This is a question that has been in the air for quite a while. What should be the choice of employment for those who are right at the base of the pyramid? The answer lies in the immediate economic environment of the people concerned: whether the base is urban or rural, whether it encircles an industrial belt. If the base is in the rural areas, the question will have a different context. But there is a generally-accepted premise that the members living at the base will have little opportunity to get absorbed in an industrial outfit unless they are trained and employable.

Anecdotal evidence and our everyday experience indicate that self-employment could be the preferred choice for those at the bottom of the pyramid who need to earn a living.

We must remember that the economic realities for the rural and the urban members of the base of the pyramid are entirely different.

For the rural, the situation and the earning abilities are directly linked to the seasonal nature of agriculture. In contrast, in the case of the urban population, the deal is a bit more complex.

Take the rural structure. Availability of a job doesn’t mean just a vacancy. It means a vacancy that suits the skill of the aspirant. Unfortunately, today’s medium and heavy industries require skill sets that the rural underprivileged do not have. The small and the tiny industries perhaps could absorb the rural underprivileged. But again, the very definition of the underprivileged implies a lack of access to gainful employment.

For ages, the rural underprivileged have been used to working as seasonal labour in the fields and living in a vicious cycle of poverty. To escape this, they need capital as the springboard to jump into the virtuous cycle of prosperity. Over the last decade, the microfinance movement’s spread has addressed this issue in a gradual but methodical way. In a manner of speaking, for the under-skilled, industrial employment is a tethered existence, while self-employment is deemed as a “free” existence.

The same argument runs equally true for the urban poor or those at the pyramid’s base. Lacking even the seasonal farm employment that their rural brethren get, they scour the urban market for a glint of survival. The growth of the informal sector has been largely due to this lack of access.

India’s industrial growth has not happened in a manner that could have catered to the base of the pyramid. Economist Arvind Panagariya, in a recent article, harped on the inability of the small-scale to scale up through the natural cycle. This could also have taken away the current agony of the urban underprivileged.

Be that as it may, the economic reality dictates that self-employment and the informal sector remain the haven that beckons those at the base of the pyramid, even in the urban sector, with microfinance playing a major role.