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2013

SOCIOLOGY PROJECT
LABOUR IN UNORGANISED SECTOR

RISHABH SINGH D.S.N.L.U 11 Page 0 of 2/28/2013

And at last I am very much obliged to the God who provided me the potential for the rigorous research work.A. I am very grateful to her for her exemplary guidance. Apart from all these.L.B 201289 Page 1 of 11 . without whose cooperation this project was not possible. L. At finally yet importantly I would like to thank my parents for the financial support. I would like to enlighten my readers regarding this topic and I hope I have tried my best to pave the way for bringing more luminosity to this topic. I want to give special thanks to the librarian of my university who made every relevant materials regarding to my topic available to me at the time of my busy research work and gave me assistance. NAME-RISHABH SINGH B.ACKNOWLEDGEMENT I am feeling highly elated to work on the topic “LABOUR IN UNORGANISED SECTOR” under the guidance of my SOCIOLOGY teacher. I also want to thank all of my friends.

 PROBLEM OF UNORGANISED SECTOR FROM ORGANISED SECTOR  CONCLUSION  REFERENCES Page 2 of 11 .CONTENT  ABSTRACT  INTRODUCTION  UNORGANISED SECTOR EMPLOYEMENT: RESIDUAL EMPLOYEMENT  PROBLEMS IN UNORGANISED SECTOR  NO CONCEPT OF LABOUR AND TRADE UNION  PROBLEM OF UNORGANISED SECTOR FROM THE GOVT.

and it is explain about introduction of unorganized sector. 2004 as an advisory body and watchdog for the informal sector. is regarded as a group of household enterprises or unincorporated enterprises owned by households that includes informal own-account enterprises. representing a growing proportion of economic activity.LABOUR IN UNORGANISED SECTOR ABSTRACT Informal sector is referred to as the unorganized sector. The Government of India set-up a ‘National Commission on Enterprises in the Unorganized/Informal Sector' through a resolution dated 20th September. contribution of these formal activities in the unorganized sector is quite small he term informal sector was coined by the British economist Keith Hart in 1971. Although various conceptualizations of the informal sector have been debated ever since the term "informal sector" was coined by the British economist Keith Hart in 1971. However. This paper is based on Issues and Challenges of employment in unorganized sectors. the fact remains Page 3 of 11 . which may employ contributing family workers and employees on an occasional basis. Issues and Challenges of employment in India. INTRODUCTION The definition of informal sector as adopted by the Fifteenth International Conference of Labor Statisticians in 1993. particularly in the developing countries. The unorganized sector also includes some formal activities on which there is no regular system of data availability. which employ one or more employees on a continuous basis. and the conclusion of unorganized sectors details. and enterprises of informal employers. the fact remains that it has emerged as a dynamic and vibrant sector. This sector broadly corresponds to the household sector including private unincorporated enterprises. and also explained about unorganized sectors details and issues and challenges details. The unorganized sector also includes some formal activities on which there is no regular system of data availability. Status. This sector broadly corresponds to the household sector including private unincorporated enterprises.

The first Indian National Commission on Labor (1966-69) defined the „unorganized sector work-force' as "those workers who have not been able to organize themselves in pursuit of their common interest due to certain constraints like casual nature of employment. The informal sector. The terms of reference of the Commission included (i) the status of unorganized/informal sector in India including the nature of enterprises. infrastructure. Page 4 of 11 . (ii) the existing arrangements for estimating employment and unemployment in the informal sector (iii) suggest elements of an employment strategy focusing on the informal sector. therefore. based on the characteristics of the enterprises. This sector broadly corresponds to the household sector including private unincorporated enterprises. the unorganized sector refers to those enterprises whose activities and/or collection of data are not regulated under any legal provision or where any regular accounts are not maintained. In the informal sector is referred to as the unorganized sector. entrepreneurship development. skills. As the Commission started functioning. small and scattered size of establishments". trusts. ignorance and illiteracy. enterprises run by the cooperative societies. finance. (i) identify constraints faced by small enterprises with regard to freedom of carrying out the enterprise.that it has emerged as a dynamic and vibrant sector. their size. 2004 as an advisory body and watchdog for the informal sector. On the other hand. The unorganized sector also includes some formal activities on which there is no regular system of data availability. can be considered as a sub-set of the unorganized sector. technology and markets and suggest measures to provide institutional support and linkages to facilitate easy access to them. in the unorganized sector. However. etc. representing a growing proportion of economic activity. became an absolute necessity for the completion of its tasks. private and limited companies are also covered. the adoption of a uniform definition of un-organized/informal sector. particularly in the developing countries. contribution of these formal activities in the unorganized sector is quite small. in addition to the unincorporated proprieties or partnership enterprises. and magnitude of employment. Further. The Government of India set-up a „National Commission on Enterprises in the Unorganized/Informal Sector' through a resolution dated 20th September. spread and scope. access to raw materials.

Categories of unorganized labor Contract labor including construction workers Casual labor Labor employed in small scale industry Handloom/power-loom workers Beedi and cigar workers Employees in shops and commercial establishments Sweepers and scavengers Workers in tanneries Tribal labor Other unprotected labor. Relevancy of Unorganized Sector Contributions to national product and Net domestic product 92% of the total workforce in a country were employed in the unorganized sector 370 million workers constitute the work force of unorganized sector. Few examples Forest workers Tribal trying to follow traditional vocations within their traditional habitats Fishermen who venture out to sea in vulnerable canoes People working in their homes with software People assembling parts for a highly sophisticated product. operating on a proprietary or partnership basis. Hotels And Restaurants 0.37 Transport. 3. Part of the labor market which is unregulated and to a large extent unprotected Attempt to improve the socio-economic conditions for the unorganized sector will create hurdles in the smooth functioning of market led economy.25 Manufacturing 6. This can be Identified On the basis of the nature of work that workers or employees are engaged on the number of employees in undertakings.07 Electricity.65 3.By National Commission on Enterprises in the Unorganized/Informal Sector in 2004.71 37.48 Financial Services 1.39 238.07 (93%) 370.87 Non- Agriculture 26.17 16.68 131.01 1. of persons (in millions) Formal Sector Informal Sector Agriculture 1.15 11. Contribution to savings and capital formation Sharing of only household sector in Total Gross Domestic Page 5 of 11 .Definition: Part of the workforce who have not been able to organize in pursuit of a common objective because of constraints such as casual nature of employment ignorance and illiteracy small size of establishments with low capital investment per person employed scattered nature of establishments superior strength of the employer “The unorganized Sector consists of all private enterprises having less than ten total workers. Over 60% share as per current price in NDP.49 40. Estimated Contribution to Employment Year: 1999/00 (Total labor force: 406 million) (GDP share: 63%) Industrial Category No. Gas And Water 1 0.36 Trade.5 Mining & Quarrying 1. Storage & Comm. Contribute Significantly to National Product.04 Construction 1. It Provides income earning opportunity to the largest number of workers in India Forms the basis of livelihood for millions Employees both men and women Employees children in some industries Relevancy of Unorganized Sector .37.64 All Sectors 28.” .29 Community Services 11.49 21.

The labor input data is obtained from Census of Small Scale Industry. 1993-94 and 1999-2000.7 % is informal in 2001-02. UNORGANISED SECTOR EMPLOYEMENT:-RESIDUAL EMPLOYEMENT Over half of India‟s national output comes from the unorganized sector. While employment in the formal sector has been stagnant in the last decade. Value added per worker estimated from 55th. Employment estimates from 55th and 61st Round EUS survey. Apportioning was not limited only to unorganized sector GDP. it is estimated that 371. Keeping the overall unorganized sector as defined by CSO constant.2 million workers (nearly 93 per cent) are employed in the unorganized segment of the Page 6 of 11 . employment creation in the informal segment of the economy has been tremendous. 55.42% in 1999-2000 and 49. For the subsequent years.Saving mainly unorganized sector is about three fourth. NSS surveys on Employment & Unemployment. Out of 399 million workers in 1999-2000. Broad employment trends for the organized and unorganized sector is shown in Table 1 for the years 1983. Proprietary and partnership enterprises employing less than 10 workers Share of Unorganized Sector Varies between 57 and 60 percent since 1993-94 58. 56th and 57th round unorganized sector surveys.94% in 2004-05 Methodology The GDP estimates of unorganized sector in each compilation category are initially prepared for a bench mark year by using labor input method. 1987-88.5 % of NDP belongs to unorganized sector of which 47. DGET etc. Value added per worker for services from 57th round and for the rest of the sectors from 55th round. It is evident that throughout this period an overwhelmingly large portion of the workforce in India is found to be employed in the unorganised sector. Employment estimates from 55th round for all compilation categories. Multiplying the employment with value added per worker to arrive at the informal sector estimates. More than 30% of National Income comes from Unorganized Sector. In the services sector total GDP was apportioned. How is it calculated? Various Methods used by National Commission for Enterprises in the Unorganized Sector Item CSO Kolli & Hazra Sub Group Definitions of unorganized sectors Follows different criteria for different industry groups mainly dictated by availability of data Enterprises employing upto 5 workers with certain exemptions as informal sector which is a sub set of the CSO's unorganized sector. the benchmark year estimates are extrapolated with appropriate physical indicators and the relevant price indices.

However.34 per cent.25 per cent between 1983 and 1987-88 and 1.2 million workers (nearly 93 per cent) are employed in the unorganized segment of the Page 7 of 11 . Employment in the organized sector has registered a growth of 1. The share of unorganized employment in the economy has displayed remarkable steadiness over the years. it is estimated that 371. where the compound annual growth rates of employment in the organized and unorganized sector are presented. This fact clearly indicates that unorganized sector served as a buffer for the workforce when the employment opportunity in organized sector dwindled. This is also true for the unorganized sector of the economy.27 per cent. It is evident that throughout this period an overwhelmingly large portion of the workforce in India is found to be employed in the unorganized sector. 1987-88. The stagnancy of employment opportunities in the organized sector in the 1980s has to a large extent been compensated by a significant expansion of workforce in the unorganized segment of the economy. But during the decade of the 1990s.26 per cent between 1983 and 1993-94. The near stagnancy of employment opportunity in the organized sector becomes evident from Table 2.05 per cent while during the period of 1983 to 1993-94. showing only a marginal increase from 24 million in 1983 to 27. we witness a sharp decline in employment opportunities. the growth rate was around 2.25 per cent. 1993-94 and 1999-2000. the unorganized sector also underwent a sharp slump during the 1990s with the growth rate of employment falling to 1.8 million workers (7 per cent) are engaged in the organized sector. Out of 399 million workers in 1999-2000. We observe that during 1983 to 1987-88. During this period organized employment grew by only 0. It is clear that employment opportunity in the organized sector has remained more or less stagnant. employment in the unorganized sector grew by 2. Overall. the decade of the 1990s in India has been characterized by slow growth in employment opportunities.8 million in 1999-2000. employment creation in the informal segment of the economy has been tremendous. The share of informal employment has risen from 92 per cent (nearly 276 million out of 300 million) in 1983 to 93 per cent in the 1999-2000. While employment in the formal sector has been stagnant in the last decade. Over half of India‟s national output comes from the unorganised sector. Broad employment trends for the organized and unorganized sector is shown in Table 1 for the years 1983.economy whereas only 27.

economy whereas only 27. It is interesting to note that state-wise estimates of the formal/ informal sector share clearly show an overwhelming presence of the informal sector workforce in most Indian states.rating the overall trends estimates from the direct approach also reveals that roughly 9 per cent of the workforce in India is in the organized sector while the rest 91 per cent are in the unorganized segment.DIRECT APPROACH Estimates from the residual approach suggest that 92 per cent of Indian laborers are engaged in the unorganized sector while organized segment constitutes the remaining 8 per cent. Corrobo. while the share of the informal sector in urban areas accounts for around 75 per cent. Although the informal nature of farm activities in rural areas has been well documented. Orissa and Rajasthan. UP. Estimates derived from the non-agricultural sector reveals that nearly 80 per cent of the workers are unorganized and the rest belongs to the category of formal employment.8 million workers (7 per cent) are engaged in the organized sector.ing presence of unorganized sector in India. The gender break-up of workforce in infor.mal sector in rural areas suggest that roughly 97 per cent and 94 per cent of male and female workers are found in the unorganized sector respectively. It is estimated that over 94 per cent of workers in Page 8 of 11 . nearly 80 per cent of rural non-farm activities is found to be in the informal sector. UNORGANISED SECTOR EMPLOYEMENT. Bihar. MP. Further. The informal nature of farm and non-farm activities in rural areas drives this trend of overwhelm. As far the rural-urban break-up is concerned. roughly two-thirds of the urban laborer‟s constituting around 76 per cent are engaged in the unorganized sector and the rest one-third of them are engaged in the organized segment. As far as male and female workforce break-up is concerned. it can be noted that 95 per cent of female workers and 89 per cent of male laborers are engaged in the unorganized segment in India. nearly 95 per cent of the rural workforce is engaged in unorganized activities whereas barely 5 per cent of rural workers are found in formal economic activities. These are the very same states whose share in agriculture and allied activities are extremly high relative to other states. On the other hand. even non-agricultural activities appear to be extremely unorganized in nature in India. Thus. This is particularly visible in economically backward states such as. the results show that the former accounted for a little over one-third while the latter around 80 per cent in the urban unorganized sector. a difference of 1 per cent between direct and residual approach.

accounting for roughly three-fourths in each of the states. Even in industrially advanced states such as. West Bengal. Tamil Nadu. Maharashtra. Gujarat. exploitation No concept of occupational safety/services Lack of implementation of Health & Safety legislation. Delhi and Kerala appear to have less unorganized workers. NO CONCEPT OF LABOUR AND TRADE UNION Problems of Unorganized Sector Women workers and „beedi‟ workers Desperately poor Low wages.What can be done for this sector Govt has formed National Commission to address the peculiar issues with this sector Mainly working on Social security – recently approved Rs 1000 cr for this Adopted a concept of Growth pole to link this sector with organized sector Availability of capital for this sector Introduction of Health insurance Scheme – “SWASTHYA BIMA YOJANA” Page 9 of 11 . PROBLEMS IN UNORGANISED SECTOR Problems of the workforce 90% of workforce in vast informal sector Little awareness of workplace hazards Living areas close to work areas Extended work hours. and >50% women Deplorable social conditions PROBLEM OF UNORGANISED SECTOR FACED BY GOVERNMENT Problem of definition and identification Workforce uneducated about the benefits of organized sector Scattered nature of sector Employers avoid any form of regulation Unorganized sectors contribute to almost 60% of GDP (apart from providing livelihood to population) Same labor laws cannot be applied PROBLEMS OF UNORGANISED SECTOR FROM THE ORGANISED SECTOR Unfair competition (Walmart. smaller states such as Goa. However. Child labor. disease causing environments. etc. Reliance) Loss of employment Legal “bullying” Buyer preference for the “cleaner” retail stores Financial aid not available to the unorganized sector easily to compete . the share of unorganized workers is close to 90 per cent of the total workforce.these states are engaged in informal economic activities. fraudulent contractors.

“SWASTHYA BIMA YOJANA” SALIENT FEATURES OF THE SCHEME Funding Pattern Contribution by Government of India: 75% of the estimated annual premium of Rs. only 28 million (seven per cent) workers are employed in the organized sector and the remaining 93 per cent are employed in the unorganized Page 10 of 11 . The cost of smart card will be borne by the Central Government. revealed that out of a total workforce of 397 million.1 per cent in urban areas. during the reference period. On the basis of current daily status (unemployed on an average in the reference week). One needs to examine to what extent institutional finance has a role to play in the lives of those self-employed.3 per cent in 2004 in rural areas. 30 per annum as registration/renewal fee. and from 6.20. The gender differential in the worker population ratio (WPR) was distinct: 55 per cent for males and 33 per cent for females in the rural areas. and 55 per cent for males and 17 per cent for females in the urban areas. Contribution by respective State Governments: 25% of the annual premium.7 per cent to 8. The administrative and other related cost of administering the scheme would be borne by the respective State Governments CONCLUSION In unorganized sector corresponding proportions in urban India were 44 per cent for males and 45 per cent for females. In the rural areas.6 per cent to 9. unemployment rate for males increased from 5.750. The beneficiary would pay Rs. This is while the labor force increases roughly by 2.5% every year. subject to a maximum of Rs. Unemployment rate for females increased from 5. 565 per family per annum. as well as any additional premium. The results of the Survey of the National Sample Survey Organization (NSSO). 67 per cent of usually employed males and 84 per cent of usually employed females were engaged in the agricultural sector. The rate of growth of employment declined sharply from 2.6 per cent in 1993-94 to 9.98% per year in the period 19994 to 2000.0 per cent in rural areas.04% per year in the period 1983-94 to only 0. The size of the unorganized sector is relatively large and will continue to be so in the years to come in view of the limited employment opportunities in the organized sector as also due to the outsourcing of a number of occupations/activities from the organized sector. carried out in 1999-2000.

Sastry. The unorganized sector. Satpathy. India. Bhalla. Commission of European Communities. UNDP. Institute for Human Development. N S (2004): „Estimating Informal Employment and Poverty in India'. International Monetary Fund. 6. 7. Page 11 of 11 . Human Development Resource Centre. 11. 9. Anoop (2004): „Size Composition and Characteristics of Informal Sector in India'. Report on a Project Funded under the Planning Commission Scheme of SocioEconomic Research. therefore. 11. India (1998): National Industrial Classification 4. has been playing a vital role in providing employment in the economy. Institute for Human Development. Shiela (2003): „The Restructuring of the Unorganised Sector in India'. India (2004): Report of the Working Group on Workforce Estimation for Compilation of National Accounts Statistics with base Year 1999-2000 5. International Labour Office.sector. Noida. Central Statistical Organization. Organization for Economic Co-operation and Development (2002): Measuring the Non-Observed Economy . Informal Sector in India – Perspectives and Policies. Geneva. Central Statistical Organization. Discussion Paper Series – 7.A Handbook 3. India (2006): Brochure on New Series of National Accounts Statistics. New Delhi. India (2007): National Accounts Statistics: Sources and Methods. Mitra. The informal sector thus provides income-earning opportunity to a larger work force and a larger number of workers are getting their livelihood from the informal sector. V V Giri National Labour Institute. 10. REFERENCES 1. Central Statistical Organization. NLI Research Studies Series No 056/2004. United Nations and World Bank (1993): System of National Accounts 1993 2. Arup (2001): „Employment in the Informal Sector' in Kundu. ILO Socio-Economic Security Programme. base year 1999-2000. 10. 8. New Delhi. Organization for Economic Cooperation and Development. International Labour Organisation (2004): Economic Security for a Better World. Amitabh and Alakh N Sharma (ed). Central Statistical Organization.