2.1 Background: The Informal Sector in India

Although most of India's workforce works in the informal, or unorganised, sector, it is striking how high the level of organisation in the informal economy actually is. Many formal industries have backward linkages into the informal economy, as they either source products or services from the sector. Though outsourced work is itself often informal, these supply chains are comprised of layers of intermediaries organized hierarchically. These chains ultimately connect workers with companies that operate nationally and internationally. It is particularly the international intermediaries and buying houses, rather than the small enterprises or workers, that command power in these industries. They operate with little transparency, and leave little space for negotiation from outsiders or workers.

Because the supply of cheap labour is greater than demand for many of the industries, intermediaries have multiple options to choose from when it comes to sourcing products and services. Workers have little power to negotiate prices or wages. Essentially, they have no opportunity to contribute to decision making, which contributes to low prices and quality.

Increased competition between developing countries and manufacturing companies within particular nations further aggravates the economic and social realities for small enterprises and the working poor. More stable business partnerships have been replaced by short term business relationships. Buyers do business with the lowest bidding manufacturer, regardless of labour standards and quality. Being at the whim of the market, small enterprises in the informal economy will not invest in human resources or technologies. This leads to a downwards spiral of economic outsourcing in which work is insecure, prices are abysmally low, and quality suffers.

Additionally, many workers are burdened by debt. Debt takes the form of advances and loans from middlemen and employers, and must be repaid over long time periods, often at high interest rates. With low skill levels and few or - as is most often the case - no opportunities for saving or financial planning, the workers are pushed towards dependency on additional loans. Engulfed by myriad forms of cultural and political exclusion, the working poor have had to evolve life strategies based on day-to-day sustenance requirements. Planning does not extend beyond one or two days, and spending is geared toward meeting daily needs in an ongoing struggle for survival. The disorganisation of work and life is enmeshed, and dictates daily life. Under such conditions, workers have little opportunity to understand the exploitative system in which they are caught, let alone implement collective solutions, where they might, for example, start negotiating prices and labour standards that work in their favour. Workers experience deep apathy and helplessness with respect to their future and their lives as a consequence.

MAYA ORGANIC contends that transforming the system is possible. However, this kind of systemic change would require strong institutions that represent the needs of the working poor. hese institutions would have to improve the capabilities of workers to operate in the markets,