Unorganised Sector

The Indian economy is characterised by the existence of a vast

majority of informal or unorganised labour employment. As
per a survey carried out by the National Sample Survey
Organisation (NSSO) in 2009–10, the total employment in the
country was of 46.5 crore comprising around 2.8 crore in the
organised and the remaining 43.7 crore workers in the
unorganised sector. Out of these workers in the unorganised
sector, there are 24.6 crore workers employed in agricultural
sector, about 4.4 crore in construction work and remaining in
manufacturing and service.
Categories of unorganised labour force

Unorganized sector by definition is constituted of workers

who are devoid of standard social security cover and therefore,
it can be assumed that the largest majority of workers in non-
farm employment do not receive any social security benefits
from the Government.
Unorganized sector is also termed as the traditional sector
because of use of age-old traditional production practices
which are now considered obsolete.

 The Ministry of Labour, Government of India, has

categorised the unorganised labour force under four
groups depending on
 occupation,
 nature of employment,
 specially distressed categories and
 service categories.

1. Under Terms of Occupation:

Small and marginal farmers, landless agricultural
labourers, share croppers, fishermen, those engaged in
animal husbandry, beedi rolling, labelling and packing,
building and construction workers, leather workers,
weavers, artisans, salt workers, workers in brick kilns and
stone quarries, workers in saw mills, oil mills, etc. come
under this category.
2. Under Terms of Nature of Employment:
Attached agricultural labourers, bonded labourers, migrant
 workers, contract and casual labourers come under this
category.
3. Under Terms of Specially Distressed Category:
Toddy tappers, scavengers, carriers of head loads, drivers
of animal driven vehicles, loaders and unloaders come
under this category.
4. Under Terms of Service Category:
Midwives, domestic workers, fishermen and women,
barbers, vegetable and fruit vendors, newspaper vendors,
etc., belong to this category.

Welfare measures for the unorganised sector

The Ministry of Labour and Employment in order to ensure the

welfare of workers in the unorganised sector which, inter-alia,
includes weavers, handloom workers, fishermen and
fisherwomen, toddy tappers, leather workers, plantation
labourers, beedi workers, has enacted the Unorganized
Workers’ Social Security Act, 2008.
The Act provides for a constitution of the National Social
Security Board which shall recommend the formulation of
social security schemes, viz. life and disability cover, health
and maternity benefits, old age protection and any other
benefits as may be determined by the Government for the
unorganised workers. Accordingly, the Ministry has
constituted a National Social Security Board.

Major characteristics of the unorganized sector:

The unorganized is overwhelming in terms of its number range

and, therefore, it is omnipresent throughout India.

As the unorganized sector suffers from cycles of excessive

seasonality of employment, majority of the unorganized
workers do not have stable employment.

Even those who appear to be visibly employed are not

gainfully and substantially employed, indicating the existence
of disguised unemployment.

The workplace is expanded in nook and corner.

There is no formal employer employee relationship thus

unorganized workers are subject to exploitation significantly
by the rest of the society.

Poor working conditions and low wages for all jobs.

Primitive technologies are rampant in the unorganized sector.

 Illiteracy and limited exposure to the outside world not
encourage higher technologies and resulting in poor
absorption of new technology.
 The unorganized workers do not receive sufficient
attention from the trade union due to inadequate and
ineffective labour laws and standards relating to the
unorganized sector.
 There is low productivity compared to formal sector may
be because of excessive seasonality of employment.
 Poor human capital base (in terms of education, skill and
training) any effective legal action against it is seen as a
step of impairing this sector.
 Low organizational level; low in size, usually hiring less
than 10 employees, and mostly from the immediate family;
 Heterogeneity in functions;
 Entry and exit easier than formal sector;
 Typically, limited capital investment; little to no labour-
capital division;
 Often labour-intensive jobs, requiring low-level skills; as
workers learn on the job, there is generally no formal
training;

 Labour agreements focused on casual work and/or social

relationships as opposed to formal contracts; sometimes,
the relationship between employer and employee is
unwritten and informal with little or no rights;