India Unorganized Sector
India Unorganized Sector
India Unorganized Sector
Brief history
In the mid 1950s, W.Arthur Lewis developed a theoretical model
of economic development based on the assumption that there
was an unlimited supply of labour in most developing countries
and that this vast pool of surplus labour would be absorbed as
the modern industrial sector in these countries grew. It was
therefore assumed that the traditional sector comprised of petty
traders, small producers and a range of casual jobs would
eventually be absorbed into the formal economy and disappear.
This argument became less convincing since the 1970s when
case studies on informal sector in various parts of the world
began to reveal the highly active existence of men, women and
children crowding at the bottom of the urban economy in Third
World countries. So many studies have revealed the vast number
of workers, in the Third World, striving hard to survive on the
fruits of their labours outside the formal sector of the economy.
The formal informal dichotomy can be regarded as a new
variation on the dualism theories of the past. In the colonial era
a contrast was constructed between an invasive western
capitalist sector and an opposing eastern non-capitalist peoples
economy. In post-colonial development theory the concept of
dualism was applied to the dichotomy of traditional and modern.
According to this view, the rural agricultural order was still
predominantly pre-capitalist while the urban-based industrial
economy was described as capitalist. In the most recent phase of
the dualism doctrine capitalism is the label of only the advanced
segment of the urban milieu: the formal sector. The modes of
production in the lower economic terrain, rather questionably
labeled as non-capitalist, are characterized as the informal
sector.
In operationalizing these variations on dualism, the contrasts are
more significant than the specific characteristics of each
segment. For instance, its entirely normal to describe the
informal sector by summing up the absence of elements found in
the formal sector. In the absence of a more analytical definition,
the landscape of the informal sector becomes synonymous with
the kaleidoscope of unregulated, poorly skilled and low-paid
workers. Highlighting this chaotic assortment Keith Hart coined
the term informal economy in 1971.
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than the inferior quality of the new urbanites labour, and their
other defects, rejects such an optimistic view. The failure of the
newcomers efforts to find stable, decently paid and dignified
work is in this alternative perception due mainly to a
development strategy that, in the face of excess supply, seeks to
keep the price of labour as low as possible, allows no room for
collective action to reduce these peoples vulnerability and
refuses to provide this footloose workforce with public
representation. In short, the lack of registration, organization
and protection does not have its origin in the free play of social
forces, but its the deliberate product of economic interests that
benefit from the state of informality in which a wide range of
activities in all branches of the economy are kept, systematically
and on a large scale, through evasion of labour laws and
taxation.
Indeed, the informal sector is not a separate and closed circuit
of work and labour. There is the interaction, between the formal
and informal sectors, and dependence of the latter on the former
and even its subordination to it. Now with the neo-liberal
economic policies there is the widespread informalization of the
formal sector through down sizing, casualisation and
contractualisation. In short the capitalist leaches become richer
and richer by squeezing the life blood of the working force.
The Indian Scenario
The Indian Economy is characterized by the existence of a vast
majority of informal or unorganized labour employment. As per
the Economic Survey 2007-08, 93% of Indias workforce include
the self employed and employed in unorganized sector. 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.
1. In terms of Occupation:
Small and marginal farmers, landless agricultural
labourers, share croppers, fishermen, those engaged in
animal husbandry, beedi rolling, labeling 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.
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This report shows a substantial shift between 1999-00 and 200910 in the structure of the labour force which can be broadly
divided in to self employed, regular, and casual workers. (casual
workers are employees who do not enjoy the same benefits and
security as tenured employees. All daily wage employees and
some categories of contract employees are casual labourers.)
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.
Many thought that Indias growth could do no wrong, and took
the administrative versions and interpretations for granted. Now
it comes to a point that none of these can be taken for granted.
Growth is slow, inflation is structural and structure of
employment is not enough to cater to the growing labour force.
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. While the
sector contributes around half of the GDP of the county, its
dominance in the employment front is such that more than 90%
of the total workforce has been engaged in the informal
economy. As per the latest estimation of a Sub-committee of the
National Commission for Enterprises in the Unorganized Sector
(NCEUS), the contribution of unorganized sector to GDP is about
50% (NCEUS 2008).
This national level pattern of informal workers occupying around
90% of the workforce is more or less similar in the case of most
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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.
In our global cities such as Bangalore, which are being showcased as the new faces of an affluent and vibrant India, there are
lakhs of people who rely on manual labour for their own
livelihood. The housemaids, security guards, construction
workers, garment workers, cobblers, beedi workers, agarbati
workers, drivers and many others have a very different story to
tell. Their incomes have not grown at the staggering rate of their
employers; indeed adjusted for inflation their incomes have often
fallen over the last two and half decades, driving them into
deeper poverty.
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
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not
receive
sufficient
50 years ago? Therefore, this law which does not deal with the
issue of unemployment, its regulation, wages, and conditions of
work and so on is not merely incomplete but dysfunctional if it
proceeds to deal with social security on a stand alone basis. The
Act, actually, suffers from a serious lack of legislative policy and
intent. Ultimately this Act is an eye wash which has neither the
capacity to address nor the inbuilt provision to provide solutions
to the needs of the unorganized sector. Even the provisions and
procedure of the Minimum Wages Act (1948) is so vague and
futile that different states of India have fixed abysmally meagre
wages and that too with so much of variations from state to
state.
In fact a comprehensive Act, catering to the security needs of
the unorganized sector such as Food, Nutrition, Health,
Housing, Employment, Income, Life and accident, and old age
remains a dream in India. Still the cries of the unorganized
sector goes unattended with the governments laying red carpets
for the corporates and so called investors at the expense and
sacrifice of the working class.
Tomy Jacob
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