Self-made: the nature of informal entrepreneurship


The Swiss have a phrase that I recall from my time in Zurich that is evidence of a certain level of pride in the goods they produce.  “Swiss made” is printed on anything from the bottoms of milk cartons to fancy watches to billboards on the highway.  Like the phrase “Built in the USA”, it has a  distinct kind of exclusivity that ascribes a certain standard of excellence to a national identity.  Indeed, and rightly so.  Swiss manufacturing is among the highest quality in the world so why not advertise it as a brand of the country itself?

If India were to have such a tag line to describe the merits of its products, however, it would most likely read “Self-made”.  Though it has a rich and prosperous history of industrial production in the early part of the 20th century, India is not known for the quality or efficiency of its manufacturing industry by any means, but at the root of its economy lies a spirit of individual entrepreneurship that does not even participate in the formal market industry. 

Remnants of the booming cotton and textile industries exist today only in the decaying artifacts of factories and mills that have been transformed into magnificent secret gardens of the city’s rich ecology.  Since the textile strike of 1982-83, and the subsequent closing of other large manufacturing units in the city, formal sector employment has been steadily on the decline at a rate of about 9% per annum (Ibid: 37) while the growth of informal sector employment has been steadily on the rise, hand in hand with the population increase of migrant workers.

Today, however, the population is swelling from within the city, as families have settled in slum areas for multiple generations and have established livelihoods in different areas all over the city. Mostly in the service industry, casual contract labor, or self-employment, over 65% of the workforce in Mumbai is engaged in the informal sector[1] having no ties to corporations or governing bodies yet providing invaluable necessities for the city’s function.  Over In other words, the marginalized and the poorest of the poor have themselves indispensable.  Meanwhile the provisions and amenities unavailable to them keep them stuck in a sector of unskilled, low-income labor from which there is little opportunity to rise up.

The most visible evidence of the self-employed in Mumbai are the street vendors, or more commonly known throughout India as "hawkers".  Indeed, it is impossible to pass through the city without encountering hundreds of hawkers trying to sell you anything from a key chain to a knock-off Louis Vuitton.  Mumbai without the hawker is like New York without the yellow cab.  Like the cabs, the pervasive nature of their presence in the city does not help their reputation or gain them any brownie points from the locals, though their services are widely used.  They are seen as an eyesore and a nuisance by many as they compete with pedestrians and autos for open space; overcrowding the sidewalks and forcing people to walk in the street.


With only 10% of hawkers properly licensed, the other 90% are illegally infringing on public space.  Thus their job security is under the constant threat of raids, bribery, or harassment by the police and municipal authorities.  It is no coincidence that their domestic security is also in a precarious situation, as the coveted land on which they make their homes in the city is not their own....but this is a big subject for another time.

Considering the impact their presence makes on the urban life it's astounding that hawkers comprise only 2% of the total informal industry at work in the city[3].  The numbers of middlemen and self-employed agents who work behind the scenes is mind-boggling, but without clear statistics or research on the subject much of what I gather is based on what I see or can gain from conversations in broken English with local hawkers.  

I've learned that though he or she may be “self-employed”, the hawker with whom I (the customer) interact is just the tip of a long supply chain of men (and occasionally women) who contribute a similarly small percentage to the overall out-put of the product.  The number of transactions that occurs at every stage of the delivery cycle are marked by the fragmentation of job-types that exist here.  In other words, there is a job for practically anything you can imagine.  (I think there's even a job for stacking peanuts)  It's like a new kind of stimulus plan.  Unemployment crisis?  What unemployment crisis?  Just invent more jobs!

A brief trip to Dharavi - known as one of the largest slums in the world in addition to being one of largest producers of industry per capita in Mumbai with an estimated 5,000 businesses and 15,000 single-room factories - last weekend revealed a glimpse of just how systemic the fragmentation of informal sector is in Mumbai.  The recycling of plastic alone, for instance, consists of at least 12 stages that I can estimate (below), each requiring two or more dedicated individuals to complete.  Streamline any stage of this process and hundreds of people are left without a job.  Leave the system to operate as is, and thousands of people are stuck doing unskilled labor below the poverty line for the rest of their lives.  What gives?  

Stages of plastic recycling as far as I could estimate (sorry, photos were prohibited so I have not visuals to go along with this)

1) Street sweep

2) Garbage delivery

3) Trash sorting by material

4) Plastic sorting by color and quality

5) Plastic crushing into tiny fragments

6) Removal of small metals with hand-held magnets

7) Washing of plastic fragments

8) Drying of sorted plastic fragments

9) Melting (raw material sold to factories due to high electricity use of melting machines)

10) Molding (sold again to specific factories for different products)

11) Repackaging

12) Exported either locally or internationally

[1] Mumbai Metropolitan Development Authority Census Report, 1996

[2] Ibid, 1993

[3] Mumbai Reader 2009, Urban Design Research Institute