«Published Annually Vol. 6, No. 1 ISBN 978-0-979-7593-3-8 CONFERENCE PROCEEDINGS Sawyer School of Business, Suffolk University, Boston, Massachusetts ...»
According to the Ministry, quality of employment is determined by factors such as the level of job security, reasonable level of earnings and the living status of workers. The employment policy emphasises that there should not only be more jobs, but jobs that are decent and ensure minimum wages, safe working conditions and basic social security. This has particularly been highlighted in context of the retail sector. In addition, the retail sector policy has focused on the right to space and livelihood for very small, selfemployed retail traders, like street-shop owners and vendors. Thus, the government policy has highlighted a need to balance quality employment creation in the organised retail sector with protection of employment in the unorganised sector.
The FDI policy in India is regulated by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, which comes under the central government. The employment potential of a sector, the need for investment, the latest technical know-how and global best management practices play a key role in determining the FDI policy. In the case of retail, in 2006 FDI up to 100 per cent was allowed in wholesale cash-and-carry subject to certain conditions to facilitate investment in the supply chain. FDI up to 100 per cent is allowed in franchising, since it creates opportunities for self-employment; in trading items sourced from small-scale sectors since they are labour-intensive; and in manufacturing, which can generate employment. In 2006, 51 per cent FDI was allowed in single-brand retail subject to certain conditions. This partial liberalisation was based on the assumption that brand retailers will not directly compete with small mom-and-pop stores who largely sell non-branded products.
At present, FDI is not allowed in multi-brand retail primarily to protect employment in the unorganised sector.
RESEARCH DESIGN AND METHODOLOGY
To examine whether there has been a change in the quality of employment with retail modernisation, a pan-India survey of employees and their employers (the retailers) in the organised and unorganised retail sectors was conducted in 2009-10. The survey covered 10 Tier I, II and III cities. This classification of cities into tiers is based on the population of a city, as given in Mckinsey (2007). Tier I cities include Delhi, Mumbai, Kolkata, Chennai, Pune, Hyderabad and Bangalore, Tier II cities include Surat and Tier III cities include Bhubaneswar and Amritsar. Rural areas were excluded, as organised retail presence in rural areas is low.
Face-to-face interviews were conducted with a randomly selected sample using a semi-structured questionnaire. Separate questions were designed for employees and retailers. Completed questionnaires were collected from 121 unorganised retail employees, 79 organised retail employees, 254 unorganised retailers and 78 organised retailers. Though the size of the sample is small (532 respondents), it is a representative sample as it covers a number of cities where organised retail has a presence, retailers across different product categories, different retail formats and different levels of employees.
The employee questionnaire focused on their demographic profile, educational qualifications, years of experience, and details of the job including working hours, holiday entitlement, incentives, and remuneration. To assess the quality of employment in the unorganised and organised sectors, the indicators set by the Ministry of Labour and Employment, namely, employee remuneration, working hours and holiday entitlements were used. Survey respondents were also asked if they had received training and if it had affected their performance and their short-term and long-term job prospects. Employees in the organised retail sector were asked about differences in the pay package in domestic and foreign organised retail outlets. Retailers were asked about their shop size, average number of employees, employee qualifications and wages, and their training and skill development programmes. Some questions were common across retailers and their employees to cross-check the findings. The unorganised retailers were asked about the impact of organised retailers on their business and their future prospects as well as whether they were considering Conference papers © Knowledge Globalization Institute, Pune, India, 2012 working in the organised sector. Since the sample size was small, simple statistical tools and descriptive techniques were used to analyse the data.
DATE ANALYSIS AND RESULTSThe survey data was analysed to assess and compare the employment-generating potential, quality of employment, education and skill development opportunities and future prospects in the organised and unorganised sectors.
The survey found that most of the unorganised retail outlets were small with only 23 per cent of the stores larger than 1,000 square metres (sq.m.) compared to 75 per cent of the stores in organised outlets. To assess employment-generating potential, employment density as measured by average floor space in square metres per person in an occupied building was calculated. This helps to assess if there is disguised unemployment or if new employment opportunities have been created in the retail outlet. The survey results indicate the presence of disguised unemployment in unorganised retail outlets. For smaller shop sizes per square metre, employment density is lower in unorganised outlets. This implies that each employee gets less space in an unorganised retail outlet. As shop size increases, employment density in organised retail outlets is lower than in unorganised outlets, indicating higher employment creation in the organised sector (Table 1).
TABLE 1: Employment Density in Organised and Unorganised Outlets (in sq. m.)
Note: 1= 500 sq.m., 2=501-1000 sq.m., 3=1001-2000 sq.m., 4=2001-4000 sq.m., 5= 4001 sq.m.
Conference papers © Knowledge Globalization Institute, Pune, India, 2012 Quality of Employment The quality of employment was assessed both in terms of salary earned and physical working conditions. Average salaries, increments and incentives (like overtime payments and performance-linked bonuses) were compared for employees with similar designations, educational qualifications and years of experience. To assess physical working conditions, the percentage distribution of employees by their hours of work and holiday entitlements was calculated.
While organised retail outlets have a wide gradation of employees, which includes senior managers, junior managers, store-help and contract employees (security guards, liftmen, housekeepers, etc.), such gradations are not present in the unorganised sector. As a result, it is difficult to compare salaries in organised and unorganised outlets. Usually, the shop-owner in an unorganised outlet doubles up as the manager and has helpers to assist him. Comparing managerial salaries in organised outlets with the owner’s salary in the unorganised sector does not reveal the true picture, because of the differing nature of their work and the reluctance of self-employed owners to reveal their actual earnings. Therefore, the salaries of store-help with similar education and qualifications in the unorganised and organised retail sectors have been compared in Figure 2.
FIGURE 2. Average Salaries of Store-Help in Organised and Unorganised Outlets
Up to Class 12th Degree Graduate qualifications and experience get higher salaries in organised retail outlets than in unorganised retail outlets. The salary difference between the organised and unorganised sector employees is as high as 1/3rd the total salary of an employee in the unorganised sector. In addition, 70 per cent of organised sector employees pointed out that the package offered by foreign retail outlets is better than domestic organised retailers.
Increments in the organised retail outlets are linked to the performance of the employees, while in the unorganised retail outlets they are linked to employee’s years of experience. The survey found that organised retail outlets offer more opportunities to earn increments and incentives. Around 59 per cent of employees of the organised sector said that they received incentives compared to only 19 per cent in unorganised retail.
To assess the quality of employment, employees were asked about the average working hours in a week and holiday entitlement in a year. Weekly working hours were lower in organised retail outlets. While 69.2 per cent of unorganised sector employees claimed that on an average they work for 66 hours or more, only 29.4 per cent of organised sector employees did so. In fact, 7.69 per cent of unorganised sector employees worked for more than 72 hours a week, while none of the organised sector employees were made to work such long hours. In addition, 76.4 percent of organised sector employees claimed that they could take more than 15 days of leave per year compared to 11.54 percent of unorganised sector employees.
Conference papers © Knowledge Globalization Institute, Pune, India, 2012
It was found that employees in the unorganised sector have lower qualifications than those in the organised sector. Around 66 per cent of the unorganised sector employees did not have a Bachelor’s degree and 20 per cent did not even finish 12 years of schooling. In the organised sector, 53 per cent of the employees had a Bachelor’s degree. In contrast, none of the employees in the organised sector had qualifications lower than higher secondary (after 12 years of schooling). Around 5 per cent of the employees in the organised sector had taken specialised courses in retail management. Across employees with the same designation, it was found that 67 per cent of the store-help in the organised sector had a Bachelor’s degree compared to 33 per cent in the unorganised sector.
Employees were asked about the training that they received at work; this is an indicator of whether there are skill development opportunities in their workplace. Around 59 per cent of employees in the organised sector received formal training, while around 96 per cent in the unorganised sector did not receive any formal training at work.
Retailers were asked if they offered any training to their employees. Sixty three per cent of the unorganised retailers did not impart any formal training, whereas 93.5 per cent of organised retailers provided formal training. In the unorganised retail outlets, employees are primarily trained on sales promotion techniques, dealing with customers and product information; the training is largely provided within the shop for a maximum of seven days before the employee formally joins work. Only retailers dealing in specialised products like electronics send their employees to the corporate office of the brand for training. Organised retailers, on the other hand, provided training on sales promotion techniques, customer handling, product information, store management techniques, operational management, visual merchandising, personality development and grooming, stock and inventory management, including verification of the stock and ordering process, and product storage techniques for perishable products.
Moreover, most employees are formally trained by the head office of the company (brand) and some employees are sent abroad for training; this is an ongoing process. The survey found that all organised retailers who provided formal training were satisfied with the skills of their employees.
The employees in organised retail outlets were asked to rate their level of satisfaction on working in organised outlets along various parameters. The responses were analysed using a five-point rating scale, with 1, 2, 3, 4, and 5 representing ‘very low’, ‘low’, ‘average’, ‘high’ and ‘very high’ levels of satisfaction, respectively. The responses were ranked based on the percentage of respondents who rated the parameters as 4 or 5. The ranks are given in Table 2.
The majority of the respondents gave a high rank to the training and skill development programmes in the organised retail outlets, followed by higher growth opportunities. However, they seem to have some concerns about job recognition which is usually reflected in performance-based bonuses, promotions, etc. One reason is that the survey was conducted during the global slowdown and retail business was impacted.
Conference papers © Knowledge Globalization Institute, Pune, India, 2012 Future Job Prospects of Employees Respondents were asked about their short-term job prospects in their retail outlet and long-term job prospects in the overall retail sector. The responses (Figures 3a and b) indicate that short-term job prospects are mostly good in the organised retail sector, while it is moderate in the unorganised sector. However, most unorganised retail sector employees found long-term employment prospects in the retail industry good. This is because the retail sector is growing and this is generating job opportunities, particularly in the organised retail sector. Sixty-five per cent of the unorganised sector employees pointed out that they would like to work in organised retail outlets. They felt that they are not threatened by the growth of organised outlets since it offers job opportunities.
Conference papers © Knowledge Globalization Institute, Pune, India, 2012 Although the majority of the unorganised sector employees are interested in moving to the organised sector, the transition from the unorganised to the organised sector is not smooth as shown in their responses in Table 3.
TABLE 3: Responses of Unorganised Retail Employees on Prospects in Organised Sector
This is primarily due to the difference in the skill requirements of the two sectors, which makes it difficult for an employee in the unorganised retail outlet to get absorbed in the organised sector.