The informal sector contributes to roughly half of India’s GDP (Ministry of Labour and Employment. 2015) and the workers in the informal sector—the backbone of employment and service provision in India—have been one of the hardest hit by the pandemic. As lockdowns with social distancing became the norm to prevent infections, tens of thousands of informal AC technicians lost the opportunity to service ACs in the typical April to July period this year.
UrbanCompany, on the other hand, a services aggregator-provider, saw a 33 per cent increase in its customer base during the unlock phase from June (LiveMint, 2020). Such formalised entities—with the resources they have to train, equip, and drive large-scale advertising—assured clients that their service providers would comply with notified safety standards and safety equipment. The company went on to achieve a 103 per cent increase in its profits in FY20, led by the beauty and domestic appliances servicing segments.
AC technicians in the informal sector, often not part of social security schemes, and without access to safety equipment, training, or the means to advertise, are stranded with failing businesses and flatlined incomes.
Offer social security to informal AC technicians
Most social security schemes in India offering essential health, education, food security, pension, and emergency cash transfers can only be availed by workers in the formal sector. There are, however, a few such as the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) that provides a financial safety net and the Atal Pension Yojana (APY) which covers informal workers. The Ayushman Bharat provides health insurance to citizens. Policymakers need to effectively link these schemes to the informal AC servicing workforce as well to help them tide over periods of low income.
CEEW’s recommendations for India’s recovery through jobs, growth and sustainability pathways identifies several near-term relief measures to improve the dire economic situation of informal workers. One of the suggested actions is to make a one-time cash transfer to affected migrant labourers to ensure their livelihood security (Ghosh, Arunabha, Shuva Raha, et al. 2020). Such a cash transfer also needs to be extended to the informal AC service technicians who number in lakhs.
Prepare for an imminent surge in informal-sector technicians
Even though India’s penetration of room air-conditioners is one of the lowest globally (7 – 10 per cent), the demand for cooling is set to rise significantly in the coming decades on account of rising temperatures and increase in incomes.
The Ministry of Environment, Forest and Climate Change (MOEFCC) recognising that India needs to develop its cooling sector sustainably launched the India Cooling Action Plan (ICAP) in 2019. It is a blueprint of recommendations across various segments such as Air-Conditioning, Refrigeration, Research and Development, and the Servicing Sector to enable the sustainable growth of the cooling sector.
“The Refrigeration and Air-Conditioning (RAC) service sector is largely unorganised and presents an immediate opportunity for securing environment benefits and livelihoods enhancement of RAC service technicians through training and certification,”
Excerpt from the India Cooling Action Plan.
The ICAP estimates there are about 200,000 AC service technicians in India, most of whom function in the informal sector. India’s cooling demand is likely to grow 8 times in 20 years, with the demand for cooling in buildings, alone, rising 11 times (Ministry of Environment, Forest and Climate Change, 2019). Even if we assume a proportionate increase in technicians, we will have two million AC technicians in the country. These numbers are a compelling reason to address both the current un/underemployment employment of informal AC technicians and also set in motion processes to train and formalise future ones, as the ICAP indicates.
Recommendations to formalise, train and certify informal sector AC service technicians
Formalising informal technicians needs to be the focus of the labour-force policymaking from 2020 through 2030 through several short and long-term measures. The ICAP commits to the training and certification of 100,000 AC technicians by 2022-23. But without formalisation, many technicians will not be able to access this training.
The current period could be used to begin digitising the formalisation process of technicians so they can benefit from the regular online trainings recommended by the ICAP. This would help in tracking the progress of the formalisation initiative and also form the backbone for further training as newer technologies get adopted in residential air conditioners RACs.
Training and certification efforts need to be coupled with incentives of better earnings and employment to encourage technicians to sign up for them. CEEW research recommends public procurement of certified technicians for government-led needs as one of the measures (Bhasin, Shikha et al (a). 2020).
Investment is also needed to create a market demand for trained and certified technicians through regulations as well as public campaigns to inform consumers on the benefits of regular AC servicing (Bhasin, Shikha et al (b). 2020). Both industry and the government need to increase consumer awareness on Good Servicing Practices through advertisements, campaigns, and regulations. As more technicians join this workforce, India’s mid-to-long-term measures need to include an increase in training capacity, targets, and an evolved standardised curriculum.
Achieving growth with sustainability across the sector goes hand-in-hand with ensuring livelihood security for all workers. With the informal sector contributing significantly to India’s GDP, its needs merit attention as much for the financial health of the workforce as for India’s overall economic development. The ICAP, recognising the need to focus on the informal sector, considers technicians as integral to the future of the cooling sector. The task now is to identify all technicians, equip them with best-in-class skills, provide them with formalisation opportunities and secure their employability while driving the cooling sector towards sustainability.
Agarwal, Nikhil. 2020. "Lockdown impact: Urban Company acquires 33% new customers". New Delhi: LiveMint, June 11.
Bhasin, Shikha, Apurupa Gorthi, and Vaibhav Chaturvedi (a). 2020. A Universal Certification System for India’s refrigeration and Air-Conditioning Servicing Sector. New Delhi: Council on Energy, Environment and Water.
Bhasin, Shikha, Apurupa Gorthi, and Vaibhav Chaturvedi (b). 2020. Do Residential AC Buyers Prioritise Energy Efficiency?. New Delhi: Council on Energy, Environment and Water.
Ghosh, Arunabha, Shuva Raha, et al. 2020. Jobs, Growth and Sustainability: A New Social Contract for India’s Recovery. CEEW and NIPFP Report. New Delhi: Council on Energy, Environment and Water.
Ministry of Environment, Forest and Climate Change. 2019. India Cooling Action Plan. New Delhi: Ozone Cell, Ministry of Environment, Forest and Climate Change.
Ministry of Labour and Employment. 2015. Employment in Informal Sector and Conditions of Informal Employment. Chandigarh: Labour Bureau, Ministry of Labour and Employment.