2013

SOCIOLOGY PROJECT
LABOUR IN UNORGANISED SECTOR

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

ACKNOWLEDGEMENT
I am feeling highly elated to work on the topic LABOUR IN UNORGANISED SECTOR under the guidance of my SOCIOLOGY teacher. I am very grateful to her for her exemplary guidance. 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 also want to thank all of my friends, without whose cooperation this project was not possible. Apart from all these, 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. And at last I am very much obliged to the God who provided me the potential for the rigorous research work.

At finally yet importantly I would like to thank my parents for the financial support.

NAME-RISHABH SINGH B.A, L.L.B 201289

Page 1 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. PROBLEM OF UNORGANISED SECTOR FROM

ORGANISED SECTOR CONCLUSION REFERENCES

Page 2 of 11

LABOUR IN UNORGANISED SECTOR

ABSTRACT Informal sector is referred to as the unorganized sector. This sector broadly corresponds to the household sector including private unincorporated enterprises. The unorganized sector also includes some formal activities on which there is no regular system of data availability. However, 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, the fact remains that it has emerged as a dynamic and vibrant sector, representing a growing proportion of economic activity, particularly in the developing countries. This sector broadly corresponds to the household sector including private unincorporated enterprises. The unorganized sector also includes some formal activities on which there is no regular system of data availability. The Government of India set-up a National Commission on Enterprises in the Unorganized/Informal Sector' through a resolution dated 20th September, 2004 as an advisory body and watchdog for the informal sector. This paper is based on Issues and Challenges of employment in unorganized sectors, and it is explain about introduction of unorganized sector, Status, Issues and Challenges of employment in India, and also explained about unorganized sectors details and issues and challenges details, and the conclusion of unorganized sectors details.

INTRODUCTION The definition of informal sector as adopted by the Fifteenth International Conference of Labor Statisticians in 1993, is regarded as a group of household enterprises or unincorporated enterprises owned by households that includes informal own-account enterprises, which may employ contributing family workers and employees on an occasional basis; and enterprises of informal employers, which employ one or more employees on a continuous basis. 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, the fact remains
Page 3 of 11

that it has emerged as a dynamic and vibrant sector, representing a growing proportion of economic activity, particularly in the developing countries. In the informal sector is referred to as the unorganized sector. This sector broadly corresponds to the household sector including private unincorporated enterprises. The unorganized sector also includes some formal activities on which there is no regular system of data availability. However, contribution of these formal activities in the unorganized sector is quite small. The Government of India set-up a National Commission on Enterprises in the Unorganized/Informal Sector' through a resolution dated 20th September, 2004 as an advisory body and watchdog for 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, their size, spread and scope, and magnitude of employment; (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; (i) identify constraints faced by small enterprises with regard to freedom of carrying out the enterprise, access to raw materials, finance, skills, entrepreneurship development, infrastructure, technology and markets and suggest measures to provide institutional support and linkages to facilitate easy access to them, etc. As the Commission started functioning, the adoption of a uniform definition of un-organized/informal sector, based on the characteristics of the enterprises, became an absolute necessity for the completion of its tasks. 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, ignorance and illiteracy, small and scattered size of establishments". On the other hand, 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. Further, in the unorganized sector, in addition to the unincorporated proprieties or partnership enterprises, enterprises run by the cooperative societies, trusts, private and limited companies are also covered. The informal sector, therefore, can be considered as a sub-set of the unorganized sector.

Page 4 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, operating on a proprietary or partnership basis. - By National Commission on Enterprises in the Unorganized/Informal Sector in 2004. 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. 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. 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. 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 . 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. 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. Over 60% share as per current price in NDP. Contribute Significantly to National Product. Estimated Contribution to Employment Year: 1999/00 (Total labor force: 406 million) (GDP share: 63%) Industrial Category No. of persons (in millions) Formal Sector Informal Sector Agriculture 1.39 238.87 Non-

Agriculture 26.68 131.5 Mining & Quarrying 1.01 1.25 Manufacturing 6.71 37.07 Electricity, Gas And Water 1 0.04 Construction 1.17 16.36 Trade, Hotels And Restaurants 0.49 40.37 Transport, Storage & Comm. 3.15 11.48 Financial Services 1.65 3.29 Community Services 11.49 21.64 All Sectors 28.07 (93%) 370.37. Contribution to savings and capital formation Sharing of only household sector in Total Gross Domestic
Page 5 of 11

Saving mainly unorganized sector is about three fourth. More than 30% of National Income comes from Unorganized Sector. 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. Proprietary and partnership enterprises employing less than 10 workers Share of Unorganized Sector Varies between 57 and 60 percent since 1993-94 58.5 % of NDP belongs to unorganized sector of which 47.7 % is informal in 2001-02. 55.42% in 1999-2000 and 49.94% 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. The labor input data is obtained from Census of Small Scale Industry, NSS surveys on Employment & Unemployment, DGET etc. For the subsequent years, the benchmark year estimates are extrapolated with appropriate physical indicators and the relevant price indices. Employment estimates from 55th round for all compilation categories. Value added per worker for services from 57th round and for the rest of the sectors from 55th round. Multiplying the employment with value added per worker to arrive at the informal sector estimates. Keeping the overall unorganized sector as defined by CSO constant. Value added per worker estimated from 55th, 56th and 57th round unorganized sector surveys. Employment estimates from 55th and 61st Round EUS survey. Apportioning was not limited only to unorganized sector GDP. In the services sector total GDP was apportioned. UNORGANISED SECTOR EMPLOYEMENT:-RESIDUAL EMPLOYEMENT Over half of Indias national output comes from the unorganized sector. While employment in the formal sector has been stagnant in the last decade, employment creation in the informal segment of the economy has been tremendous. Broad employment trends for the organized and unorganized sector is shown in Table 1 for the years 1983, 1987-88, 1993-94 and 1999-2000. 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. Out of 399 million workers in 1999-2000, it is estimated that 371.2 million workers (nearly 93 per cent) are employed in the unorganized segment of the

Page 6 of 11

economy whereas only 27.8 million workers (7 per cent) are engaged in the organized sector. The share of unorganized employment in the economy has displayed remarkable steadiness over the years. 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. It is clear that employment opportunity in the organized sector has remained more or less stagnant, showing only a marginal increase from 24 million in 1983 to 27.8 million in 1999-2000. The near stagnancy of employment opportunity in the organized sector becomes evident from Table 2, where the compound annual growth rates of employment in the organized and unorganized sector are presented. Employment in the organized sector has registered a growth of 1.25 per cent between 1983 and 1987-88 and 1.26 per cent between 1983 and 1993-94. But during the decade of the 1990s, we witness a sharp decline in employment opportunities. During this period organized employment grew by only 0.34 per cent. Overall, the decade of the 1990s in India has been characterized by slow growth in employment opportunities. This is also true for the unorganized sector of the economy. 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. We observe that during 1983 to 1987-88, employment in the unorganized sector grew by 2.05 per cent while during the period of 1983 to 1993-94, the growth rate was around 2.27 per cent. This fact clearly indicates that unorganized sector served as a buffer for the workforce when the employment opportunity in organized sector dwindled. However, the unorganized sector also underwent a sharp slump during the 1990s with the growth rate of employment falling to 1.25 per cent. Over half of Indias national output comes from the unorganised sector. While employment in the formal sector has been stagnant in the last decade, employment creation in the informal segment of the economy has been tremendous. Broad employment trends for the organized and unorganized sector is shown in Table 1 for the years 1983, 1987-88, 1993-94 and 1999-2000. 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. Out of 399 million workers in 1999-2000, it is estimated that 371.2 million workers (nearly 93 per cent) are employed in the unorganized segment of the
Page 7 of 11

economy whereas only 27.8 million workers (7 per cent) are engaged in the organized sector. UNORGANISED SECTOR EMPLOYEMENT- 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- 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, a difference of 1 per cent between direct and residual approach. Further, 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. The informal nature of farm and non-farm activities in rural areas drives this trend of overwhelm- ing presence of unorganized sector in India. Thus, 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. 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. On the other hand, roughly two-thirds of the urban laborers 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, 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. Although the informal nature of farm activities in rural areas has been well documented, even non-agricultural activities appear to be extremely unorganized in nature in India. 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. As far the rural-urban break-up is concerned, nearly 80 per cent of rural non-farm activities is found to be in the informal sector, while the share of the informal sector in urban areas accounts for around 75 per cent. 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. This is particularly visible in economically backward states such as, Bihar, UP, MP, Orissa and Rajasthan. These are the very same states whose share in agriculture and allied activities are extremly high relative to other states. It is estimated that over 94 per cent of workers in
Page 8 of 11

these states are engaged in informal economic activities. Even in industrially advanced states such as, Maharashtra, Gujarat, Tamil Nadu, West Bengal, etc, the share of unorganized workers is close to 90 per cent of the total workforce. However, smaller states such as Goa, Delhi and Kerala appear to have less unorganized workers, accounting for roughly three-fourths in each of the states. 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, exploitation No concept of occupational safety/services Lack of implementation of Health & Safety legislation. NO CONCEPT OF LABOUR AND TRADE UNION Problems of Unorganized Sector Women workers and beedi workers Desperately poor Low wages, fraudulent contractors, disease causing environments, Child labor, 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, Reliance) Loss of employment Legal bullying Buyer preference for the cleaner retail stores Financial aid not available to the unorganized sector easily to compete .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

20. SWASTHYA BIMA YOJANA SALIENT FEATURES OF THE SCHEME Funding Pattern Contribution by Government of India: 75% of the estimated annual premium of Rs.750, subject to a maximum of Rs. 565 per family per annum. The cost of smart card will be borne by the Central Government. Contribution by respective State Governments: 25% of the annual premium, as well as any additional premium. The beneficiary would pay Rs. 30 per annum as registration/renewal fee. 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. One needs to examine to what extent institutional finance has a role to play in the lives of those self-employed. In the rural areas, 67 per cent of usually employed males and 84 per cent of usually employed females were engaged in the agricultural sector. On the basis of current daily status (unemployed on an average in the reference week), during the reference period, unemployment rate for males increased from 5.6 per cent to 9.0 per cent in rural areas, and from 6.7 per cent to 8.1 per cent in urban areas. Unemployment rate for females increased from 5.6 per cent in 1993-94 to 9.3 per cent in 2004 in rural areas. 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. The rate of growth of employment declined sharply from 2.04% per year in the period 1983-94 to only 0.98% per year in the period 19994 to 2000. This is while the labor force increases roughly by 2.5% every year. 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. The results of the Survey of the National Sample Survey Organization (NSSO), carried out in 1999-2000, revealed that out of a total workforce of 397 million, 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

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