By Sharon Waxman, President and CEO, Fair Labor Association and Karen A. Tramontano, Founder, Global Fairness Initiative
This weekend, India will host the G20 Leaders’ Summit, bringing together the finance ministers of the major economic powers that drive the world’s global production.
This meeting is an essential forum to address significant issues related to the global economy. Critical issues are on the agenda, including climate change, the war in Ukraine, food insecurity, global poverty, and the U.S. inclusive economic growth agenda. One noticeably absent issue is a direct discussion about how the G20 countries can support decent jobs in informal and formal economies. Since India is hosting the G20, it is well-placed to lead this conversation.
In 2022, the World Bank identified India as one of the world’s fastest-growing economies. It already is South Asia’s largest economy and ranks fifth worldwide at $3.5 trillion. But jobs in the informal economy – where there are no legal rights for workers – dominate. India’s informal economy currently makes up 43.1% of its GDP. Some estimates indicate that up to 90% of Indians work in the informal sector without formal employment rights or contracts.
The laws in India – the Employee’s State Insurance Act of 1948 and the Employee’s Provident Fund of 1952 – require medical, sickness, maternity, disability, and retirement benefits for workers. But these benefits only apply to those working in the formal economy, specifically to enterprises that employ more than ten workers.
It’s the same story in Brazil, South Africa, and other countries attending the G20 Leaders’ Summit. A majority of the workforce in these countries is in the informal sector, where benefits and legal rights remain elusive. And, while the percentage of workers in the informal economy in the U.S. is not large, the circumstances for those workers – who tend to be migrants and other vulnerable workers – are the same.
While over the last ten years, many G20 countries, including India, have reduced the number of people living in extreme poverty (below $2.15 per person per day), G20 leaders must focus on decent jobs and informality cohesively. Until they do, the related challenges of child forced labor and lack of living wages that have plagued the people of these countries will persist.
When the G20 leaders meet next week, they can tackle this issue head-on. They can start by challenging the ill-fated “trickle-down” economic model that strives to tie global reductions in state spending to increased private investment to boost incomes and reduce poverty, which consistently fails to reduce poverty or create decent jobs and often instead ushers a race to the bottom on wages and labor protections.
The G20 must re-prioritize the economic needs of the bottom half of its society and focus its policy initiatives on lifting them out of poverty through decent jobs and living wages. The economies of the G20 need to work for and meet the human needs of all their citizens.
Sharon Waxman is president and CEO of the Fair Labor Association (FLA), an international network of companies, universities, and civil society organizations collaborating to ensure that millions of people working at the world’s factories and farms are paid fairly and protected from risks to their health, safety, and well-being.
Karen A. Tramontano is the founder of the Global Fairness Initiative (GFI), a non-profit organization working to promote a more equitable, sustainable approach to globalization to ensure its benefits reach all people, including the working poor.