level the level of education had an
important influence on the kind of activity and employment that a worker engaged in. It was
observed that most women who were professionally trained or had higher levels of education
were engaged in salaried jobs, while a large proportion of illiterate women were either engaged
as casual labourers or were self-employed.
Under-investment in human capital is a major insecurity faced by women workers in the
informal economy. This leads to lack of marketable skills. Most women workers had very low or
limited skills.7 To capture the skill insecurity among women workers, they were queried about
the ease with which anyone else could acquire the skill. Given the rudimentary nature of the
skills among the informal workers, 63% reported that their skills could be transferred easily. This
could also mean that the skill involved in their work was not very technical but simple with the
use of less advanced production technologies.

The low levels of skills with which they operated also led to low level of earnings. This was also
observed in another study of Ahmedabad city (Rani and Unni 2000), where in the construction
industry the skilled8 workers received earnings above the poverty line wage and full employment
compared to semi-skilled and unskilled workers. A large proportion of workers also felt that due
to lack of education and skill it was difficult to move into other alternative jobs. This basically
raises the need to focus on promotion strategies for increasing skills to improve the quality of
employment, particularly for the vulnerable groups in the informal economy. Women thus tend
to be concentrated in the small scale production and personal services, which are more likely to
be non-tradable and thus vulnerable to both falling incomes due to demand restraint and
crowding effects because of ease of entry.
Capital: The concentration of workers in low productivity activities is in part a reflection of entry
barriers to other more lucrative activities, which require not only technical and entrepreneurial
skills, but also capital. The self-employed workers face insecurity due to lack of capital to
undertake their operation. Many of these activities do not have a legal recognition such as
manufacturing of kite or petty street trading. This constrains the workers from approaching
formal institutions for accessing credit. The lack of access to credit to undertake their operations
leads to income insecurity and vulnerability among workers. The self-employed workers
operated with an average fixed capital of Rs 8640 in rural and Rs 22752 in urban areas.

The nature of activity and the scale of operations undertaken by men and women seemed to be
different, in both rural and urban areas, as women operated with lower capital compared to men.
About three-fourth of the self-employed workers in the sample operated with fixed capital of less
than Rs 500. In direct questions to the self-employed workers, we found that 57% in urban areas
and 50% in rural areas reported lack of access to capital to expand their business, the problem
being most acute for women in urban areas (77%). The lack of access to capital among a large
proportion of women workers probably compels them to operate with such low levels of capital
in low productivity activities.
This would mean that the ability of woman to expand and reap gains through economies of scale
for diversifying the product is limited, and prevents them from entering into more lucrative
activities. This leads to concentration in petty trade and service activities with low scales of
operations. It is in this context that access to credit assumes particular significance. This trend of
women operating with low levels of capital is specific to the informal economy, as access to
resources in this sector is often determined not by the characteristics of enterprises such as their
economic activity and viability, but by the traits of the individuals who own and operate them
(Canagarajah and Sethuraman 2001). The ability of the self-employed to raise capital is limited
due to their lack of contacts and low ability to bear risks arising from the poor economic and
social status.
This apart, what is typical of many of the self-employed women entrepreneurs is that they have
to operate in such a way that allows them to manage family responsibilities, often without the aid
of her male partner. This deprives business women of the unpaid aid of family members that
male-headed businesses often enjoy, on the one hand intensifying the double burden experienced
by such women, and on the other reducing the economic viability of the business. We found that
60% of the women operated their business from home, compared to only 25% of the men.

Informality of work status is all pervasive in the economy irrespective of gender. Informal
employment is, however, not static, but dynamic and changing. The recent decade has seen
drastic changes in the economy due to economic reforms. These dynamic changes create
different kinds of employment opportunities for both men and women, along with new kinds of
insecurities. The crucial difference by gender relates to the nature of work and degree of
informality. Men tend to be engaged in more remunerative economic activities even within
similar occupations, such as trading better quality goods and services. Women are
over-represented in home-based and sub-contract work in exploitative exchange relationships.
Such a link between gender and informality arises out of social, cultural and economic barriers
often reflected in their original endowments and creates situations of poverty. Social and cultural
norms also restrict the nature of economic activities women can engage in. These norms are
operated through caste and religious customs along with the household responsibilities of rearing
and caring thrust upon women.

Work, or the kind of activity that men and women get involved in, is also changing far more
rapidly than before. Changing economic activity means acquiring new kinds of skills, some of
which are technical. The need to provide education and skill training becomes even more acute,
especially for women who are further disadvantaged since they are poorly endowed with
education, skills and ownership of capital. The economic reforms and opening up of the
economy generate volatility in the market due to the inflow of goods from other countries and
possible outflow of capital and consequently work. The rapidly growing and changing
consumers choices add to the volatility. This affects the income and employment of the informal
workers who are often engaged in these activities, either trading or manufacturing. The volatility
in the market also changes the nature of insecurities faced by these workers.
Many of these workers operate on capital borrowed on very high interest rates, and market
volatility affects them quite adversely. Given the increased pressures of efficiency the banks are
even more reluctant to lend to such workers. In order to break this vicious circle of informality,
gender and poverty the issue of employment and income has to be directly addressed. While low
levels of education and skill remain major constraints, a mere focus on supply of formal modes
of education cannot be a solution. Availability of work on a regular basis with better
remuneration is crucial to generate and improve the quality of employment. For the
self-employed access to credit and development of marketing institutions that cater to the needs
of poor women entrepreneurs would work to break the cycle.

TABLE 2
Share of Women Workers in the Total, Informal and Formal Workforce, 1999-2000
Rural Urban Total

All Workers

Total Workforce 34.6 19.7 31.0

Informal Workforce 35.3 20.0 32.0

Formal Workforce 17.6 18.3 18.0

Non-agricultural Workers

Total Workforce 21.4 17.8 19.4

Informal Workforce 22.5 17.9 19.9

Formal Workforce 16.0 17.4 16.8

Note: The informal workforce is based on the residual method. Source: Computed as indicated
in footnote 1 from NSSO (2001a) and DGE&T.

TABLE 3
Share of Women Workers Among the Poor Workers, 1999-2000
Rural Urban Total

All Workers

All 38.2 38.4 19.6

39.4 25.1 27.4

18.8 26.2 35.6

 36.1 19.1 37.6

Non-Agriculture

All 26.6 32.1 18.4

20.8 21.7 24.8

23.4 19.5 23.9

28.4 22.1 20.1

Source: NSSO, 2001a.

Footnotes:
1. We have applied the workforce participation rates, obtained from the Employment and
Unemployment Survey, National Sample Survey Organization (NSSO 2001a), on the population
interpolated for the inter-census years to obtain the workforce in 1999-00. Estimate of
employment in the organized sector by the one-digit industry group from the Directorate General
of Employment and Training (DGE&T), Ministry of Labour, Government of India, has been
subtracted to obtain the informal employment by the residual method.
2. This figure has been computed from the raw data of the NSSO 55th Round and is unadjusted
for population.
3. A recent paper on National Policy for Street Vendors estimated street vendors to constitute
2.5% of the urban population amounting to 10 million (Bhowmik 2003).
4. In 1999-2000 the official all India poverty line was drawn at Rs 336 per capita per month in
rural and Rs 451 in urban areas.
5. The empirical analysis is based on a survey of 1236 households conducted in Gujarat where
we have concentrated on poor workers in the informal economy in the city of Ahmedabad and in
villages in the surrounding five districts. In order to do this we have chosen the sample from
relatively poor housing colonies, slums and chawls in urban areas and low caste hamlets in the
villages. For details see Unni and Rani, 2002.
6. These include persons reporting themselves to be seeking and available for work any time
during the year.
7. Skill was defined to include knowledge about how to conduct the activity currently engaged
in. For example, if a worker was engaged in trading, we enquired about their capacity to keep
accounts and manage the business.
8. Skilled construction workers include bricklayers, masons, reinforced concrete workers, tile
and roof layers, plasters, supervisors and foremen, carpenters, plumbers, blacksmiths and
electricians working in the construction industry. Semi-skilled workers include white washers,
pipe layers and construction workers not elsewhere classified. Unskilled workers include loaders
and unloaders.

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