Demonetisation

Bearing the brunt

Print edition : December 23, 2016

Daily wage labourers waiting to be hired at the Hauz Kazi, in New Delhi. They have been jobless since the demonetisation. Photo: V.V. Krishnan

Demonetisation has thrown into disarray the livelihoods and incomes of informal workers, who account for the bulk of the labour force.

The Central government's recall of Rs.500 and Rs.1,000 notes on November 8 has turned the spotlight on informal workers, who account for the vast majority of the country's labour force. These workers stand to suffer the most as work grinds to a halt in agricultural, industrial and service sectors in the wake of the decision to demonetise high-denomination notes.

In a report on the informal economy in 2009, the National Commission for Enterprises in the Unorganised Sector estimated that the share of informal workers, despite varying projections of unemployment rates, was likely to remain around 92-93 per cent of the entire labour force in 2016-17, with 86-87 per cent working in the informal sector and around 6 per cent in the formal sector.

According to the commission, total employment in the country, which grew from 401.13 million in 2004-05 to 426.93 million in 2006-07, is projected to hit 555.90 million in 2016-17 at an estimated gross domestic product growth of 9 per cent. Of this, the informal sector's share was 342.49 million or 85.38 per cent in 2004-05, which grew to 365.47 million (85.60 per cent) in 2006-07 and is projected to touch 482.87 million (86.6 per cent) in 2016-17.

It is also pertinent to note that the Ministry of Labour's Report on Employment-Unemployment 2015-16 found in a survey that 68 per cent of the households had an average monthly income of less than Rs.10,000, while around 20 per cent had an income of Rs.10,001-20,000.

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