POL S/ Econ 409Judy (Chu) ZhuangJennifer Noveck Aug 20th, 2015

Domestic Worker Policy in IndiaExecutive Summary

Domestic workers in India face prominent inequality issues including, gender

disparity, child labor, and low levels of social welfare benefits. Domestic workers are

marginalized in the sense that most domestic jobs are cooking, babysitting and running

errands (ILO, 2010, 1). Gender disparity is an ongoing issue with the ratio of male to

female as high as 83:17 (ILO, 2010, 21). While many children under the age of 15 are

employed as domestic worker, the working condition is stagnant and no legislation so far

has enacted to eliminate psychological and emotional abuse to child labor (ILO, 2010,

28). The Ministry of Labor and Education (MOLE) and government have legislated the

Skill Development for Domestic Workers. This policy aims to improve domestic

workers’ skill capacity in the labor market to enhance their living standards. However,

the effectiveness of the policy is constrained because it has not addressed the working

conditions for domestic workers in the long run. Therefore, I strongly urge the MOLE to

consider making changes to this current domestic workers’ policy.

Targeting at fixing the persistent flaws embedded in current domestic workers’

policy, this paper identifies three potential approaches for India government: reforming

education system, eliminating child labor, and increasing minimum wages. Each

approach has advantages and disadvantages depending on administration’s endeavors and

people’s participation rate. My first approach is education reform. India Government

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should provide incentives, obligations as well as financial aids for children to obtain

education from Grade K to 12. For poor households with lower status and less financial

resource to invest in children’s education, public funding and legislations on primary and

secondary education are urgently needed. The wide availability and increased quality of

education can be a sustained foundation for individual’s capability development as well

as for creativity and competitiveness. The second approach is eliminating child labor.

Child labor widens gender gap and creates detrimental consequences domestically and

internationally. Government should urge firms to comply and enhance codes of conduct.

To keep close eye on violations in contracts and fight against bribery or corruptions,

labor inspections and mandatory audits in labor-intensive sectors and firms by NGOs are

strongly recommended to increase transparency. The third approach is increasing

minimum wage. Minimum wages in India are still very low compared to other

developing countries and to the increasing living costs. Therefore, increase in minimum

wage would be a solid solution to provide sustainable living conditions for the low-

skilled workers and to reduce the significant inequality in labor income distribution.

Overall, after weighing the pros of cons, I propose policy changes to focus more

on education reform to protect domestic workers.

Overview and Background

India has exhibited unprecedented economic growth over the recent years. GDP

per capita has nearly tripled over the past decade, reaching 1262 USD (see Figure 1),

national poverty trend is heading downhill; average real wage increases annually, peaking

1$295 monthly manufacturing workers have a securer working environment. Though

1 World Bank Data (2010) See http://data.worldbank.org/country/india

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India has experienced positive outcomes on national scale, changes need to be made on

current policy to enhance domestic workers’ living standards.

Statement of purpose:

Stagnant improvements in domestic worker’s livelihood, low schooling rates,

society’s reluctance to recognize domestic workers’ visibility have highlighted why the

Ministry of Labor and Education in India needs to turn the focus around and make policy

changes. According to World Bank data, unemployment rate in India is 4.9%, while

youth unemployment rate as high as 12.9%; average wage rate is 4.83 INR/day, average

wage in manufacture is a bit higher but still no more than 6.25 INR/day (see Table 1).

Many of the domestic workers till this day are living in villages and slums where they

have limited access to transportation and markets (Roy, 2002, 2). They are still forced to

work long hours, sleeping on floors and face various threating and mistreats (Yee, 2014).

Poor living conditions show domestic workers’ social well-being hasn’t changed for the

better. These horrific treatments of domestic workers have not been fully recognized by

society or the MOLE. Education turns out a big problem for labor participation and

domestic labor market. Based on India census 2011, at national level, total adult literacy

rate is 74%, which means current education can hardly meet the demand of domestic

labor market. Besides the low percentage in education enrollment, gender gap in

education is significant, male literacy is 82%, while female literacy is just around 65%,

and as low as 52% in some state (See Table2).

What is currently being done?

India government and MOLE have currently enacted skill-development policy by

providing special job training programs to enhance national skill development strategies

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(Agnihotri, 2011,5). Government has decided to provide incentives, create opportunities

for diversified job training programs and make assessments in a timely manner. Specific

job training ranges from childcare to cooking, depending how much the skill sets have

increased, and domestic workers get paid on average approximately $41 per month (ILO,

2011). According to National Skill Development Policy (2009), government is also

making an effort to change distribution and patterns within the workforce. Such as “rise

in self-employment, greater sub-contracting, outsourcing, increasing worker to work

away.”

Issues:

While the Skill Development Policy by State government and MOLE provides

stability and flowing incomes to poor households and benefits female workers’ self-

esteem to certain extent, it magnifies the pre-existing issue of inequality. The remaining

problems that need to be put into agenda are drastic social welfare conditions, gender

discrimination and child labor.

Current policy neglected the importance of how education improves social

welfare. Higher level of education brings higher pay. Domestic workers earned 23.4%

less than workers who perform the same task elsewhere (ILO, 2010, 7). Current domestic

worker’s annual average wage ranges between 4200- 9600 Rupees while college

graduates earn up to 225,000 Rupees (WEIGO, 2008). The huge wage disparity occurs

because society preserves the perception they are “unproductive” workers and are

socially disadvantaged (ILO, 2010, 7). A major discrepancy in annual wage between

college graduates and domestic workers highlights the idea education can bring higher

wage and better livelihood.

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Current policy’s attempt to improve gender equality is weak. Despite the India

government has legislated many issues relates to women’s equal rights, like 44 Central

laws (Basu, 2009, 2), gender discrimination issues still persists. The reality that women

are still in a “subordinate position compared to men” (Basu, 2009, 1) is appalling. The

numbers of domestic workers in India range from 2.5 to 90 million, 3.5 million of which

are females (ILO, 2010, 14). The data from ILO (2010) shows the dramatic differences in

labor participation rate between male and female where the ratio is 68: 27. Women have

limited access to jobs in engineering, medicine and business (ILO, 2010, 8). Because

intuitively women are perceived as labor machines bounded with housework and

childcare and are emotionally unstable most times. Therefore they are less productive and

remain lower rank in the society compared to men.

Current policy fails to display promising results toward the issue of child labor.

The majority of child labor generates from domestic workforce and over 50% are under

the age of 15 (ILO, 2010, 29). Child labors have a higher flexibility to be sent elsewhere.

One is because they lack entitlement or any awareness to workers’ rights. Second is that

they are readily to be controlled by employers, and third is due to cheap labor costs. They

cannot get any safety or health insurance from employers; many child labors suffer from

hunger, inhumane working conditions and poor treatments. Low licensing from agencies,

low guarantee for timely payments, frequency of sex trade and debt bandage have

intensified the risk for child labor and made child labor the prime victims of illegal

activities.

NGOs’ perceptions:

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According to one domestic NGO, Maitri, the main goal of the policy was enabling

higher qualifications to translate into higher pay rather than education. Maitri believes the

program has established a close relationship between the female domestic workers and

micro financing institutions to promote job-training divisions (Sarkar, 2013). As a result,

there is a sharp increase in the participation rate of female domestic workers. Seemingly,

gender equality has improved. Villages and neighboring towns formed a “village

economy” (Roy, 2002) to freely deliver information. Therefore, domestic workers have

wider access to any updates relating to job-training programs and encourage more people

to participate. Maitri also witnessed that the training program focuses on “soft skills,

including communications, decision-making skills” (Sarkar, 2013). They advocated the

skill-development policy could secure a definite career path for domestic workers

through intensive soft skill trainings

Necessity for change:

Current policy fails to address the following severe problems in domestic labor

market: disparities in gender, unfair socioeconomic conditions and child labor. These

loopholes are impeding India to thrive and grow sustainably. Domestic workers are still

treated unequally and even regarded as “invisible” (Agnihotri, 2011,5). Also, with 2only

3.3% in GDP (less than many developed and developing countries) devoted to education,

India faces the obstacle for helping more people emerge from poverty and achieve a

sustainable economic growth. Therefore, there is a necessity to make changes in the

current policy.

Discussion

2 World Bank Data (2014) See http://data.worldbank.org/topic/education

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I propose three options to improve the well being of domestic workers in India by

enhancing government’s current skill development policy. The first option is education

reform through targeting children in poor areas in India. Domestic workers face serious

difficulties in finding alternative jobs due to their “lower-than–average formal education

or absence of economic opportunities” (ILO, 2010, 6). Education can provide diverse job

selections for domestic workers because high-skilled jobs require parallel level of

education. Higher education greatly reduces the likelihood of unnecessary physical and

emotional abuse. Studies shown despite employers perceive working conditions as safe, it

can be hazardous for domestic workers (National Domestic Worker Alliances, 2007, 6-7).

Out of 242 domestic workers, 194 have experienced certain degree of physical and verbal

abuse (National Domestic Worker Alliances, 2007,11). Compared to domestic workers

(80.2%), healthcare professionals face slightly 25% chance of physical abuse (Swahnberg

et al , 2009,3). Also, women reported to have higher abuse rate compared to men

(Swahnberg et al , 2009,1). This evidence indicates higher education reduces the risk of

physical abuse. India’s current education system has no learning value, poor

infrastructure and money (Swami, 2013). And household poverty is evidenced as the root

for low literacy rate (Kaur, 2013, 1) because lack of money indicates insufficient access

to educational resources.

To turn the situation around, government should provide incentives, legal

obligations and financial aids for poor households to keep their children in school.

Economically, government faces huge deficits due to lack of funding. Politically and

socially, perceptions weigh in the decision of the importance of education and determine

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the amount of effort putting in. For security reasons, due to poor infrastructure, the safety

of young children going to school is hard to be guaranteed.

Second option is to eliminate child labor. The crucial step is to launch legislated

federal law stating any entry of underage person, especially females, to firms is strictly

prohibited. Previously, the Child Labor Act in 1986 sort out to collect fines to firms when

they employ children (Basu, 2005, 2). However, the result backfired and led to a period

of increase in child labor. Due to low labor costs in children, firms were willing to pay

the fines and continued to hire children. Therefore, supervision from NGOs in labor

intensive divisions of firms is not negotiable. Firms should also have weekly board

meetings regarding the issues of hiring protocols where they will learn about the

obstacles ahead. Reports and weekly audits should be handed to the NGOs promptly.

Government must impose legal frameworks, like implementing legislative laws,

conducting interviews, to make adjustments to firms’ human resource department. The

main purpose is to prevent illegal trafficking and protect children from harm. Compared

to the first option, economically, governments experience less financial burden and firms

are taking responsibility to make compensations during compliances. Politically,

government empowers more regulations and has a bigger say in the matter. However,

trust disputes and alienation would merge among various parties. High risk of trafficking

and debt bondage is a persistent problem, which are hard to alternate in a short span of

time.

Third option is to increase minimum wage. This heightens domestic worker’s

visibility and increases their living standards. There are several reasons. First, increasing

in minimum wage gives people higher purchasing power, since demand for most

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necessity goods is fairly inelastic in price. Second, increase in minimum wage raise social

awareness toward domestic workers. They have competitive ground when it comes to

bargaining goods and have broader access to social welfare. Therefore, their visibility

increases. Economically, evidence has revealed that huge increase in minimum wage

would shift the market back to formal (Dinkelman and Ranchhod, 2012). However,

increase too much in minimum wage would clash the employment rate in the market due

to crowded out effect. Compared to the first option, economically, government faces

fewer burdens by the cost. However, political regimes can sway a lot in the decision-

making.

Recommendation

Taking into account the pros and cons of the three options, I suggest the

government to implement education reform. “Education for all”, is strongly

recommended (Kaur, 2013). Parents, especially in poor household, have the social

perception that children should not go to school and should rather work. However,

education “is not a thing which parents or relatives … should have it in their power to

withhold” (Baland, Robinson, 2000). Education proves to have long-term beneficial

effects and high returns for the child’s future development because it can effectively

realize child’s potential in creativity in the short run (Barnett, Ackerman, 2006, 86).

Education can drastically close literacy rate gaps between female and male,

reduces burdens in households and raises female awareness in their independency. With

low education standard, female are constantly facing subconscious pressure from the

workplace. Jobless women also bring the entire household in jeopardy through putting all

financial burdens on working male (Kaur, 2013, 2). Once females are educated, they can

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share the pressure of feeding the family by earning higher income, have more flexibility

in job choice (Raju, Phil, 2014; Hu, 2003), and a louder voice when treated unequally in

workplace (ILO, 2010, 49).

While education reform opens door for female domestic workers to compete fair

and square and improve their awareness on their legal entitlements, India’s legislation on

Minimum Wage Act seems to have less effect on “the extensive margin in terms of

employment opportunities”(Gudibande, Jacob, 2015). Education can take effect in the

long run to improve skill level and labor productivity, reduce gender gap in labor market

and mobilizing more families from poverty.

Eliminating child labor cannot raise the awareness of independency for domestic

workers. Because the detrimental effects on children is fairly deep rooted. Parents’

dominant control over children is another reason the second option won’t work. Chronic

and drastic poverty may induce parents to use their children as a source of income or

encourage them to join labor force at early age, rather than send children to school.

According to a study, parents are altruistic and child labor is socially inefficient, it may

arise in equilibrium because parents fail to fully internalize its negative effects (Baland,

Robinson, 2000). Consequently, child labor problem is hard to solve without education

reform, legal enforcement and poverty reduction.

Weakness in enforcement mechanisms also proves the other two options may not

work out as effectively as education reform. Compliances between NGOs and firms may

be poor due to weak enforcement mechanism (ILO, 2010, 49). Minimum wage has less

incentive to improve domestic worker’s living standards unless “accompanied by strong

enforcement mechanisms” (Gudibande, Jacob, 2015, 2).

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According to Sengupta (2008), the current education system for the poor in India

is appalling. Currently, India has insufficient teachers in rural regions and students of all

age group are cramped in a small classroom. Their manners are deformed and facilities

are ill equipped. Students have complained not having money for school materials. So I

strongly recommend government to put education reform on the top of policy agenda.

Providing better and equal primary and secondary education to different areas in the

country can not only produce next generation with higher skills and more creativity, but

also relieve household burden of dependency, increase labor productivity and labor

income, and reduce gender disparity.

Implementation

The education policy should focus implementing from the bottom to the top. Prior

to my recommendation, there have been trials on improving education standards for

domestic workers. The Government of India has taken several measures to hoist the

status of women in the society. Different plans and policies that have laid emphasis on

women empowerment and the participation rate of women in economic, education, health

and politics to match up with men (Raju, Phil, 2014). However, it is not specific enough.

Promoting enhancement in youth educational program, aiming Grade K to 12 for the poor

in India is the fundamental step. Public education should be legislated through federal

laws to add restrictions toward parents’ perceptions. Beyond that, endeavor from

government plays a vital step in the process of operating this policy.

Government’s enforcement can include signing contracts with parents, obliging parents

not to send kids to work. Government should provide material incentives to poor families

and thus establish trust among households. Such Incentives are majorly financial

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education aid, scholarships, tuition waiver or cut-down depending on academic

performances. Government can also offer free school bus service, free meal plan and

after school programs such as programming, literature clubs, dance, choir, exploration

club, independent study group for all age and social etiquette class. Lastly, government

should motivate students from 10th -12th grade to pursue global education through

providing distance online courses; international- group seminars because competitive

spirit and creativity create broaden the horizon for young individuals.

The major concern for government in implementing this policy is lack of funding.

To reduce the burden for government, funds should come from all channels, including

private sectors and public sectors. One specific approach could be at the end of every

school year; there would be district talent showcases. Its purpose is to raise funding.

Also, government can welcome private companies or institutions at home or abroad to

invest in primary or secondary education and take part in infrastructure construction.

Local governments should be fully alert on the damaging effect of nation’s low literacy

rate and the gender gap in the workforce. I trust the current Department of Labor and

Education are competent enough to take on the task. Since funding is the main obstacle,

hiring a budget advisor would be wise and effective.

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Appendices

Bibliography

Agnihotri, N. (2011). “Recognition for India's invisible workers”, World of Work, (72),

29-30.

Baland, J., & Robinson, J. (2000). Is Child Labor Inefficient? Journal of Political

Economy, 108(4), 663-679.

Basu, A. (2009) Harmful practices against women in India: An examination of

selected legislative responses. United Nations.

Basu, K. (2005). Child labor and the law: Notes on possible pathologies. Economics

Letters, 87(2), 169-174.

Barnett S. W. Ackerman D (2006) Costs, benefits, and long-term effects of early care

and education programs: Recommendations and cautions for community

developers, Journal of the Community Development Society, Vol. 37, No. 2,

Dinkelman T. Ranchhod V.(2012) Evidence on the impact of minimum wage laws in an

Informal sector, domestic workers in South Africa, IDEAS

Edmonds, E. V., and Norbert S. 2012. "Poverty alleviation and child labor."

American Economic Journal: Economic Policy, 4(4): 100-124.

Concerning Decent Work for Domestic Workers. (2011). The Economist

(US), 399(8739), 73.

Gudibande R. & Jacob A. (2014). Minimum Wage Law for Domestic Workers : Impact

Evaluation of the Indian Experience

Retrieved from: http://www.raduateinstitute.ch/files/live/sites/iheid/files/sites/

cfd/shared/working%20papers/CFD2015_05.pdf

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Hu L. J (2003), The hiring decisions and compensation structures of large firms

Industrial and Labor Relations Review, Vol. 56, No. 4, pp. 663-681ILO (2010) Domestic Work policy Brief, Remuneration in domestic work,

Retrieved from http://www.ilo.org/wcmsp5/groups/public/dgreports/---

dcomm/publ/documents/publication/wcms_173363. Rights for Domestic Workers

Iosr Journals, & Dr.E.Raju, M.A, M.Phil., Ph.D., Post Doctoral Fellow. (2014).Gender e-

Discrimination in India IOSR Journal of Economics and Finance (IOSR-JEF)

ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 2, Issue 5 (Jan. 2014), PP 55-65

Retrieved from : www.iosrjournals.org

Kaslen, Stephan (2002) “Low Schooling for Girls, Slower Growth for All? Cross‐

Country Evidence on the Effect of Gender Inequality”, Education Economic

Development. 16 (3): 345-37

Kaur, Ramandeep (2013) Low Female Literacy Rate and Its Impact on Our Society

Costs, Benefits, and Long-Term Effects of Early Care and Education Programs:

Recommendations and Cautions for Community Developers, Ministry of Labor,

National Policy on Skill Development (2009) Retrieved from the web

http://labour.gov.in/upload/uploadfiles/files/NationalSkillDevelopmentPolicyMar

ILO (2010), Remuneration in Domestic work, ILO report

Retrieved from Web: http://in.one.un.org/page/rights-for-domesticworkers

National Domestic Worker Alliances (2007), the invisible and unregulated world of

domestic workers, Center for urban economic development

Retrieved from: www.domesticworkers.org

Roy, T. (2002). Economic history and modern India: Redefining the link. Journal of

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Economic Perspectives, 16(3), 109-130.

Sarkar, Radha, (2013) An Inside look at Domestic Workers in India Spotlight Maitri (Part

One), American India foundation. Retrieved from web:

http://aif.org/2013/09/an-inside-look-at-domestic-workers-in-india-spotlight-on-

maitri-part-one/

Sengupta (2008), Education Push Yields Little for India’s Poor, New York Times

Swahnberg K1. Hearn J. Wijma B .(2009) Prevalence of perceived experiences of

emotional, physical, sexual, and health care abuse in a Swedish male patient `

sample, US national library of medicine ;24(2):265-79.

Swami V. (2013) The present education system in India. NetworkersHome Retrieved

from: http://www.cciemagazine.in/uncategorized/the-present-education-system-

of-india/

Yee, Weiser (2014), Claim Against Indian Diplomat has echoes of previous case, New

York Times.

Williamson, J, & Pampel, Fred C. (1993). Old-Age Security in Comparative Perspective.

New York: Oxford Press

WEIGO (2008) Retrieved from :

www.unicef.org/infobychttp://wiego.org/sites/wiego.org/files/resources/files/

dw_background_note.pdf country/india_statistics)

Tables and figure

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Table 1: Labor Statistics of India

India Labour Last Previous Highest Lowest Unit

Unemployment Rate 4.90 5.20 9.40 4.90 percent

[+]

Employed Persons 29650.00 28999.00 29650.00 17491.00 Thousand

[+]

Unemployed Persons 44.79 40.17 44.79 5.10 Million

[+]

Population 1238.89 1223.58 1238.89 359.00 Million

[+]

Retirement Age Women 60.00 60.00 60.00 60.00 [+]

Retirement Age Men 60.00 60.00 60.00 60.00 [+]

Labor Force Participation Rate 52.50 50.90 52.90 50.90 percent

[+]

Wages 4.83 5.07 5.47 3.12 INR/Day

[+]

Wages In Manufacturing 6.25 6.55 6.97 3.92 INR/Day

[+]

Youth Unemployment Rate 12.90 18.10 18.10 12.90 percent

[+]

Data source: http://www.tradingeconomics.com/india/indicators World Bank Data (2014) Retrieved from : http://data.worldbank.org/country/india

Table 2 Literacy rate Male and Female India 2011 Census

STATE TOTAL MALE FEMA TOT MAL FEM

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S/UT LITERATES

LITERATES

LE LITERATES

AL LITERACY RATE

E LITERACY RATE

ALE LITERACY RATE

INDIA 77,84,54,120

44,42,03,762

33,42,50,358

74.04 82.14 65.46

Jammu & Kashmir

72,45,053

43,70,604

28,74,449

68.74 78.26 58.01

Himachal Pradesh

51,04,506

27,91,542

23,12,964

83.78 90.83 76.60

Punjab 1,89,88,611

1,06,26,788

83,61,823

76.68 81.48 71.34

Chandigarh #

8,09,653 4,68,166 3,41,487 86.43 90.54 81.38

Uttarakhand

69,97,433

39,30,174

30,67,259

79.63 88.33 70.70

Haryana 1,69,04,324

99,91,838

69,12,486

76.64 85.38 66.77

NCT of Delhi #

1,27,63,352

72,10,050

55,53,302

86.34 91.03 80.93

Rajasthan 3,89,70,500

2,41,84,782

1,47,85,718

67.06 80.51 52.66

Data source retrieved from :

http://indiafacts.in/india-census-2011/literacy-rate-india-2011/

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Figure Figure 1. India Per capita GDP (2006-2014)

Data source retrieved from: www.TradingEconomics.com | World Bank

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