Informal workers—those laborers who, by definition, are “employed in enterprises that use power and employ fewer than 10 people or do not use power and employ fewer than 20 people “— comprise a staggering three-quarters of all non-agricultural employment in developing countries. India, Brazil, and Mexico—all federations—are three of the top six countries with the largest global percentages of the total informal labor force. Together, they comprise three-fourths of the entire informal labor force across the developing world.

There is a clear correlation between federal political structures and the incidence of informal labor. But can this correlation be extended to make a causal claim about the impact of political structures upon the power of society’s most marginalized? If so, are there implications for democracy? In short: yes and yes.

A longitudinal analysis of India’s federal system, and the interaction between the “margins” of society and the state, underscores how federal systems offer effective, potent “powers of the powerless”, in the words of Havel, to civil society. Federalism, by institutionalizing the accountability of the state to its citizens, promotes democracy.  Were India not a federal system with significant powers delegated to the states, its informal workers would not be able to exploit their “voting bloc” (Agarwala 2013), and they would consequently have far less welfare protections and political power than they do today. In short: in a federal system, when a group in civil society calls, the state listens.

The question of whether a particular system of government could have an impact on democratic outcomes is often an after-thought — if thought of at all — in popular consciousness. Academia, however, as it often does with otherwise innocuous topics, has struck up a lively debate on the topic. The original ambition of federalism, structuralists contend, was to create countries without kings. This is as simple an idea as it is important.  Federalism, in theory and practice, is a bulwark against dictatorial consolidation. Bolivia and Honduras, the two countries I discussed in a previous post, are facing acute executive aggrandizement and inching closer to authoritarianism. They are also both unitary systems. This is no coincidence.

These are largely testaments to how federalism endows states with legal routes by which to thwart executive cooptation. The impact of federalism on informal labor forces, meanwhile, is a testament to how federalism endows civil society with such. India, home to 450 million informal workers—93 percent of the total workforce, contributing to 60% of India’s overall GDP—is a prototypical example of these theories in action. This is thanks to two words: welfare boards. Rina Agarwala (2013), in a brilliantly researched book, “Informal Labor, Formal Politics, and Dignified Discontent in India”, details their character, ascension, and importance.

In the 1980s, after Indian labor law management was devolved from the federal to the state level, informal workers began politicizing their status to demand accountability from local and state level officials. With power over labor law, and closer proximity to these informal workers within the labrynthine bureaucracy that is India, Indian states now had immense power over the fate of their informal laborer citizens (Agarwala 2013).

Informal workers recognized this, and rose up. Welfare boards were born of this intentional exploitation by the informal labor force of the federal system. They are tripartite institutions with members from the state government, employers, and workers, which allow for informal workers to appeal for their fundamental rights to welfare, workplace protections, and general social services (Agarwala 2013). These are demands otherwise unguaranteed by an inherently transitory, disadvantageous employment sector. When there is no formal employer, and no guaranteed benefits, informal workers turned towards the states. And the states were forced to listen.

With their creation, spurred by federalistic decentralization, a new era was born. All of a sudden, Indian officials are forced to respond to the demands made by informal workers — or risk losing their vote. The result: informal workers’ demands made are now met at a higher incidence than before the welfare boards, Agarwala (2013) finds. Studies by Carr et. al (1996), Chowdhury (2003), and Sanyal (1991) show this organizing by informal workers has translated into improved working conditions for informal workers in India.

Welfare boards are thus India’s informal labor forces’ most innovative, effective equivalent of a poor coalition; one which vocalizes their demands towards the state and effectively mobilizes them as a political bloc and economic actor. Without the informal status, there would be no incentive to politicize demands.  Without the federal structure, demands would be silenced, ignored, and/or swallowed by the magnanimity of the Indian national level state. Without the ability of a welfare board system to build upon the mechanisms of accountability that federalism implicitly establishes between lower levels of government and the electorate, demands for welfare would continue to go unmet.

The timeline reflects the power of federalism: decentralization led to the institutionalization of the relationship between the states and their citizens, which promotes the citizens’ outcomes and increases their accountability. No longer are informal workers wholly disenfranchised margins of society, thanks to federalism.

Informal workers in India continue to face undeniably staggering odds. Federalism, however, is providing a means of survival to these 450 million people — by promoting democracy.  

Photo: Worker woman in a construction site in Bhubaneshwar- Orissa- India, Carla Antonini, 2008. Licensed for commercial reuse.