Unorganised labour force in India

The Indian economy is characterized by the existence of a vast majority of informal or unorganised labour employment. 

Who is an Unorganixed worker

The term unorganised worker has been defined under the Code on Social Security, 2020, means a home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947 or Chapters III to VII of the Code i.e. Employees Provident Fund, Employees' State Insurance Corporation, Gratuity, Maternity Benefit, Employee's Compensation.

The Indian Scenario

As per Economic Survey 2023-24, India’s workforce is estimated to be nearly 56.5 crore in 2022-23. 45 per cent of the workforce is employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services, and 13.0 per cent is in construction.

The Ministry of Labour, Government of India, has categorized the unorganized labour force under four groups in terms of Occupation, nature of employment, specially distressed categories and service categories.

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.

Under Terms of Nature of Employment

• Attached agricultural labourers, bonded labourers, migrant workers, contract and casual labourers come under this category.

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.

Under Terms of Service Category

• Midwives, Domestic workers, Fishermen and women, Barbers, Vegetable and fruit vendors, News paper vendors etc. belong to this category.

In addition to these four categories, there exists a large section of unorganized labour force such as cobblers, Hamals, Handicraft artisans, Handloom weavers, Lady tailors, Physically handicapped self employed persons, Rikshaw pullers, Auto drivers, Sericulture workers, Carpenters, Tannery workers, Power loom workers and Urban poor.

• Though the availability of statistical information on intensity and accuracy vary significantly, the extent of unorganized workers is significantly high among agricultural workers, building and other construction workers and among home based workers. As per Economic Survey 2023-24, 57.3 per cent of the total workforce is selfemployed, and 18.3 per cent is working as unpaid workers in household enterprises.
• As per the Report Migration in India, 2020-21, based on Periodic Labour Force Survey (PLFS) 2020-21, released by Ministry of Statistics and Programme Implementation (MoSPI), the total migration rate in India was 28.9% and in rural was 26.5%. Out of the total migrant persons, around 10.8% persons were migrated due to employment related reasons. The employment related reasons include in search of employment/better employment, for employment/ work (to take up employment/ to take up better employment/ business/ proximity to place of work/ transfer) and loss of job/closure of unit/lack of employment opportunities.
• The latest report of the NSSO uploaded by the close of May 2011 about the casual workers in India between 2004-05 and 2009-10 compared to that of the period between 1999 – 2000 and 2004-05 very clearly shows that there is significant increase in the number of casual workers and decline in the number of regular workers.
• All these NSSO reports are clear evidences to prove that the labour market of India  has been undergoing tremendous transformations, including  growth of informal sector activities, deterioration in the quality of employment (in terms of job security, terms and conditions at work), Weakening of worker organizations and collective bargaining institutions, marked decline in social security etc. To a greater extent, these transformation could be related to the ongoing globalization process and the resultant efforts on the part of employers to minimize the cost of production to the lowest levels. It is also evident that most of these outcomes are highly correlated and mutually reinforcing. A closer analysis suggests that the growing informalisation of labour market has been central to most of these transformations, which inter alia highlights the utility of understanding the growth of unorganized sector in India and its implications.

Growing prominence of unorganized sector in India

• Predominance of informal employment has been one of the central features of the labour market scenario in India. 
• This national level pattern of informal workers occupying around 90% of the workforce is more or less similar in the case of most of the prominent states in the country. Among the unorganized sector workers, a considerable proportion (about 65%) is engaged in agricultural sector, which in turn indicates the prominence of rural segment in the informal economy.
• The growth of formal employment in the country has always been less than that of total employment, indicating a faster growth of employment in the informal sector. 
• It is widely acknowledged that the informal sector in India suffers from a low productivity syndrome, compared to the formal sector. The prominent features of the sector are lower real wages and poor working / living conditions.
• The unorganised workers suffer from cycles of seasonality of employment, lack of a formal employer-employee relationship, absence of adequate social security protection and other welfare schemes such as sickness and unemployment allowances.
• With the advent of globalization and resultant reorganization of production chains led to a situation where production systems are becoming increasingly atypical and non-standard, involving flexible workforce, engaged in temporary and part-time employment, which is seen largely as a measure adopted by the employers to reduce labour cost in the face of stiff competition. No doubt, it obviously indicates that these flexible workers in the new informal economy are highly vulnerable in terms of job security and social protection, as they are not deriving any of the social protection measures stipulated in the existing labour legislations. The insecurities and vulnerabilities of these modern informal sector labour are on the rise, as there is a visible absence of worker mobilization and organized collective bargaining in these segments owing to a multitude of reasons.
• The alarming expansion of informal sector, in recent times, has adversely affected employment and income security for the larger majority of the workforce, along with a marked reduction in the scale of social welfare / security programme.

The major characteristics of the unorganized workers

• The unorganized labour is overwhelming in terms of its number range and therefore they are omnipresent throughout India.
• As the unorganized sector suffers from cycles of excessive seasonality of employment, majority of the unorganized workers does not have stable durable avenues of employment. Even those who appear to be visibly employed are not gainfully and substantially employed, indicating the existence of disguised unemployment.
• The workplace is scattered and fragmented.
• There is no formal employer – employee relationship
• In rural areas, the unorganized labour force is highly stratified on caste and community considerations. In urban areas while such considerations are much less, it cannot be said that it is altogether absent as the bulk of the unorganized workers in urban areas are basically migrant workers from rural areas.
• Workers in the unorganized sector are usually subject to indebtedness and bondage as their meager income cannot meet with their livelihood needs.
• The unorganized workers are subject to exploitation significantly by the rest of the society. They receive poor working conditions especially wages much below that in the formal sector, even for closely comparable jobs, ie, where labour productivity are no different. The work status is of inferior quality of work and inferior terms of employment, both remuneration and employment.
• Primitive production technologies and feudal production relations are rampant in the unorganized sector, and they do not permit or encourage the workmen to imbibe and assimilate higher technologies and better production relations. Large scale ignorance and illiteracy and limited exposure to the outside world are also responsible for such poor absorption.
• The unorganized workers do not receive sufficient attention from the trade unions.

Social security measures

• eShram : The portal for the registration of Unorganized Workers across the Country was launched on 26th August 2021. This portal will help build a comprehensive National Database of Unorganized Workers (NDUW) in the country. The portal will prove to be a huge boost towards last mile delivery of the welfare schemes for crores of unorganized workers for more than 38 Crore workers. The registration is totally free for the workers.
• Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM):  Pradhan Mantri Shram Yogi Maandhan Yojana is a government scheme meant for old age protection and social security of Unorganized workers.
• Aam Admi Beema Yojana : The workers in the unorganized sector constitute about 93% of the total work force in the country. The Government has been implementing some social security measures for certain occupational groups but the coverage is miniscule. The majority of the workers are still without any social security coverage. Recognizing the need for providing social security to these workers, the Central Government has introduced a Bill in the Parliament.

Source: Ministry of Labour and Employment