Sociology-of-Informal-sector-munotes

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1 UNIT I
1
FORMAL AND INFORMAL SECTOR
Unit Structure
1.1 Objectives
1.2 Introduction
1.3 Indian worker
1.4 Organisation
1.5 Formal Sector
1.6 Summary
1.7 Questions
1.8 References
1.1 OBJECTIVE  To acquaint students with Indian worker and working conditions of
workers.
 To Study the structure of formal organization and functions of
organization.
 To being awareness about informal sector, problems of worker & then
challenges.
1.2 INTRODUCTION A worker is a person who is engaged in gainful employment. According to
law a worker should be any person who contributes to the gross national
products by his/her work which includes work for market economy as well
as for self - consumption.
1.3 INDIAN WORKER However, in India, the term is used, in restricted sense, to refer t o those
workers who are employed in organised industries, that is, in those
industrial establishments which are covered by the Factories Act. The
workers who are engaged in cottage industries are excluded. Since our
factory industries have been growing ver y slowly since the middle of the
19th century factory our industrial labour has also been increasing slowly.
In 1900, the number of workers in our factories was only 5 lakhs. Between
1950 and 1993, the estimated average daily employment in working
factorie s has increased from 3 million to 9.1 million. Indian industrial
labour is only about 3 -0 per cent of the total working population I or about
32 per cent of workers engaged in industries. This is a small I percentage munotes.in

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2 Sociology of Informal sector
2 indeed. But on account of its organisat ion and contribution to national
income, industrial labour occupies an important place in the economy
of the country. A contented industrial labour will be great asset to India,
but a dissatisfied industrial labour acts as a drag on development.
Industrial labour in India exhibited certain well known features which
have affected the trade union organisation. In the first instance, most
industrial workers have their roots in villages. Quite a large number of
them have left their traditional occupatio ns and have migrated to cities in
search of permanent or temporary job. Most of them still retain their
attachment to land and the periodic migration from the town to the village
is a common characteristic of our industrial labour. Only in recent years, a
new class of industrial labour without roots in agriculture has been
emerged in our towns and cities.
Secondly, industrial labour is largely uneducated. As a result, they do not
understand the problems which their industries confront and the problems
which they themselves are facing.
Thirdly, industrial labour in India is not united but is divided and
subdivided on the basis of region, religion, language and caste. It is only in
recent years that some of these differences are disappearing gradually and
some degree of unity on the basis of economic consideration is taking
place. Finally, workers do not remain in the same job for long. There is
high labour turnover. Absenteeism indiscipline etc. are quite common.
This may be because the workers are originally from the rural areas where
people were comparatively free; or it may be because of their lack of
education and love of leisure.
The early industrial workers:
Initially when British established factories, many workers from the rural
areas started working t here. Working conditions were very bad. Receiving
very low wages in exchange for long hours of work under the most
hygienic conditions, workers live in squalid quarters or slums. The
craftsmen became the poor labourers in the factories. The unorganized
industries were made up of old Indian industries such as biri and few
others, where child labour frequently prevailed and whose workshops or
hovels were described as “dark, crowded, ill ventilated and insanitary with
damp mud floors on which workers sit for the whole day.”
It is not surprising then the Indian worker never liked the work
“Compelled by necessity, pressed by poverty, hunger or debt, they had to
leave their ancestral village to merge with the anonymity of the city life”.
Since they had to migrate without their wives and children they always
wanted to rush back to the village as frequently as possible. The worker
was “villager at heart”.

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3 Meaning and Scope of Anthropology
1. Directors & Executives 2. Departmental and Middle management 3. First and second class technicians, Junior managers, Supervisors, Superintendents, Service officials, High rank office employees. 4. Blue collar workers Highly skilled 5. Office workers and Clerks 7. Agricultural, land, miscellenous population. Traditional 6. Blue collar workers Modern The modern worker:
Today, the nature of industrial production is changed. Many new cadres of
management have c ome up instead of having only the ownership of
productive units.
There are many levels of work in modern Indian industry considering the
occupational status and social prestige.
1. The highest level which is occupied by directors and executives.
2. The nex t level is that of departmental managers middle management
as well as first and even second class technicians.
3. The third level is made up of junior managers supervisors and junior
superintendents, service officials, higher office employees etc.
4. Next to these, the skilled workers follow especially trained in
technical schools and undergraduate centres. Though these are
logically classified as blue collar workers, they, in fact, may be
considered as the blue collar aristocracy.
5. This level is made up of office workers employed in industry or in
some of this subsidiary activities such as banks, commerce, insurance
etc. They are so called white collar workers, who are now in the
process of growth.
6. The last level is filled by manual workers, the authen tic blue collar
workers to be found everywhere on the basis of modern industry.
Traditional workers in India were working in jute and textile mills,
railways, mines and plantations established by the British rulers. Modern
workers are working in plastic, p harmaceuticals, electronics etc. These
industries, in fact came after independence and are still in the process of
development in the wake of scientific and technological advance.
„Work‟ is also associated with status, not only the level at which the
work er is working. When we look at the occupational pyramid we find
that many skilled workers belonging to the level 4 receive higher payment munotes.in

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4 than those at level 3. Yet they do not have the same status.
There is also shift in status and prestige. As industry d evelops and the
social structure reshapes itself in accordance with new values, the level of
aspiration of the people increased and the direction of social change to a
large extent can be predicted.
Characteristics of Indian Labour Worker:
Indian worker is not much different from his counterparts in western
industries. He has some desire aspiration or feelings, only there may be the
difference of degrees. Today many of the workers in the industries are city
born, though some of them still come from the vill ages. In the new
industrial townships or colonies the vast majority of workers came fronx
nearby villages or tribal areas. But they are no more too much attached to
their native places.
According to some studies conducted on the status of workers, 50%
amon g the women workers from modern industries and 24% among those
from traditional industries had broken all the connections with their
villages so they never visited them.
Further, it is proved and confirmed by many studies, that modern worker
is more commit ted to industry, he has accepted factory discipline, ready to
learn new skills and shed old ones, producing efficiently and fighting for
his rights as a worker through a trade union. He may have still deep‟
rooted interest in land, but this does not come i n the way of his career.
Though high absenteeism is not there, but some absenteeism might be due
to the attachment to farm life among the workers, although it is not so
alarming.
According to E. A. Ramaswamy, we like to know what are the life
chances and a spirations of industrial workers vis -a-vis other sections of
the society? How are workers differentiated among themselves? To what
extent they constitute a distinct interest group or class in the society? What
is the nature and extent of their involvement in trade unions? What role do
they perceive for themselves in achievement of the goals of a modern
industrial society committed to economic growth and social equality?
1. Social background of industrial workers:
A large part of sociological research on Ind ian industrial workers consists
of analysis of their social and economic background. In the initial stages
of industrialization, 50 years ago Buchanan and Prabhu conducted
research among the workers and it was observed that factories were
largely establish ed in urban areas but industrial jobs were manned by
migrants from rural areas. Rural society was at that time believed to be a
closed tradition -bound, well knit society. Hence those migrated to towns
for industrial jobs were low caste farmers artisans and servicemen who
were pushed out of their village due to economic deprivation. These
migrants left their families behind in villages and lived themselves in munotes.in

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5 Meaning and Scope of Anthropology working class quarters in towns. They missed their family and community
life while in town and hence frequently returned to their villages. Their
social life in towns was more or less an extension of their social life in
villages.
But today by all means this situation is different. Factory workers are
drawn from alt sections of the society (Harris I960, Lambert : 1963; Vaid :
1968 Sheth 1968 Sharma 1974) while some of them are migrants from
rural areas and agriculture based jobs, there are among them permanent
and semipermanent urban settlers who no longer have any nostalgic
attachment to the romantic sur roundings of the Indian village. In some
places the social characteristics of industrial workers (e.g. caste
background education, age, family size etc.) closely resemble the
corresponding characteristics of the urban population around them
(Lambert : 1963 ; Vaid 1968). The progressively increasing use of
sophisticated technology implies the employment of young educated
people from the various strata of society. They are much younger, better
skilled and English speaking. They are diploma and degree holders f rom
different technical institutes. They are more capable of concerted action
and organisations than the others. They are able to fight for their rights.
Industrial jobs has in many ways acted as a leveller in the traditional social
and economic structure of Indian society. Most of the workers are born
and brought up in cities therefore they are more aware, alert and careful as
well as exposed to mass media and urban environment. They worry for
their children‟s future.
2. Recruitment and Commitment:
Kerr an d Moore in 1960s observed in their studies of industrialization of
non-industrial societies that rural agricultural low caste background of
industrial workers and their attachment to rural social life made them to
fly to their native homes very frequently as they considered industrial jobs
a necessary evil. These scholars were convinced that a high degree of
absenteeism and labour turnover among workers and a low degree of
productivity as compared to workers in other countries was very
prominent. They also contended that the process of industralization took
place slowly due to the non -acceptance among workers of the strange
urban industrial social system and its different culture. So Indian workers
were labelled as non -committed to the modern industrial syst em or at least
partially committed” to industrial work.
Kerr Harbinson Dunlop and Myers write “The industrial society is held
together by a system of rules, relationships statutes and beliefs quite
different from those of an agrarian society and the transf ormation from the
latter to the former is generally disrupting and painful ....”. Moddier has
suggested that the value system of the industrial worker militates against
industrial values. Myers feels that hurdle is deep rooted in the Indian way
of life and MC Cormeck has attributed it to family practices and
relationships. Myers puts it simply when he says that it is the city living
that is disliked and not the factory job. He observed that in Bombay
(Mumbai) the factories had no difficulty in attracting pe ople from the rural munotes.in

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6 areas but poor labour conditions often drove them back, generally for
social reasons. More than 3/4th of the workers in Lambert‟s study spoke
of their intentions of remaining in factory employment. 61% of the
workers in Vaid‟s study in Kota were certain that they desired to remain in
factory jobs even if they lost their current jobs. Moore and Feldman‟s
definitions of “commitment” is that “the committed worker has severed
his connection with the land and with his tribal background. He is fully
urbanized and never expected to leave industrial life”. We find that Indian
worker is “partially committed” to use Myers‟ observation. Studies have
shown that though the Indian worker is fully urbanized there is still “a
sentimental feeling” for the village, perhaps a result of the inconvenience
and difficulties met in the city”. Rashmi C. Ved‟s inquiry revealed that
50% among women workers from modern industries and 24% from
traditional industries had broken all connections with their village so the y
never visited them.
Vaid has argued that absenteeism and turnover were not good indicators of
lack of commitment. For him absenteeism could be a function of a variety
of forces (such as personality, supervisory behaviour sickness). Low
productivity too i s dependent on several factors relating to management
and technology rather than on workers‟ commitment (Sheth : 1971).
Sharma and Vaid observed the following characteristics among Indian
workers in their studies —
1. Workers migrated from rural areas are better in attendance, more
regular and hard worker than those who came from cities.
2. They also could adjust with their work quickly.
3. Today these workers are well aware of the economic security, better
income and status and therefore they would like to change their jobs.
Later studies confirmed that today workers are from the families which
have had such experience for 2 - 3 generations. Modern technology
demands some formal technical training among workers. Most of the
workers are near their rural area s as per the policy of the dispersal of
industries. Recruitment of workers is still largely through informal social
channels, but workers with special skills are increasingly recruited through
formal selection procedure and employment agencies. Labour laws and
management attitudes have entailed considerable job and social security
for workers. A number of studies also show that rather than the social
background of the workers, it is superior technology, high job status and
employment in a large factory whic h determine high commitment among
workers towards work. The nature of job determines the kind of attitude a
worker can have. The repetitive and monotonous kind of job done by a
machine operator naturally produces less commitment, an unskilled
worker who pe rforms manual jobs is also less committed i.e. have less
devotion or sincerity. Comparatively highly skilled maintenance men and
tool makers are more sincere and much committed towards their work
They like their job. munotes.in

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7 Meaning and Scope of Anthropology It was found that Bangalore workers wer e more production conscious and
admired conscientious work. They wanted to do work which are skilled,
contain some variety and from which they would learn something new and
useful. The job of craftsmen was considered more satisfying.
In this background it can be rightly said that Indian workers are not less
committed to their work. On the contrary they want modern industry to
show some commitment to them.
3. Attitude towards work:
Lambert, Vaid and Sharma observed the following aspects of Indian
workers in their studies.
1. As far as satisfaction is concerned, it was observed that those who had
relatively higher status within the factory hierarchy and those working
with more sophisticated machinery and tools felt better placed and
satisfied.
2. These workers also adjusted well with their work especially those
who had higher status, higher income and higher skill as well as
technological sophistication.
3. Workers who were challenged by work technology and promotion
opportunities were more satisfied. Therefore it was recommended by
the sociologists that workers with higher skills must be given better
opportunities to improve their status or income. Also such workers
must be given challenge to do better by having better job design and
promotional chances.
Wedder burn and Crompton also suggested that technology determines
work orientation. For them the continuous process technology created
interest and gave sufficient freedom to try out their own ideas. In contrast
workers in the machine shops found their work bori ng and felt that they
have little freedom or discretion in the organisation of their work.
Even on work orientation of Indian workers, Gold thorpe Lock Wood and
their collaborators have pointed out in “The Affluent Worker (1968) that
the orientation of the worker toward work is the result of his definition of
the work situation. For Gisbert, the Indian male born and bred in the
traditional joint family and shaped up in it up to the time he grows, is
handicapped to make his own decision due to the over prote ctiveness and
paternalistic attitude of the head of the family. The self confidence or the
sense of responsibility is not built properly as a result the worker becomes
dependent and considers his employer as mai -baap i.e. parents and expects
him to protect him. He possesses a sense of insecurity and tends to be
submissive servant. Even protective laws have made the workers more
irresponsible towards production.
But today many studies of worker motivation in India have suggested that
the physiological and sa fety needs of the workers are more or less
satisfied. In view of this, the workers are increasingly concerned about munotes.in

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8 their social and ego needs. Many research findings reported that the socio
psychological needs of the industrial workers remain largely unsa tisfied.
It is believed that only wage, is not sufficient. Higher status and
recognition also contribute to the positive attitude to work.
Technological development is likely to create opportunities for workers
but at the same time unskilled jobs have gone .
Thus on the basis of studies on Indian workers and their attitude towards
work in general it can be concluded that,
1. Today, workers are more aware of their position and are concerned
with their future.
2. The workers are not much dependent on their emp loyers for their
betterment.
3. Workers now look forward for their job security,
Skill enhancement and promotion by working hard.
They take their job as the source of livelihood and have become more
sincere and responsible towards it.
4. Social Consequence s of Industrial Work:
A large number of industrial workers are employed in the [unorganized
sector where employers enjoy a great deal of immunity from Ithe
regulative labour and industrial legislation. It has been seen that trade
lunions have provided the workers a sort of identity as “members of the
[working class”. They also have become more disciplined and job
conscious.
Mobility and Occupational Aspiration:
In spite of a worker‟s confidence in regaining jobs easily, mobility een
units was found to be po or. This shows that even earlier workers reluctant
to change jobs. This is more so today. Lambert found bility among units
poor. Amongst workers 727% had no more than one previous job and the
average number with previous jobs was only 1.14%. Gisbert feels that
most often the workers‟ orientation towards work is largely decided by
external factors. Joint family‟s overprotectiveness gives no sense of
confidence „to workers according to P Gisbert - Kamla Chowdhary
expresses the view that unlike his western cou nterpart the Indian worker is
marked by excessive obedience and lack of competitiveness. Most
probably, family obligations, sometimes a poor record of education and
work experience and the difficulty of finding lucrative jobs is responsible
for low mobilit y and also for the low level of occupational aspirations.
Sometimes traditional obligations act as a hindrance to full commitment.
But as Moore and Feldman described Indian worker as over -committed
worker who is “committed to not only to industrial life bu t also to his
particular occupation or his particular employer. “Perhaps the Indian
worker is more adventurous, but his aspirations are undoubtedly low. This munotes.in

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9 Meaning and Scope of Anthropology may be lack of better opportunities available in India. Their general level
of education is also v ery low. Workers did not show any desire for upward
mobility. Lambert found that 62.4% of workers he studied expected to
stay in the same rank even in near future. Workers at higher level had
somewhat higher aspirations. Highly skilled jobs were more attra ctive and
thereby found that job satisfaction was highest among skilled workers and
lowest among semi -skilled workers. This coincides with Vaid and
Sharma‟s findings that superior technology) contributes to better work
adjustment. Lambert found that the le vel of) aspiration varied from factory
to factory but it was the highest in the most modern and technically
advanced engine factory. Lambert did not fine caste as important factor.
Sharma also found that education influenced a person‟s level of
occupationa l aspiration.
On the basis of these studies, certain characteristics of Indian workers can
be listed out in the following way:
a) Less dominance of caste system:
Indian workers are still divided and subdivided on the basis of caste,
region, religion and l anguage but these are not very important today. With
the introduction of reservation policy by the government the caste
structure has lost its significance in industries.
b) Higher education:
Though Indian industry got agricultural) hands during its early days, it has
now been securing workers with high er educational qualifications
compared to the minimum qualification of job.
c) No more agricultural work experience:
The research studies conclude that most of the workers have rural
background but do not ha w agricultural work experience.
d) Good attendance record:
The research studies show that today among the modern workers
absenteeism is far less. Most of the workers with rural background have a
good attendance record. Immigrants displayed work adjustment superior
to that of local employees.
e) Good working conditions:
Better working conditions create comfortable working conditions. This
leads to reduction in the number of absentism .
f) Low mobility:
Indian workers are less mobile. They do not leave job and go to another.
This is mo stly due to excessive obedience, lack of competitive spirit,
having desire of staying in or nearer to the native place, resistance to
change, problem of adaptability to the new environment and
organisational climate etc. This shows that Indian worker does not want to munotes.in

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10 learn continuously after attaining certain age or some goals. He is
habituated to do routine tasks rather than accepting challenging jobs.
g) Desire for job security:
Indian workers are more keen on getting jobs which offer security. They
want permanent jobs though initially the job does not have high salary.
h) Less Unionisation:
Indian worker, though he subscribes his name to some union or the other,
he does not participate in any of the union activities. Most of the workers
are highly self centered.
i) Wages:
The Indian worker‟s attitude towards the organisation does not seem to be
influenced so much by the work he does as by the wages he earns and his
seniority in the organisation. Higher wages create more interest and mor e
authority. It also provides more sense of responsibility.
j) More disciplined:
Today workers are ready to be disciplined and controlled. They follow
most of the rules.
k) Low level of aspiration among Indian workers :
Workers do not have high level of aspiration in view of the limited
opportunities available to them within industrial organisation.
l) Technology and workers:
If the technology is superior, the worker accepts the challenge and can
adjust well with the work situation.
m) Skill and workers:
Skilled workers are more satisfied than unskilled workers.
n) Workers and aspirations:
Workers at higher level have higher aspiration. Even those who work at
lower levels have higher aspirations if they are encouraged and make to
realise their potential.
1.4 ORGANIZATION Organization is a group of people working together under authority
towards achieving goals and objec tives that mutually benefit the
participants of the organization. It is clear that people who work together
require a defined system or structure through which they relate to each
other and through which their efforts can be co -ordinate.
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11 Meaning and Scope of Anthropology Functions of an o rganization:
There are three kinds of functions which must be performed when ever an
organization comes into being:
a. Division of labour:
Since an organization is a structure of human association, it involves
individuals and groups of individuals to join together to perform certain
task and therefore division of work is done. This leads to fixing of
responsibility, delegation of authority and specialization which are the
principles of an organization.
b. Combination of labour:
Because there is division of labour from the structural point of view it
results in various units, departments and division of an organization. These
divisions are made on the bases of skills of the workers, the tools and the
machinery used.
c. Co-ordination:
This is achieved through leadership in the structural sense. It involves
fixing of responsibilities and delegation of authority. It establishes control
of authority. It establishes control which provides for efficient
performance of activities.
1.5 FORMAL SECTOR It is also known as organized sector. It can be defined as the sector which
covers the labour force in all the enterprises in public as well as Private
Sector which has more than ten workers . These organized units are
largely supported and protected by the Government. The y provide better
wages, good working conditions and sometimes even pension facilities to
the workers. They include manufacturing and service organization like
commercial banks, insurance companies, manufacturing companies,
tourism, communication companies etc.
The structure of a formal organization can be depicted in a diagram form
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12

In any organization there is a hierarchy. Hierarchy refers to the various
levels of authority in an organization. The formal organization al structure
is presented in the form of a pyramid as above. At the base of the pyramid
are the workers, moving up the pyramid are the first line supervisors
usually referred to as supervisors or foreman. Such people use both
technical knowledge of their j ob as well as skills in human relations. They
have direct authority over the workers. Over these are the people of
middle management consisting of Superintendent Plan Manager and
HOD. Individuals at this level sometimes feel they are caught in the
middle a s they are pushed and pulled by such managers on each side of
them. They are responsible for the implementation of policies framed by
the top management which include Senior Executive/ Presidents and Vice
Presidents who constitute the administration of the organization. Above
them is the Board of Directors elected by the share holders of the
corporate body. They influence the overall policies.
Authority Structure of the Formal Sector:
This may be:
1. Vertical Structure
2. Horizontal Structure.
1. Vertical S tructure:
It clearly states that the lines of authority passed from top to bottom. At
the top ultimate power lies in the hands of top management who holds the
highest position in hierarchy. He has subordinates who are directly
accountable to them. His subo rdinates will have their subordinate and in
this way the hierarchy goes on until the lowest level. This structure is
based on two traditional principle.
a. The scaler principle which is related to a chain of commands i.e. :
authority and responsibility in an organization should flow in a clear
BOD Board of Directors Senior Executive /President Vice-President Superintendents Plant Manager / H.O.D. Supervisor And Foreman Workers munotes.in

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13 Meaning and Scope of Anthropology unbroken line i.e; from the top authority to the workers who are at the
bottom of the hierarchy.
b. Unity of command means that no subordinates shall be responsible for
more than one superior because orders from one s uperior may conflict
with orders from another superior and therefore the subordinates may
be in an awkward situation.
2. Horizontal Authority Structure :
This indicates the relationship between peers and fellow workers across
the organization. Individuals located at the same level normally have no
authority over each other. They are rather equal in terms of authority and
formal influence and more or less equal in social status also.
Types of Formal Sector:
They are as follows: -
i. Line Organization
ii. Staff Organization and
iii. Functional Organization
i. Line Organization:
In a line organization authority and power pass from top of the hierarchy
to the bottom level step by step through downward delegation of authority
and responsibility. All major decisio ns and orders are given up the top
exclusive to the to the immediate subordinate. When authority flow from
top to subordinate level in more or less a straight line, it is known as line,
it is known as line organization.
Characteristics of Line Organization :
1. Each manager has direct authority over his subordinates.
2. Each one report to only one immediate superior.
3. Managers have complete authority in their own areas of operation.
4. Authority flows downwards and responsibility flow upwards.
Advantages o f Line Organization:
a. It is the simplest type of organization that can be easily defined and
explained.
b. It is economically effective and quick decision can be taken.
c. Responsibility is fixed and unified at every level.
d. It provides greater contro l and disciple in the organization. munotes.in

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14 e. It develops the officers in all round capacity to take higher position on
line command in the department.
Disadvantages:
a. It overloads the executive with activity therefore long range planning
and group formation ar e neglected.
b .It does not make for specialization as one executive is required to do
all the work.
c. It is based on one man management therefore decisions taken are
arbitrary.
d. Distribution of work is not according to any scientific plan but the
whims and fancies of the executive.
e. It can encourage nepotism and promotion becomes a matter of
flattery.
ii. Staff Organization:
Staff managers ordinarily do not have direct authority over the line
members. Staff members have technical or professional knowl edge and
hence provide assistance or advice to line members. The staff members
provide service as well as advice on activities such as planning, research
or determination of executive manpower needs. There ar two types of
staff.
a. General Staff
b. Special Staff
a. General Staff:
General staff have general background which is usually similar to the
background of the executives and provide assistance to the top
management in one capacity or the other. They are not specialist and
therefore they do not have di rect authority or responsibility. They may be
known as special assistants or assistant managers.
b. Special Staff:
They have special background in some functional areas. They provide
expert advise and service to the organization such as research and
develo pment, purchasing, statistical analysis. In the modern industrial
world almost all business organizations have line and staff organizations.
iii. Functional Organization : [structure]
The functional design is also known as ¯u for organization [u= unity].
Some of the major functions are production, marketing, finance, HR, legal
research, development and so on. The type and the number of functions
would depend upon the type of organizations Eg.: - A service organization munotes.in

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15 Meaning and Scope of Anthropology will have different functions. The func tional structure divides the
organization into different departments according to their main functional
areas.
Advantages of Functional Structure:
1. It improves efficiency as well as the quality of products because the
specialist is involved in each funct ional area.
2. The functional structure helps in better communication and co -
ordination within the department.
Disadvantages:
1. It indulges narrow specialization rather than general management
skills and therefore functional manger executive positions.
2. Functional units may be concerned with their own areas and therefore
less responsive to the overall organizational needs.
3. Co-ordination is more difficult to achieve and hence it may seriously
delay responses affecting the entire organization.
Feature of Formal Sector :
The Indu strial growth up to 1991 was mostly based on the socialistic
pattern of society. Indian economic system had been based on the mixed
economic pattern. Therefore, public sector played a dominant role.
Government used to industries for the violation of any ru les. Government
also encouraged and supported many new units of production and also
allowed diversification of products. Government also issued technological
policy and industrial policies for regulation of production. Government
also wanted to create more employment through these industries. Thus
employment generation was the main objective.
Organised sector :
Organised sector is defined as the one covering labour force in all the
enterprises in public as well as private sector employing 10 or more
workers.
Organised units ar e being supported and protected by the government.
They also provided better wages, good working conditions and other
benefits, even pension facilities to the workers. Many people developed
and made their careers with organized units. There are manufacturi ng
organizations, public sector serice organizations like commercial banks
and insurance, private sector service organizations like banks, transport
tourism organization, finance companies or communication like mobile
phone services, television etc.
Organi sed sector is standardized. They operate mostly on systematic lines.
Demand for labour in this sector is balanced with the supply of the same
through the efforts of the employment exchanges; consultants,
advertisements, trade unions etc. There is formal se lection procedure used munotes.in

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16 Sociology of Informal sector
16 for appointment. Workers or employees are regulated by formal laws. The
organization is also formally controlled, has hierarchy of authority, work
well planned, basis adopted as specialization of knowledge, effective line
of communic ation, higher pay -scale according to ability and experience.
There is formal indirect contractual impersonal and temporary
relationships predominant in such organizations.
Organisation in this sector train and develop the employees through their
efforts. T hey pay the wages / salaries to the employees based on job
evaluation and their ability to pay. Trade unions in these organizations are
strong. They regulate the HRM practices in these organizations.
Nature of work or the pattern of relationships in the fo rmal sector:
According to the studies conducted by Braverman and others, skill
initiative and control are steadily removed from work with the
development of mechanized and automated production. In addition, the
labour process has been increasingly rationa lized„ in capitalist society
Tasks are minutely divided into simple operations and directed and
organized by management. This development applies not only to
manufacturing industry, but to work in general. The net results of these
changes are (1) deskillin g of labour force (2) reduction of its control over
the work process and in particular, cheapening of labour power. Workers
are forced to sell their labour power in order to subsist. Their work has
undergone a process of degradation which involves the rem oval of skills,
responsibility and control and work process is dominated by the employer
and management.
Organised sector is restricted to manufacturing, electricity, transport and
financial services. Its share is 7% of the total employment in 1999 -2000
i.e. 28 mn out of 397 mn total employment.
The organized sector comprises of the public and private sector. Public
sector„s share in the employment in the organized sector was 71% during
1983 -94. Now it is declined due to the government„s policy of reducing
employment in the public sector.
The share of the private sector has been less than 1/3rd of the employment
in the organized sector. The private sector is profit motivated and does not
generate employment as the public sector.
Characteristics of Formal Sec tor:
1. It is impersonal or abstract in nature i.e. it is the job or the position
which is of prime importance whereas the men who perform the role
are secondary in nature.
2. The relationship between the members is designed in such a manner
that the forma l relationship are in coordination with plans which are
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17 Meaning and Scope of Anthropology 3. It is a part of the wider system and it includes material and non -
material elements as well as economic, political and administrative
system wh ich may be reflected in the human environment.
4. All individuals in the organization are assigned specific duties and
responsibilities.
5. All the activities are directed towards the attainment of the goals.
6. There is a clear distinction between superio r and subordinate
relationships.
7. There is a system of coordination between the activities of the
individuals of the departments.
8. All formal organization have their own rules and regulations.
Problems of Formal Sector:
Some of the problems faced by th e workers in the formal sectors are
related to automization, privatization and liberalization. Due to the merger
of Indian industries with multination companies the workers are facing the
problems of lay off, voluntary or compulsory retirement. A large amo unt
or number of workers are unskilled or semi -skilled and therefore there is
little scope of their employment. Even the skilled workers have to improve
their knowledge. There is no job security as the system of „Hire & Fire„ is
followed. Information revol ution has changed the entire demand and
supply pattern. The union have not been able to protect its members
because of downsizing and outsourcing. Due to all these factors, the
numbers of workers have become less and they have lost their strength to
bargai n with their employers.
There are problems in the organised sector too. Due to automation,
privatisation and liberalisation the industrial scene is mostly changed.
Many industries are being merged with many international or
multinationals hence their India n units are closed. Workers are facing lay
offs, voluntary retirement or compulsory retirement. Many unskilled or
semiskilled workers are losing their jobs as there is no scope of manual
jobs.
Even highly skilled labour have to improve or renew their knowl edge to
maintain their demand. Now no doubt workers are better paid, there is no
job security. Workers move from one organisation to another. New
generation workers have to work very hard to find suitable jobs for
themselves. Industries especially large sc ale factories are closing down
and business processing industries are being, instituted in place of them.
Their job is to collect, process data and supply them to their customers.
They undertake administrative functions. Information revolution has
changed the whole demand and supply pattern.
Though the workers in large industries are unionised, unions fail to protect
their jobs. They are also unable to dictate their terms and conditions due to
downsizing and outsourcing of industries. Though unions are stil l munotes.in

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18 Sociology of Informal sector
18 struggling it is not possible to achieve the earlier status. Workers have
become less in numbers therefore have lost their strength.
Workers in plantation and mines:
Though these are organised formal sector, working conditions are very
bad. Workers hav e to work under very poor sanitary conditions without
adequate ventilation Drinking water supply is absent. Wages are very low.
Mostly women a nd children work who are not given any facilities. In mica
industries, it is noticed that very small children who come along with their
mothers have to be in their mothers‟ lap, inhale minute mica particles,
their face get covered with sparkling mica. In plantation, workers are not
given sanitation facilities, good comfortable houses or even no protection
from rain or sun while at work. They are not even given proper rainy
shoes. Regarding hours of work it was observed that plantation workers
work for 10 -12 hours a day even though undentheJfectory Act 1948 they
should not work for more than 8 hours a day.
1.6 SUMMARY The work ing condi tion of a worker depends upon the sector in which
he/she is employed . The formal sector, involves rigid rules and regulations
along with a job security to certain extent. Whereas , the informal sector
where the entry is not restricted , it does not provide any kind job security.
Even in the formal Sector, workers face a range of issues which i f
unresolved lead to mass absent eeism and also in se vere cases may lead to
strikes and eventual lockouts
1.7 QUESTIONS 1) What do you mean by worker?
2) Discuss organization and its function.
3) Highlight structure of formal organization.
4) Analyse Characteristics of formal sector.
1.8 REFERENCES  Anthony Giddens, „Sociology„, Simon Griffths Polity, 2006.
 Schneider EV -Industrial Sociology, Tata Mcgraw Hill, 1983.
 ILO, 1994, The Urban Informal Sector in Asia : Policies & Strategies.

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19 2
INFORMAL SECTOR
Unit Structure
2.1 Informal Sector
2.2 Types of workers
2.3 Social Security of workers in informal sector.
2.4 Difference between formal and informal org.
2.5 Summary
2.6 Questions
2.7 Reference
2.1 INFORMAL SECTOR According to the defi nition given by the Central Statistical Organization
the unorganized on the informal sector includes all those incorporative
enterprise and household industries which are not regulated by any
legislation and which do not maintain an annual account or balan ce sheet.
According to a noted economist Banerjee - Unorganised sector is one
which caters to the local market and to consumer who comes from the
lower segment of the society.
According to Nirmala Banerjee - The unorganized sector consist of
loosely for med g roups which includes self -employed person, wage
earners, family members and house hold workers. Hence it is therefore
called as the informal sector.
It can also be defined as the spontaneous or deliberate. grouping of men in
which the structure is not cle arly defined or methodically distinguished.
The component organisation in an unorganised sector include small
industries, tiny industrial “ units, cottage industries, shops and
establishments, hotels, restaurants, mobile business or trading units, taxi
operators, agriculture etc.
Demand for and supply of labour in this market is mostly balanced
through casual labour and contract labour. These practices are more
prevalent in the third world countries. Organisations in this sector do not
follow any systematic or scientific method of recruitment or selection.
Candidates are mostly informally employed. They also accept low wages.
Sometimes their skill is considered.
Organisation in informal sector normally do not design the jobs, do not
plan for man power. They do not undertake any measures to train or
develop the employees. Performance appraisal through formal means
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20 Sociology of Informal sector
20 Employees are normally offered minimum wages as announced by the
government. Some organisations av oid paying even the minimum wages.
Normally the organisations do not provide employee benefits welfare
measures, fringe benefits etc.
Most of the organisations do not have trade unions. Trade unions are
generally weak even in these organisations wherever t hey exist. Employee
grievances, industrial conflicts etc. are rare to find in this sector as the
employees have to accept the wage offered by the employer. Further they
also accept other terms and conditions of job.
The informal sector mainly consists of p eople who are self employed and
provide needful services but in unorganised and unauthorised manner e.g.
street hawkers. This sector may cover wide range of activities like retail
and wholesale trading, repairing and servicing, casual labour and
manufactur ing etc. By definition the units in the informal sector are
considered those which employ less than 10 workers. But it is difficult to
distinguish between formal and informal sectors.
Attempts have been made in ILO, studies to identify and to distinguish t he
informal sector. Taking a cue from the dualistic nature of the urban
economies in the developing countries, the nature of organisation
(organised and unorganised), the technology used (traditional or modern)
the mode of production followed (capitalistic or subsistence) State
recognition of the economic activities and State regulation of the product
and the labour markets are taken as lines that demarcate the formal and
informal sectors.
Thus the areas like manufacturing, construction, transport trade and
services may be considered as informal sectors. But then again to
differentiate informal sectors from formal areas, some criteria are evolved
by the ILO groups which are as follows :
1. Small size of operation: The production or manufacturing activities
are carried out on a small scale.
2. Family ownership: There is informal relations between the employer
and employees. There is no functional division of labour or
specialisation.
3. Casual nature of employment: Jobs are highly temporary.
4. Use of indigeno us and non modern (traditional) technology :
Which is labour intensive with fully manual operations involved in
production process.
5. Lack of access to State benefits : like the benefits of organised
capital market, bank finance foreign technology, foreign exchange
concessions, imported raw material, protection from foreign
competition and a best of other concessions and incentives which are
extended to the enterprises of formal sector by virtue of their having
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21 Informal Sector 6. Competiti ve and unprotected market : arising chiefly on account of
ease of entry, nature of product produced and its demand and the
marketing arrangements which are exploitative.
7. Unprotected labour market : giving rise to insecure jobs
underemployment and depresse d wages.
8. Scattered nature of place of work : or of employment the place of
work is spread out. Different types of activities are taking place in
different places even in the same line of production.
9. Contract nature of labour : Mostly workers are employ ed on
contract basis hence they are most temporary.
10. Workers : Semiskilled and illiterate - mostly skilled or qualified
workers do not work. Generally workers are migrants and do not
possess sufficient qualification.
ILO has considered this sector as emp loyment generating sector since it
can absorb those who cannot enter the organised formal economic system
due to some inabilities. It is argued that informal sector provides job and
supplies goods and services which are needed by lower and middle
classes.
Informal sector is largely unorganised unregistered and therefore
iunprotected. Generally the migrants enter this sector for dire need of
isurvival. Informal sector is also referred to as large self employed sector.
The informal sector as per the 1993 SNA refers to productive institutional
units characterized by (a) a low level of organisation (b) little or no
division between labour and capital and (c) labour relations based on
casual employment and/or social relationships as opposed to formal
contracts. T hese units belong to household sector and cannot be associated
with other units. In such units, the owner is totally responsible for all
financial and non -financial obligations undertaken for the productive
activity in question. For statistical purposes, t he informal sector is
regarded as a group of production units that forms part of the household
sector as household enterprise or equivalently, unincorporated enterprises
owned by the households.
Rise and Growth of Informal Sector:
The importance of the inf ormal sector in supporting livelihoods and
contributing to production and consumption activities of developing
countries is widely evident. However, lack of consensus across countries
in regard to a clear and uniform definition of the informal sector has
hampered its identification and measurement for proper comparison. In
addition, relationship between informality and economic growth is not
straight forward and there is no chance and concrete evidence that this
sector enhances economic growth.
The informal sector was originally treated as a residual emanating from
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22 Sociology of Informal sector
22 emphasized in the literature that productivity growth in the formal sector
act as a ‘pull‘ factor in drawing informal sector workers and enterprises
towards it. Paradoxically, informal sectors of most developing countries
have actually increased over time. Informality has been characterized as a
response to high transaction costs caused by cumbersome bureautic
procedures for bu siness start -ups and inksome compliance with unclear
and prohibitive rules and regulations.
Rise in informality is associated with economic restructing and economic
crises. E .g. The structural adjustment programmes [SAP‘s ] of the 1980‘s
and 1990‘s is said to have increased the informal economy due to
retrenchment of the public sector and associated liberalization policies.
The relationship between informality and growth is not only inconclusive
but it can go in both directions.
i. Economic growth can have expansionary or contractionary effects on
the informal economy and
ii. The informal economy can have a positive or negative impact on
economic growth.
Sustained economic growth that is pro -poor is believed to reduce
informality.
Developing countries with:
a. No growth
b. Capital intensive growth (jobless growth ) or
c. High - tech growth (rise in demand for skilled services sector jobs
rather than unskilled manufacturing jobs) could experience an
expansion in their informal sectors.
For eg., In Indian‘s case , its GDP growth has been largely capital and
information technology intensive rather than labour intensive, with limited
formal employment generated in the manufacturing sector till 2002. The
informal economy is assumed to be counter cyclical i.e contract ing during
economic booms and expanding during recessions. However, informal
sector activities can also rise during times of economic boom, as
exemplified by a recent study, where the informal enterprises were able to
quickly respond to a rise in demand by evading the bureautratic
impediments of a formal business setup.
Characteristics of an Informal Organization:
Any organization or business cannot operate completely within the
framework. In reality workers of one department may know other workers
from the other department and they together plan various activities which
are beyond the control of management. Such organization helps the
members to feel that they are human beings and also helps them to gain
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23 Informal Sector Sociologist like Pet er Blau & Elton Mayo have studied the informal
organization and come to the following conclusion. Eg. In the large formal
organization a close group emerges which works in an apparently opposite
direction but its efficiency is better and more advantageous for the
company. At the same time, the study reveled that due to the freedom
given to the workers to express themselves. They developed more
confidence and could lso resolve the problems more efficiently.
Elton Mayo studied a group of industrial workers wh o had formed their
own small groups which had rules that were not necessarily in compliance
with these of the management but it was observed that the members
followed them because they had the freedom to express their views freely,
share their experiences and problems, cooperate with each other and at the
same time have some kind of status which would not exist in the formal
organization. Infact, on the basis of the relation within the formal
organization social scientist can determine the functioning of th e formal
organization.
On the basis of these observation we can briefly note the features of the
informal organization: -
1. Ease of entry : Since there is no need of any formal selection, workers
can get job easily. In the urban areas there is more scope fo r
individuals to get an entry if so desired. This results in the
unorganized sector having all kinds of workers viz. skilled, semi -
skilled, unskilled, literature, temporary or permanent.
2. Reliance on indigenous resource: Informal manufacturing units use
goods, raw materials which are easily available and not very
expensive. This includes the employment of workers who may not be
very skilled or efficient.
3. Family enterprise : By this we mean that all family members
contribute to the production of goods. A s the work is of such a type
that no special quality is required to perfom the given task.
4. Small scale of operation : Production is on a very small scale as a
result of which the number of workers required is also very less the
capital which is involved is invested at a very small scale.
5. Labour intensive technology : In the informal sector there is more
emphasis on simple tools and machines or it is done by hands.
6. The skills for operating the production of goods is not obtained
formally but learnt on ly by practice. It is only through observation
that the workers gradually learns to master the art.
7. Unstable/unprotected Market: Since the goods produced by the
informal sector ’s are those which can be afforded by the poor or the
middle class people, th ere are no advertisements or campaigns, but
they are distributed on a door to door basis. That is why it is said that
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24 Sociology of Informal sector
24 8. No Official Recognition: The informal sector is not officially
recognized. Because of this they are not registered with the
government. Also due to this they lose may tax concessions and they
cannot apply for space, water or power facilities.
2.2 TYPES OF WORKERS Workers in India are of various types. To know the working conditions,
wage rates, life styl es of various workers it is essential to classify workers
in different categories. Each category is markedly different from the other
ones. Such classification helps us to assess the problems of workers in
each category. Though government has tried, to col lect data on different
types of occupations, establishments which employ labour, the basis of
employment, condition of services but it is not sufficient. A vast body of
informations collected by Labour Department show that there is wide
variety of labour a nd a large number of workers are employed in different
jobs. In 1971, it was studied that 43.34% were cultivators, 26.33%
agricultural labourers, 28.9% were in mining, quarrying, livestock,
forestry, plantations etc., 3.52% were in - household industry, 5.9 4% were
in manufacturing 1.23% were in construction, 8.0% were in transport,
commerce an trade, while 8.75% were in other services.
An analysis of the reports of census on labour shows that a lar ge variety of
workers are found both in organized and unorgan ized sectt. of primary,
secondary and tertiary nature. They are also working in private and public
sectors.
In absolute terms, however, employment in the public sector ro to 143.98
lakhs and that in the private sector to 70.39 lakhs by end of March 1978.
The overall employment in the organized seel - however increased from
207.44 lakhs at the end of March 19 71 214.37 lakhs at the end of March
78.
To understand the problems of Indian workers, we must stij different
varieties of workers - their position, natur e of employiw working
condition, their commitments, attitude of government employers towards
them. We can classify the workers in two grc broadly - (1) Permanent and
organized, (11) Unorganized under second group. We should study
different types of workers like contract women and child labour.
I. Permanent Workers:
Workers are classified as permanent labour when they work in organized
sector, their job tenure is long, they are permanently employed and they
are receiving statutory provisions like adequate wa ges, D.A., H.R.A.,
transport allowances, medical benefits and other facilities. Mostly
permanent workers are in factories - the most organized establishments -
the number of workers engaged in factory establishments forms the bulk
of organized labour. Perm anent workers are the confirmed employees,
completed at least five years, hence can enjoy gratuity, provident fund and
pension provisions as given by the employers or the government. munotes.in

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25 Informal Sector Permanent workers in factories, plantations, mines or in any sector
wheth er private or public contribute most to the production. They are also
organized into unions, can fight for their welfare and see that their benefits
cash or in kind as promised by the government are reaching them. They
can also protest against any unsafe w orking conditions, injustice or
misbehaviour. Permanent class of workers are the most protected class by
the government, employers and also by society.
Today, Indian workers are educated, trained, committed, sincere and
responsible towards their work. If t hey go on strike they give
“compensation for that. Permanent employees also do not suffer from any
loss either financially or by benefits. Even during lay off periods or
retrenchments permanent workers are protected.
In organized sectors, especially in fac tories, employment is fairly very
large and important. Even in plantations and mines 8.9 millions of workers
are working. Employment of labour in transport and communications
group of industries is also fairly large, of which railways and posts and
telegra phs are very important. They represent a great state enterprise. In
March 77 the number of workers employed in Railways was 14.73 lakhs.
Employment of workers in major ports is also fairly large. Among the
industrial labour employed in transport services I ndian Seamen constitute
an important section.
II. Unorganized Labour:
This group of workers includes those who cannot be identified by a
definition but could be described as those who have not been able to
organize in pursuit of common objective because
(a) They are scattered
(b) The nature of their job is casual or seasonal
(c) Workers are ignorant and illiterate
(d) Small size of establishments with low capital investment per person
employed
(e) Superior strength of the employer operating singly or in combination.
It is difficult to take into account every sector of such employment and
therefore, only those categories can be considered where the number of
workers is large and where information about them is available in some
form. For ex.
(a) Contract labour including construction workers,
(b) Casual labour
(c) Labour employed in small scale industry
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26 Sociology of Informal sector
26 (e) Sweepers and scavengers
(f) Workers in tanneries
(g) Tribal labour
(h) And other unprotected labour.
Even those who work in households as domestic servants constitute labour
in unorganized sector but they are not registered hence not known.
Further, these categories include workers who are protected by some
labour legislation an d also others who are not thus protected at all.
So, we can see a large variety of workers are working in unorganized
sector, they are less protected and not covered under government welfare
schemes. They, due to their casual nature of jobs cannot be class ified
properly. Thus, they are deprived of their due benefits, e.g. women cannot
get maternity benefits, leaves or other statutory provisions out of
ignorance or due to employers’ reluctance.
a) Contract Labour :
Those who work under contract or sub contrac t basis i.e. indirectly are
called contract labour. Such workers are not taken care, unprotected,
temporary, seasonal, and suffer from lack of any government protective or
beneficial measures. Employers are not directly responsible for the
payment of their wages, conditions of job, hours of work and other
minimum facilities which they should get as workers. Mostly women and
children are employed under contract. They are the most unprotected and
unclassified workers generally employed by labour contractors, Sardar or
other intermediaries. The origin of the widespread vogue of contract
labour is acute labour shortages which compels employers to seek the
help of labour contractors or other intermediaries. From recruitment to
engagement by the contractors them selves for specific jobs is an easy step
in quarrying mines and some seasonal factory industries. Contractors are
still largely to be found in public works, road construction, in sugar, cotton
ginning and pressing factories, carpet weaving, in rice and flo ur mills,
building construction and even in engineering and metal works.
Workers may be skilled e.g as fitter, turners, weavers or semiskilled. Most
of them, however, are unskilled and they work as coolies or do manual
jobs.
‘Contract Labour’ can be distin guished from direct labour in terms of
employment relationship with the principal establishment and method of
wage payment. Unlike direct labour, which is on the pay or muster; roll of
the establishment and entitled to be paid wages directly, contract labour is
neither on pay roll nor is paid directly. The establishment! which gives out
work to a contractor or contractors does not owe any direct responsibility
in regards to his/her labour. In sever al contracts, the wage rates to be paid
to labour are menti oned, but whether payment is made actually is hardly
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27 Informal Sector person/organization for whom the contractor works is responsible. The
advantages to the employer in employing contract works are :
1. Product ion at lower cost,
2. Engaging labour without extending fringe benefits such as leave
wages, Employee’s State Insurance, or Provident Fund and bonus
facilities.
3. Eeneral reduction of the overhead cost and the administrative burden
of maintaining an estab lishment and
4. It is always economical to give work on contract basis rather than to
invest huge money in installation and start manufacturing.
Contract labour can broadly be divided into two categories:
(1) job contracts and (2) labour contracts. Large establishments give out
contracts of jobs or of particular operation, e.g. work of loading and
unloading of consignments can be given to contractors on lump -sum
payment basis. The contractor engages his own workers. The contractor
can be an individual or a n establishment. The protection received by
contract labour varies according to the situation.
The principal industries in which contract labour is largely employed are
engineering, Central and State Public works Departments, railways, the
cotton textile i ndustry in some areas like Ahmedabad, dockyards, cement,
paper, mining etc. In mines as already stated the bulk of the labour is
contract labour and the system has spread to plantations also. In
Ahmedabad about 10% and in cement, paper, and coir making ind ustries
about 20 -25% is contract labour. Even in gold mines in Kolar one third of
the workers, and in Bengal dockyard about 45% of the workers are
employed through contractors.
According to some surveys by the Labour Bureau, when we see the
percentage of c ontract labour to total labour in certain other selected
industries, we find that in iron ore and manganese ore as well as in Jute
Pressing the contract labour is maximum i.e. more than 70% while in
construction (PWD) this labour is nearly 60%. In fire bri cks it is 24%
while in. quarries, docks, salt, dal mills, toy manufacturing it is more than
32%. Contract labour is also more in wood work, metal rolling, cotton
ginning and pressing, rice mills etc. Contracts are usually given out for
work involving the e mployment of unskilled manual work, over which
supervision is difficult. Immediate employment of large labour force at
short notice in order to speed up the work, the absence for a long time of
any suitable machinery for employment, like Employment Exchang es, the
lack of sufficient Supervising Staff and the shortages of labour have been
some of the reasons for contracting the labour. Generally, manual work
like building work, the loading or unloading of consignments, shifting of
wooden boxes, removal of cyl inders and stocking of goods in godowns,
constructing the road etc. are given on contract basis. Even within the
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28 Sociology of Informal sector
28 difficult, work is allotted to intermediaries within the establishment.
Employers are benefited, it is said by giving out the contract of jobs or of
particular operations since they do not have to maintain an establishment.
This reduces the cost. By not employing the labour directly the employer
does not have to provide any welf are measures to workers. In case of
certain jobs as in PWD and construction, the system of contract labour is
found to be most convenient. Even in Air India and other such big
companies there are certain categories of work which are always given on
contrac t basis.
In the cotton ginning and pressing in U.P. it is estimated that about 75% of
the work is done by contract labour. In the sugar factories also contract
labour is provided with very low wage rates and very poor working’
conditions.
But there are man y disadvantages of contract labour. Most labour laws do
not apply to contract labour and these laws which have been extended are
not properly enforced due to migratory nature of contract labour. Most
contractors do not possess any sense of moral obligation towards the
workers and always exploit the helpless position of the labour in their
charge. The contractor gets his contract by the lowest bid therefore he tries
to pay as low wages to his workers as possible. The employers also do not
provide any welfare work.
Even in construction industry contracting is there. Occupations in which
contract labour is employed, range from purely unskilled work categories
like loader, unloader, cleaner, sweeper and Khalasi to skilled job like
polisher, turner, gas culture a nd riveter in all distribution and driller,
blaster, blacksmith, carpenter and filter in mining industry. Apart from
these there are certain regular processes such as nickel polishing and
electroplating in engineering establishments, dyeing, bleaching and
printing in some units in textiles and designing and raising work in almost
all carpet manufacturing units wrlere contract labour is common.
The building and construction industry covers a variety of workers and
operations. Its activities range from constr uction of dams and bridges and
roads and track to factories and offices, schools, hospitals and ordinary
residential buildings. Together with the requirement of maintenance of
construction, this forms a major sector of employment. Most of these
operations are seasonal and at times involve changes in the employment
pattern largely due to climatic conditions. Big projects may employ
workers at a stretch for many years. In urban are as construction of
building or roads, goes on continuously. There has been rap id expansion
in building and construction. For the most part such labour is quite
unorganized and is scattered all over the country. Central and State Public
Works Departments and Railways usually employ contract labour. Most of
the construction works are actually executed by big and small contractors,
the latter usually working as sub contractors under a principal contractor.
Unregulated entry of unqualified workers makes this sector a chaotic area
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29 Informal Sector The National C ommission on labour pointed out many evils of the
contract labour system. According to it, “there is wide disparity in the
wages, and working condition of direct labour and contract labour.
Though the Wage Boards - are constituted, in absence of an effectiv e
implementation machinery, contract labour is generally paid wages very
much below the rates prescribed for regular workers -in the industry.” The
Commission also points that “The condition of work of contract labour are
far from satisfactory. Working hou rs are irregular and longer. The period
for which payment is made varies from a day to six months. There is no
security of employment, the job ends with the contract. Leave with wages
is not available to contract labour.”
As regards housing facilities, con tract labour is never considered at par
with direct labour. Benefits under the E.S.I. Scheme and Employees’
Provident Fund Act are not available to contract labour because they are
not qualified. Therefore National Commission has recommended for a
stricter regulation of contract work.
The Contract Labour (Regulation and Abolition) Act 1970 :
The Act aims at the abolition of contract labour in respect of categories as
may be notified by the appropriate government in the light of certain
criteria fixed for the purpose and regulation of service condition of
contract labour where such abolition is not possible. It provides for
registration of establishment employing contract labour and licensing of
contractors. The provision and maintenance of certain basic welfa re
amenities like drinking water and first aid facilities and in certain cases,
rest rooms and canteens for contract labour has been made obligatory
under the Act. Principal employers have to provide them at the cost of the
contractor. Provision has also b een made in the Act to guard against
default in wage payment. -The Act came into force since February 10,
1971.
b) Casual Labour :
In absence of any permanent worker or to fill the vacancies temporarily
casual labour is contracted. They are temporary employe es and serve only
for a specific period. They are also known as ‘Badli’ workers or substitute
workers. In engineering industry casual labour is employed to fill
vacancies caused by absenteeism and temporary pressure of work.
Employment of casual labour is a common feature in Railways, the Public
Works Department, both central and state, the state electricity corporations
and employments in the private sector where the nature of work is similar.
Employment of casual labour in several categories of work is we ll
recognized and not objected to. It is taken exception to mainly when such
labour is continually employed for long periods to circumvent the
provisions of law, which confer benefits to permanent workers through
better working conditions; more amenities a nd the like and what is more
when used deliberately to restrict the scope of regular employment.
Still a large volume of labour is casual which is engaged for varying
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30 Sociology of Informal sector
30 Decasualiza tion of Labour:
Some factories have tried to regularise recruitment by a system of
controlling substitute labour. This system, known as the Badli control
system or decasualisation of labour, has been devised with the two fold
purposes (a) of giving the ba dlis regular employment and (b) eliminating
the influence exercised by the jobber in the recruitment of labour. Under
the system, on the first of each month special badli cards are given to a
selected number of persons who are asked to present themselves e very
morning at the gate when temporary vacancies are filled up from among
them. No worker is recruited as long as ‘badlis’ holding cards, are
available and according to seniority the jobs are filled in. Service
certificates are issued to registered worker s and the length of service is
considered in providing jobs. Such workers can also be given some
security of job through the scheme.
Generally these workers are less skilled, and are always in search of jobs.
They are migratory in character. Because of the ir continuous movement
they cannot get any benefit of regular job.
c) Seasonal Labour :
Seasonal Labour is the category in which workers work only for a specific
period on contract basis, when some specific order is received. In carpet
industries, work is c ontracted only when some order is received; similarly,
loom workers work only on order. Thus road construction is a seasonal
job, building houses is also a seasonal job. During rainy season no job is
continued especially which are carried in open. Such wor kers cannot get
any benefits as they are purely temporary employees. They are given daily
wages and no other benefits like leave with wages, sickness allowances or
even full wages are paid.
d) Self-Employed Workers :
Workers who are skilled and provide serv ices to others on contract or
daily basis are called self -employed workers. They can also call other
workers to join them. They are painters, carpenters, plumbers or simple
machine operators, e.g. cutting stone or marbles. These workers can install
machine in some place and do work on job basis.
Problems And Social Security of the Workers in Informal Sectors: -
As compared to the formal sectors, workers in the informal sectors face a
plethora of problems which can be enumerated as follows: -
i. Job insecurity :
Workers with the informal sector are employed in factories or industries
for a temporary period of time. At the same time, the entrepreneur who
employs them is also not very rich and therefore cannot afford to give
them a proper job security.
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31 Informal Sector ii. Low Pa yment:
Workers in the informal sector specially women are paid very low wages.
This is probably because the whole business is not very profitable for the
entrepreneur. Besides women are also considered here as a surplus staff
that can be removed on any gro unds without any intimation.
iii. Lack of Skills:
Workers do not possess high skills in the beginning. They learn the skills
only during work hence the productivity cannot be increased. Besides the
age of the worker may vary from one type of work to the o ther.
iv. Workers ar e unorganized:
Workers in the informal sectors belong to different caste, religion,
language and race. As a result of this they are not organized or unionized
as a result of which their bargaining capacity reduces.
v. Workers are less i n numbers:
Although the numbers of workers in informal sector is high compared to
formal sector, but the employers cannot appoint more than certain number
of workers. As a result they cannot become powerful. Also the space in
which these sectors operate a re very small which makes it impossible to
hire more an d more people and make them work in the same place.
vi. Large number of women and children as labour :
Owing to the informal nature of industries and production of goods which
requires delicate hands an d also no special training, large number of
children are employed in informal Sector. Another factor is that many of
them are illiterate and therefore the employers can get more work with less
pay. Even if they make these children work for longer hours at the cost of
their health, they will not say or rebel in any form as they barely realize
this is exploitation.
vii. Loss cannot be implemented:
Technically loss does not differentiate between organized and unorganized
sectors. However, the basic right to th e workers is denied to be given by
the employer who‘s intention is to only save money and make profit for
himself. The workers are not even granted enough leaves and if they
happen to take some, it is at the cost of getting deducted payment at the
end of t he month. No other provisions like P rovident Fund‘s or Voluntary
Retirement are given. Promotions are very rare.
2.3 SOCIAL SECURITY OF WORKERS IN INFORMA SECTOR In India the term social security is generally used in its broadest sense, it
may consist of a ll types of measures preventive, promotional and
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32 Sociology of Informal sector
32 private. The term encompasses social insurance social assistance, social
protection, social safety net and other steps involved.
There are number of models of providing social security to the workers in
the unorganized sector. These may be classified as under: -
 Centrally funded social assistance programmes.
 Social insurance scheme.
 Social assistance through welfare funds of Central and St ate
Government.
 Public initiatives.
The centrally funded social assistance programmes include the
employment oriented poverty alleviation programmers such as
Swarnjayanti Gram Swarojgar Yojana, Jawahar Gram Samridhi
Yojana, Employment Assurance Scheme, Nat ional Social Assistance
Programme [NSAP] comprising old age pension, family benefit and
maternity benefits to address the social security needs of the people below
poverty line.
The social insurance scheme include several schemes launched by the
Central an d the State Government for the benefit of weaker sections
through the Life Insurance Corporation of India and General Insurance
Corporation of India. There are schemes for the employees of shops and
commercial establishments and other weaker section.‘Jansh ree Bima
Yojana‘ is a group insurance scheme and covers natural / accidental death,
partial or total permanent disability due to accident and the people below
poverty line and marginally above are eligible to join the scheme. Another
group insurance scheme for the agriculture landless labour, ‘Krishi
Shramik Samajik Suraksha Yojana - 2001‘ launched in July, 2001 provides
for pension and insurance besides providing money back. The contribution
of the beneficiary in Re.1 per day while the Government contribute s Rs.
2/- per day.
Several public institutions and agencies are also imparting various kinds of
social security benefits to the selected groups of workers. Among these
Self Employed Women‘s Association SE WA has made significance
achievement in promoting so cial security through the formation of
cooperatives.
Welfare funds represent one of the models developed in India for
providing social protection of workers in the unorganized sector. The
Government of India has set up five welfare funds. Central Funds are
administered through the Ministry of Labour for the bed and workers in
certain other occupations for whom no direct employers – employee
relationship exists and is implemented without any contribution from the
Government. The scheme of welfare fund is out side the framework of
specific employer and employee relationship in as much as the resources
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33 Informal Sector of welfare services is affected without linkage to individual workers
contribution. These funds are constituted from the cuss collected from the
employers and manufacturers/ producers of particular commodity/ industry
concerned.
The Government has also enacted a central legislation for the building and
other construction workers towards creatio n of welfare funds at the level
of States. These are around 20 million construction workers in the country.
A small cuss is collected on the basis of the cost of the construction
project which makes the corpus of the welfare fund for the construction
worke rs. All facilities as enumerated above are provided to this section of
the unorganized sector workers. Presently three states in the country
namely : Kerala, Tamilnadu and Delhi have started implementing schemes
under this Act. However, other States are in the process of adopting.
Moreover, the welfare fund model have successfully been implemented by
various states for various categories of workers. The State of Tamilnadu is
running 11 Welfare Boards for workers like construction workers, truck
drivers, foo twear workers, handloom and silk weaving workers. Similarly,
State of Kerala are also running several welfare funds for agricultural
workers, cashew workers, coir workers, fisherman, toddy tapers etc. The
model is so popular that some of the States like Andhra Pradesh,
Karnataka and Madhya Pradesh are in the process of bringing out their
own legislation for creation of Welfare funds in the unorganized sector
workers for providing them social security.
2.4 DIFFERENCE BETWEEN INFORMAL AND FORMAL ORGANIZATIONS 1. Widespread interest in informal organization developed as a result of
the Western Electric Studies in 1930. These studies show that
informal organization is an official network of personal and social
relations which is not established by formal authori ty. It arises
spontaneously as people associate with one another. The emphasis
within informal organization is on people and their relationships
whereas formal organization emphasis official position in terms of
authority and responsibility.
2. Informal po wer is attached to the person while formal authority is
attached to the position and a person has it only when they occupy
that position.
3. Informal power is personal but formal authority is institutional.
4. Powers in informal organization is given by gr oup members rather
than delegated by managers. Therefore, it does not follow the official
chain of command. It is more likely to come from peers than from
superiors or supervisors in the formal hierarchy and it may cut cross
organizational lines in other d epartments. It is usually more unstable
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34 Sociology of Informal sector
34 5. As the informal organization is subject to the sentiments of people
and because of its subjective nature, informal organization cannot be
controlled by management in the way a formal organiz ation is
controlled.
6. A manager typically holds some informal powers [personal power]
along with formal power [positional power]. But usually a manager
doe not have more informal power. This means that the manager and
the informal leader usually are two differentpersons in the work
group.
7. As a result of difference between formal & informal sources of power
formal organization may grow to immense size but informal
organization tender to remain smaller in order to keep within the
limits of personal relat ionship. The result is that a large organization
tender to have hundreds of informal organization generating thought
8. Because of the small size & instability informal organizations are not
suitable substitutes for large formal organizational agitations o f
people & resources that are needed for modern institutions.
9. Workers recognize the differences in rules played by formal &
informal organization including the more secondary role normalcy
played by the informal organization. One study of workers &
mana gers saw the informal organization as influential & beneficial.
They viewed the formal organization as more influential & beneficial.
2.5 SUMMARY Loss of employment in the affected sectors as business closed down &
GDP contracted, was considered to be the most important social
consequence of the crisis that India is facing. The bulk of the job losses
was concentrated in modern sectors that depended on institutional
finances, the lack of which resulted in the closures of many firms. As a
result, many skille d workers were pushed into taking relatively in period
jobs in the informal sector. So India should above adopt the super of
flexible labour market like other countries who allowed their affected
employees to be reallocated from formal sector to the inform al sector, thus
moderating the impact of the recession.
2.6 QUESTIONS 1. How has the informal sector grown in the Indian Scenario?
2. Discuss social security measurer s in India ?
3. Explain the characteristics & Functions of a formal sector.
4. Analyze the different types of organizations in the formal sector.
5. How does the formal sector differ from the informal sector?
6. What is an informal sector ? Discus its characteristics. munotes.in

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35 Informal Sector 7. Discus the problem faced by the workers in the informal sector &
what ty pe of social security is offered to them for the same.
2.7 REFERENCES  Anthony Giddens, ‘Sociology‘, Simon Griffths Polity, 2006.
 Schneider EV -Industrial Sociology, Tata Mcgraw Hill, 1983.
 ILO, 1994, The Urban Informal Sector in Asia : Policies & Strategies .

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36 3
THEORIES OF INFORMAL SECTOR
Unit Structure
3.0 Objectives
3.1 Introduction
3.2 Dualist Theory
3.3 Structuralist Theory
3.4 Legalist Theory
3.5 Classical/Marxian Approach
3.6 Institutional Approach
3.7 Summary
3.8 Questions
3.9 References
3.0 O BJECTIVES  To introduce you to the various theories of informal sector
 To anlyse various theories of informal sector
3.1 INTRODUCTION The concept of the informal sector was not popular till the 1970s, though
this sector existed even before. It was only in t he early 1970s that the
notion of informal sector became popular. Each of the theories has a
different perspective on how the informal and formal economies are
linked. The term “informal economy” (IE) refers to a broad range of
phenomena that vary in size and content both within and between
economies. There is general agreement that the informal economy (IE) is
the most major source of employment in developing nations and that it
plays a sizable role in providing work and income for marginalised people
in developed economies, notwithstanding the difficulty in determining the
size of the IE. In particular, the International Labour Organization (ILO,
2018a) estimates that 61.2% of all employment worldwide (or nearly two
billion people)1 is informal.
3.2 DUALI ST THEORY Both Hart (who coined the term informal sector) and the International
Labour Organisation (ILO) believed that the informal sector was a
transitory phase that would disappear when countries developed. The
formal sector would expand and absorb the informal sector. Thus, workers
in unregistered small factories would be absorbed as formal sector
workers, Hence, the ILO believed that these two sectors were independent
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37 Meaning and Scope of Anthropology considerably as th e formal sector expanded. The dualists argue that
informal units and activities have few (if any) linkages to the formal
economy but, rather, operate as a distinct separate sector of the economy
and the informal workers comprise the less -advantaged sector of a
dualistic labour market. This approach is known as the ‘dualist
approach’ , and it is regarded as outdated considering the developments in
the economy in recent years. But we find that far from disappearing this
sector has grown in all countries includ ing the developed ones.
3.3 STRUCTURALIST THEORY The structuralist theory developed by Manuel Castells, Alejandro Portes
and Lauren Benton in late 1989 argues that far from being independent of
each other, the formal and informal sectors are related to eac h other. To
increase competitiveness, capitalist firms in the formal economy are seen
to reduce their input costs, including labour costs, by promoting informal
production and employment relationships with subordinated economic
units and workers. According to structuralists, both informal enterprises
and informal wage workers are subordinated to the interests of capitalist
development, providing cheap goods and services. The enterprises in the
formal sector use the informal sector for manufacturing componen ts as
costs are much lower, and informal sector enterprises are not subject to the
laws that regulate production in the formal sector. The formal economy
thus finds the informal economy as a useful means for increasing its
profits. At the same time, the in formal economy depends on the formal
sector for its sustenance. The structuralists stress the fact that there is a
close, symbiotic relationship between the two sectors. We find
manufacturers in the developed economies outsourcing their production to
the d eveloping countries because manufacturing in the informal sector in
these countries is much cheaper due to availability of cheap labour and
institutional support. The structuralist approach is relevant while
examining economic growth during the phase of li beralisation (from about
1991 in India). An important point raised by the structuralist is that the
informal sector exists because of the needs of the formal sector. This
implies that the informal sector is not autonomous as the dualists would
want us to b elieve. According to the structuralist, the informal sector plays
a key role in manufacture and cost reduction for the formal sector.
3.4 LEGALIST THEORY It was developed by Peruvian economist Hernando de Soto (1989). He
looks at how state regulations lead to the growth of informal economy.
The legalist theory states that the informal sector comprises small
operatives who work outside the formal economy because they find the
legal procedures too tedious and complicated to follow. These operators
prefer to operate informally because the government procedures for giving
them formal recognition are long, complicated and difficult for them to
understand. Hence these people, instead of being deliberate offenders,
simply try to circumvent the rules because they f ind them too complex and
time-consuming. Micro -entrepreneurs such as those owning very small munotes.in

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38 Sociology of Informal sector
38 enterprises, street vendors, and home -based workers choose to operate
informally in order to cut down their costs. This could be a result of the
tax structure whic h is tough for small enterprises. Moreover, the process
of registration is complicated involving both time and effort. The forms
may be so complicated that the semi -literate micro entrepreneur may not
be able to understand them. De Soto argues that in most countries,
government bureaucracy has tough rules that force the small entrepreneurs
to adopt corrupt means.
3.5 CLASSICAL/MARXIAN APPROACH The Classical School does not recognise the informal sector as a separate
entity in the process of economic develop ment, and the sector was often
seen to be a part of the larger pre -capitalist sector (which also includes
feudalism and semi -feudalism). In the Marxist tradition, capital and labour
are seen as separate, and there is no space for economic entities that
cannot be seen as either capital or labour. This approach argues that the
informal sector is not merely linked to, but also is a necessary condition
for the existence of the modern capitalist accumulation, specifically with
its potential to lower consumption and labor costs within the formal sector
(Portes andSchauffler, 1993 and Barnes, 2012).
3.6 INSTITUTIONALIST APPROACH This approach is founded on relational and organisational issues of any
transaction. According to this approach, any type of economic tran saction
involves discovering efficient terms and conditions. But the parties
engaged in economic transactions face ‘hold up’ problems in distributing
ex-post benefit from joint actions because of ‘incompleteness’ of contracts
and ‘opportunistic’ behaviour of individuals engaged in contracts
(Williamson 1985). The participation of third parties or legal institutions
to enforce the terms and conditions is either costly or ineffective.
Therefore, informal institutions such as norms and trust exist as a
mechani sm of governance and as a means of enforcement (North 1990;
Ostrom 1990). Informality may therefore exist in any society, but is more
likely to exist in a society where formal rules and regulations are not in
place or are not well enforced.
3.7 SUMMARY The concept of the informal sector was not popular till the 1970s, though
this sector existed even before. It was only in the early 1970s that the
notion of informal sector became popular. Each of the theories has a
different perspective on how the informal and formal economies are
linked. Both Hart (who coined the term informal sector) and the
International Labour Organisation (ILO) believed that the informal sector
was a transitory phase that would disappear when countries developed.
The structuralist theor y developed by Manuel Castells, Alejandro Portes
and Lauren Benton in late 1989 argues that far from being independent of
each other, the formal and informal sectors are related to each other. An munotes.in

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39 Meaning and Scope of Anthropology important point raised by the structuralist is that the info rmal sector exists
because of the needs of the formal sector. This implies that the informal
sector is not autonomous as the dualists would want us to believe. . The
legalist theory states that the informal sector comprises small operatives
who work outsi de the formal economy because they find the legal
procedures too tedious and complicated to follow. These operators prefer
to operate informally because the government procedures for giving them
formal recognition are long, complicated and difficult for th em to
understand. In the Marxist tradition, capital and labour are seen as
separate, and there is no space for economic entities that cannot be seen as
either capital or labour. According to the institutional approach, any type
of economic transaction invo lves discovering efficient terms and
conditions. But the parties engaged in economic transactions face ‘hold
up’ problems in distributing ex -post benefit from joint actions because of
‘incompleteness’ of contracts and ‘opportunistic’ behaviour of individua ls
engaged in contracts (Williamson 1985).
3.8 QUESTIONS 1. Explain the various theoretical perspectives of Informal sector?
2. Explain any 2 theoretical perspectives of Informal Sector.
3.9 REFERENCES  Anthony Giddens, ‘Sociology‘, Simon Griffths Polity , 2006.
 Schneider EV -Industrial Sociology, Tata Mcgraw Hill, 1983.
 ILO, 1994, The Urban Informal Sector in Asia : Policies & Strategies.

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40 UNIT II
4
MIGRATION AS A LIVELIHOOD
STRATEGY
Unit Structure
4.0 Objectives
4.1 Introduction
4.2 Conditions of Women Migrant Wage Workers
4.3 Migrant Workers - Working and Living Conditions
4.4 Employment Profile of Migrant Wage Workers
4.5 Living Co nditions of Migrants
4.6 Contract workers
4.7 Problems and issues of contract workers: Case study*
4.8 Agricultural Workers
4.9 Summary
4.10 Questions
4.11 References
4.0 OBJECTIVES  To introduce you to the concept of Migration
 To understand how migrat ion is the livelihood strategy
 To understand the problems of migrant workers
4.1 INTRODUCTION The problems of the women workers in general and in the unorganised
sector in particular deserve special emphasis and focus in view of their
marginalised positio n within the class of workers. Even when women are
not employed in the sense of contributing to the national output, a
considerable share of their time is consumed by socially productive and
reproductive labour. This is what is called the ‘double burden of work’
that distinguishes women from men. For women workers in the informal
economy the double burden of combining the tasks of production and
reproduction is even more arduous because they are already engaged in
activities that require long hours to obtai n a subsistence wage. The
problems of women workers can be discussed at different levels like :
(a) The larger issue of double burden of work,
(b) Women workers and their invisibility, and munotes.in

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41 Migration as a Livelihood Strategy (c) Conditions of work as well as discrimination.
The reprod uctive role of women is less visible and less recognized by the
society. She engages in multiple livelihood activities to fulfil her
productive and reproductive role. Women spend nearly 35 hours a week
on care of children, old and the sick at home and hous ehold maintenance
compared to less than 4 hours spent by men ( NCEUS 2007).
4.2 CONDITIONS OF WOMEN MIGRANT WAGE WORKERS They gain access only to low paid work available. Women migrant
workers face even greater insecurity and are more prone to exploitation
than their male counterparts. Women casual workers are largely engaged
at construction sites, fishing industry as in the case of coastal areas or
more prominently as domestic maids. Their presence is also visible in
brick -kilns, personal services such as entertainment, housekeeping, child -
care in the unorganised sector. Millions of women migrants face hazards
that reflect the lack of adequate rights, protection and opportunity to
migrate safely and legally. Migrant women workers are a marginalized
group an d there is a gross neglect of their concerns. This can be attributed
to their lower socio -economic status and the under -valuation of their work.
Their situation is weakened by the gender stereotypes and biases, leading
to discrimination, besides the additi onal fear of sexual assaults and
exploitation. As per 1991 census there were almost 3million migrant
women who cited employment and business as the reasons for migration .
The states that reported higher women migration for economic reasons are
Tamil Nadu, A.P, Gujarat, Karnataka, Kerala and Maharashtra.
Interestingly, these are also the states with relatively higher levels of
industrialisation, commercialisation of agriculture and a higher share of
workers outside agriculture. It is plausible that changes in aspirations that
accompany economic growth and diversification are also factors that
propel more women to migrate for work. Women are more concentrated in
the shorter duration and distance (more intra -state than inter -state)
migration than their male co unterparts.
Migrant women suffer from difficulties of gaining employment compared
to migrant men. Even when they are hired, the terms and conditions are
more adverse and wages paid lower than for men and local female
wageworkers. Very often the norms of th e Minimum Wage Act 1948 are
not followed. They are paid in piece rate and are hence preferred by
employers as it helps them in cost cutting. There is no fixity of working
hours. They are made to work for long hours with no increase in wages.
Work condition s are extremely arduous. Often, as in the construction
industry, women workers are illiterate and unskilled. They are unaware of
the prevailing wage rates and accept work at lower wages. Most women
remain manual, load carrying and unskilled workers. Wages are not paid
in time and are more like a subsistence allowance. Women migrant
workers are even more insecure because of the odd work hours. They face munotes.in

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42 Sociology of Informal sector
42 exploitation in terms of adverse working conditions, lower wages and
insecure living conditions and, at ti mes, sexual harassment.
Living conditions are deplorable with workers residing in make -shift
shanties and huts with no access to drinking water and other basic
amenities. Often women workers move with the family and have the
additional burden of domestic c hores and child rearing. Inevitably, their
health suffers. They also suffer from malnutrition. That maternity benefits
are not provided further worsens their situation. Child -care facilities are
also lacking subjecting their children to the hazards at the workplaces
when they have to accompany their parents to the work site. They are thus
also deprived of basic education. The conditions of migrant domestic
servants bring out the many facets of deprivation, vulnerability and
exploitation faced by women.
4.3 MIGRANT WORKERS - WORKING AND LIVING CONDITIONS Migrant workers are mostly those who are driven from their homes in
search of means of earning a livelihood. Lacking any skills and assets they
tend to end up in the unorganised sector, both in rural and urb an areas.
Such labourers are often sourced by labour brokers. More often than not,
they end up in rural areas as farm labourers and construction workers or
rickshawalas or street vendors in urban areas. Women from poor rural
households often end up as dome stic servants in urban centres. The
bonded labourers have a different kind of predicament, with no freedom to
change their employment. Sometimes the disadvantages of migration and
bondage intersect as in the case of migrant bonded labourers in
construction sites, quarries and brick kilns.
Migration by individuals and/or households is undertaken for both
economic and social reasons. These include migration by marriage, as has
been the case of a large majority of the female migrants or due to
economic reason s such as seeking better employment opportunities.
Migration can be within the country, i.e. internal migration which can be
within the district, intra/ inter -district or intra/interstate (rural to rural, rural
to urban, urban to rural and urban to urban) or it can be international
migration.
Migrant workers comprise the petty self -employed and the unskilled
casual wage workers who are highly disadvantaged and vulnerable and are
subject to extremely adverse working conditions and economic
exploitation. The migrant workers are largely in the unorganised sector,
which is why they face exploitation at the hands of employers and
middlemen who help them get employment in destinations away from
their places of origin. In India, there is a large -scale migration of unskilled
wage labourers from not necessarily the resource -poor areas but also the
areas which have widespread poverty, low demand and wages for
unskilled labour. They migrate to areas where there is greater demand for
such labour. These comprise both rura l to rural and rural to urban
migration. Migration is critical for the livelihood of these poverty -ridden, munotes.in

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43 Migration as a Livelihood Strategy skill and asset -deficient persons, especially in rural areas which include
economically and socially backward groups such as the tribal and other
deprived groups. They are further disadvantaged because of the absence of
laws that specifically address their problems.
There is some conceptual difficulty in defining migration. This is mainly
because people move away from their place of residence or origi n for
varying time intervals. At one end is the long -term/ permanent migration
and at the other is the short duration one of less than a year. Between these
two extreme points, the varying periods have to be reckoned with in any
meaningful understanding an d measurement of migration. In addition to
the time dimension, there is also the aspect of reason for migration. This
has not drastically changed over the years. Employment continues to be
the main reason for men while marriage is the main reason for women . In
the case of men, employment as a reason for migration was seen to rise in
the nineties. This could be reflective of the impact of structural changes on
the availability of employment opportunities, largely generated in urban
centres and that too for t he more skilled among the workers. With
improved infrastructure and connectivity, migration has been facilitated as
information regarding opportunities is available in far -off places. This has
led to greater mobility of workers, a welcome fact, if it arise s out of choice
and not sheer economic compulsion. According to the 2001 Census, the
total migrant population in the country was 314.5 million. Both the Census
and the NSSO indicate that the rate of migration has increased. Temporary
or short -duration migr ants need special attention because they face
instability in employment and are extremely poor. They are engaged in the
agricultural sector, seasonal industries or in the urban sector as casual
labourers or self -employed. Migrant workers form a substantial proportion
of both the organised and unorganised workforce in urban India. In the
early 1990s a study (Acharya and Jose 1991) of low -income households in
Mumbai city found that 80 per cent of the workers were migrants.
In recent times it is observed that regional imbalances in development
within the country along with rising unemployment have accelerated the
pace of migration. The rural poor, especially from the low productivity
eastern and central states, migrate to western and southern India where
jobs a re being created especially in urban centres. Rural -urban migration
is found to be temporary or semi -permanent. Migrant casual workers
belong to the poorest sections of the population characterised by meagre
human capabilities and capital assets. It is the absence of resources or lack
of access to resources in their native places that force them to migrate to
other regions to eke out a living. Migrant labour is a compensating
mechanism used by households to reduce their disadvantageous position.
Poor migran t households are characterized by lower education levels,
lower levels of income from agriculture, and an inferior geographical
location
Migrant labourers primarily belong to socially deprived groups such as
Scheduled Castes and Scheduled Tribes and other weaker sections
including women and children. Among the ST and SC migrants, short -munotes.in

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44 Sociology of Informal sector
44 duration migration is higher. Migration in the working age group of 15 -59
years is very high.
4.4 EMPLOYMENT PROFILE OF MIGRANT WAGE WORKERS A recent study (Srivastava and S asikumar 2005) found that migrants are
engaged in different kinds of employment in rural and urban areas. In rural
areas self -employment is the main activity followed by casual work. In
urban areas, male migrant workers are primarily engaged in regular
employment followed by workers in self -employment and then casual
work. Migrant workers, particularly at the lower end, including casual
labourers and wage workers in industries and construction sites, face
adverse work as well as living conditions. This grou p is highly
disadvantaged because they are largely engaged in the unorganized sector
with weakly implemented labour laws. Migration often involves long
working hours, poor living conditions, social isolation and inadequate
access to basic amenities. It is the poor households that largely participate
in migration to earn a living. Thus, states where poverty levels are very
high including Bihar, U.P and Orissa have a high rate of out -migration to
relatively better -off states such as Punjab, Haryana, Maharasht ra and
Gujarat. These groups of migrants are characterized by meagre physical
and human capital assets and belong to socially deprived groups such as
the Scheduled Castes (SCs) and Scheduled Tribes (STs) and weaker
groups such as the women.
The poor migran t workers are extremely vulnerable and often resort to
employment through exploitative contractors and middlemen rather than
taking up individual contracts directly with their employers. This greatly
increases the dependency of the group on these middlemen and uncertain
in the rural agricultural sector employment is mainly through such
middlemen who recruit at entry points such as railway stations and bus
stands, while in the urban informal sector friends and relatives also act as
the link between the emplo yer and the migrant worker. To reduce costs
and risks migrant workers also seek employment on their own and move
in groups.
Several cases cited in Srivastava and Sasikumar (2005) indicate that in the
unorganised sector there is a high degree of organised m igration such as in
the construction industry where workers are recruited through contractors
who fix wages and retain some parts of their earnings. Sometimes, as in
the case of domestic maids, agencies and voluntary organizations get
involved as mediators for employment as the women mainly come from
tribal areas. Further, even those who enter the market independently have
to face the dominance of contractors and sub -contractors.
Migrant wage workers often face economic exploitation when they are
paid wages which are lower than what is received by local counterparts.
Employers prefer migrant labourers to local workers because the former is
cheaper. Statutory minimum wage rate guidelines are rarely observed.
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45 Migration as a Livelihood Strategy workers. For example, in the construction industry, they are treated as
assistants and given unskilled manual worker wages. Further, payments
are irregular and, sometimes, are not made in time. Piece rates are
prevalent as it provides greater flexibility to employers. Migrant workers
also prefer this system as it assures some savings. However, often
migration interlocks credit and labour such that the net returns to labour
may have no relation to wages in the destination areas.
Migrants from ba ckward regions are willing to accept any distress wages
as long as they have access to employment. In the bargain, they undercut
the employment prospects of the local labour. Their excess supply also
contributes to reducing the wage rate. Work conditions o f migrant workers
are severely adverse with long working hours in hazardous environs. The
migrant workers, in most cases, stay at the work site in temporary huts and
shanties. Often the employer expects them to be available for work all 24
hours of the day . There is no fixity of hours. This is not only true of
workers at construction sites or mines and brick -kilns but also in the case
of domestic servants who stay at the employers’ places and are expected to
be available for work round the clock, irrespecti ve of the nature of work.
Deplorable living conditions increase the health hazards of the migrant
workers making them more susceptible to disease and infection because of
the unhygienic living conditions. Occupational health problems are also
high especial ly for those working at the construction sites, quarries and
mines as lung -related health issues become common among them.
Employers do not take care of the safety measures which increases the rate
of accidents. The temporary status of the workers limits t heir access to
public health services and programmes. Women are not given maternity
leave. That childcare facilities and crèches are also not available forces the
women to bring children to the workplace and expose them to health
hazards. Problems such as bodyaches, sunstrokes and skin irritation are
endemic among the workers, such as in the fish processing units where the
conditions are damp, dingy and dirty. The extremely unsanitary working
conditions cause infections. There are reports of eye irritation, respiratory
disorders, arthritis, rheumatism, skin disorders and nausea. There are
occupational hazards and accidents and the management provides no
compensation.
Lack of a permanent residence often adversely affects the education
prospects of the childre n of the migrant. Workers who in the process are
deprived of even the basic elementary education. While the families of the
migrant workers who stay back in their native places face
financial/economic and social/emotional insecurities and the migrant is
also left isolated and lonely in an alien environment.
4.5 LIVING CONDITIONS OF MIGRANTS Migrant workers not only face adverse working conditions, their living
conditions are also often deplorable. With little or no assets of their own,
the migrant wage work ers often live in temporary hutments located at the
site of work, such as in the case of the construction industry. There is no munotes.in

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46 Sociology of Informal sector
46 facility for safe drinking water or hygienic sanitation. Often, they live on
pavements or in slums, stations and parks in the ci ties. In the case of
temporary migration, the migrants are not able to make use of the public
distribution system due to the availability of ration cards.
Over the years there has been massive poverty -induced migration of
illiterate and unskilled workers i nto mega cities such as Mumbai, Delhi,
Kolkata, and Chennai. These workers are absorbed in poor urban informal
sectors and eke out a living in miserable conditions in urban slums, which
has also contributed to urban degradation. Since these metropolises ha ve
failed to provide migrants and residents minimum shelter and subsistence
employment poverty, unemployment, extreme housing shortages and
frequent breakdowns of essential urban services (like water, electricity,
sewerage, and transport) are visible in th ese cities (Bhagat 2005). Further,
since employment generation in the megacities is limited, especially
because of the capital -intensive industrialisation, the incoming illiterate
and unskilled migrants are absorbed in very poorly paid urban informal
secto rs which are characterized by low productivity, insecurity, and
exploitation. Such a kind of migration helps avoid starvation, yet it does
not improve the economic conditions of the migrants.
Migrant workers, thus, suffer from a lack of regulated working h ours and
harsh working and living conditions but have also been facing social
consequences in terms of the wrath of local elements. There are several
instances of migrant labourers being made victims by terrorists such as in
Kashmir, Punjab and more recent ly in Assam. Several studies have
pointed out that migrant workers should be assured the right to safe and
adequate accommodation, right to organize, right to safe travel, assured
minimum wages and access to health and education services.
4.6 CONTRACT WORK ERS With globalisation, the employment structure in the Indian economy has
been undergoing certain changes. It has given rise to several non -
permanent employment structures in the form of casual workers, contract
workers and subcontractors. A contract labo urer is defined in the Contract
Labour Regulation and Abolition Act, 1970 as one who is hired in
connection with the work of an establishment by a principal employer
through a contractor. While a contractor tries to produce the given results
with the help of contract labour for the organisation, a principal employer
is a person responsible for the control of the establishment. A contract
worker changes principal employers quite often, as per the arrangements
of the contractor. Contract labour already provid es employers with a
highly flexible system of employment which fits in well with the objective
of a flexible labour market.
The principal reasons for the increase of the contract labour system are;
(i) The cost of employing contract labour is way below th at of an
equivalent regular labour force. This is because wages paid to
contract workers are far lower than those paid to regular employees, munotes.in

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47 Migration as a Livelihood Strategy the gap is rarely less than 40 per cent and often as large as 70 per
cent of the regular workers’ wages. Besides, t he fringe and terminal
benefits payable to contract labour are very few if at all;
(ii) Contract labour has no job security thereby giving to the principal
employer a high degree of flexibility in the volume of labour
employed;
(iii) Enforcing high wor k norms on contract labour is easy since such
labour is highly vulnerable to summary dismissal;
(iv) It has also been reported that during recent years, the government
imposed a freeze on fresh recruitment of regular employees and
hence many public sector units are compelled to employ contract
labour to make good the vacancies in regular cadres and also to meet
contingencies in the volume of work to be performed;
(v) In most units it was found that work which is perennial and an
essential part of the wor k of the unit is given out on contract in
violation of the relevant law. Such work includes maintenance and
actual operation of equipment, transportation of materials within and
outside the premises of the unit, cleaning and housekeeping, canteen
work and so on. There are cases in which contract workers are
employed in clerical work, stenography, office equipment operation
and so on.
(vi) A set of contractors remains on the scene in many of the units
bidding for and securing contracts of work as they aris e. A bulk of
the labour working under contractors also generally remains on the
scene though individual workers may work under different
contractors from time to time and also on different jobs;
(vii) Contract labour is largely non -unionised because worke rs fear
victimisation at the hands of the contractors if they try to form
unions. But in a few units, they are unionised usually with the active
help from the unions of regular employees. In some cases, contract
workers are organised in the same unions as the regular employees.
4.7 PROBLEMS AND ISSUES OF CONTRACT WORKERS: CASE STUDY The largest proportion of contract labour works in the construction
industry. In 1995 -96, out of an estimated 12.9 million workers in
construction, 10.7 million were contract w orkers. The study on this
industry showed that job opportunities in this industry are relatively good
even for unskilled workers while skilled workers are in great demand
everywhere. Because of this situation in the job market, wages even for
unskilled wor kers are not too low while skilled workers are virtual wage -
makers. But since both categories work under contractors, there is no
security of employment nor any kind of fringe benefits or any social
security. Work is very hard, working conditions harsh and living
conditions deplorable. Man and wife, a both, and often even children, munotes.in

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48 Sociology of Informal sector
48 work and the entire family lives at or near the site of work in makeshift
shelters, moving from place to place as the work site shifts. The workers’
children have little access t o any opportunities for education. The
contractor employing the workers has little interest in training them to
upgrade their skills, productivity and earnings. Workers have to acquire
skills on the job through years of actual work. The study revealed that
construction workers are largely illiterate, drawn from scheduled castes or
tribes, backward communities and Muslims. Women constitute as much as
a fourth of all construction workers under contract. Almost 90 per cent of
these workers work in construction because they have no other choice and
also because an entry into this industry is relatively easy.
4.8 AGRICULTURAL WORKERS The definition of agricultural worker is given by the Agriculture Labor
Enquiry Committee. Agricultural labourers are those people who derive
their source of income mainly by working on farms and lands of other
people. They work for the wages.
The work of the agricultural labour involves cultivating the soil, growing,
or harvesting any agricultural crop or horticulture commodity, an d
management of livestock, bees, cows, goats, etc.
The agricultural labour enables the backward and other low classes of
people to come to the level of other people. The people work for their
living. The common problems such as underemployment,
underdevelo pment, and the surplus population are overcome by
agricultural workers.
Agricultural labour increases the production of goods and commodities
and encourages the traditional way of agriculture. In the early times, the
lands were available in plenty. So, pe ople who were not capable of getting
a job decided to earn their living by farming.
Problems Faced by the Agricultural Workers :
Marginalization of Agricultural Labourers:
The cultivators and agricultural labourers were about 97.2 million in the
year 1951. And it increased to 185.2 million in the year 1991. Between the
years 1951 to 1991, this number increased from 27.3 million to 74.6
million. Hence, we can conclude that the number of labourers increased
three times from the year 1951 to the year 1991. And the percentage
increase from the year 1951 to the year 1991 was 28 per cent to 40 per
cent. Thus, we can say that the casualization of the workers in India kept
on increasing at a faster rate. The cost of the shares of the land and the
agricultural activi ties also declines over the years.


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49 Migration as a Livelihood Strategy Reorganization of the agricultural labour:
The agricultural labourers in India are unorganized and scattered. They are
ignorant and illiterate. As a result, the agricultural labourers have no
ability to bargain and fight for their daily fare.
Wages and income:
The wages of the workers and the family income are very less in India.
The money wage rates started increasing, but the wages of the labourers
did not increase. To date, the labourers are getting only Rs. 150 per day.
This amount is not sufficient to support the living of a family.
Employment and working conditions:
As we have already discussed, agricultural labourers face problems such
as underemployment and unemployment. They work only for some part of
the year, and the rest of the time, they remain idle because there is no
work on the farm or there is no alternative work available for them.
Indebtedness:
Banking systems are not available in the rural areas of the country. So,
when the farmers and agric ultural labourers face a lack of money, they
borrow from the landlords at a high rate of interest (sometimes 40 % to 50
%), which eventually leads them into debt.
Low wages for women in agricultural labour:
In a country like India, the system of the male patriarch is still dominant.
The women are allowed to work very hard on the farms and the lands, but
they are paid less as compared to their male counterparts.
High incidence of child labour:
The rate of child labour in India is very high. It is concluded from a survey
that the number of child workers varies between 17.5 million to 44
million, which is very, very high. About one -third of child labourers in
Asia are in India.
Increase in migrant labour:
The wages of the labourers in the irrigation areas ar e less compared to the
wages of the labourers in the rain -fed areas. This led to the migration of
the labourers from the dry areas to the heavy rain areas.
Steps taken by the government to improve the conditions of the
Agricultural Workers
Abolition of Bo nded Labor:
Several attempts have been made to wipe out the bonded labour as it is
exploitive, inhuman, and violative. Legislative attempts have also been
made to remove bonded labour. In 1976, the Bonded Labo ur System munotes.in

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50 Sociology of Informal sector
50 (Abolition) Act was passed. Accordin g to this act, about 2.51 lakhs of
bonded labourers were identified and freed in different parts of the
country.
Minimum Wages Act:
This act was passed in the year 1948. It started to fix the minimum wages
of agricultural labourers.
Distribution of Landl ess Laborers:
According to this Act, the State Government was advised to distribute
surplus lands to the agricultural labourers.
Various employment schemes:
Various employment schemes are run by the government to ensure the
employment of the workers:
 Rural Works Programme
 Crash Schemes for Rural Employment
 Food for Work Programme
 Jawahar Rozgar Yojana
4.9 SUMMARY Due to lack of opportunities and a number or reasons people migrate to
different places, especially urban areas for livelihood. The problems o f the
women workers in general and in the unorganised sector in particular
deserve special emphasis and focus in view of their marginalised position
within the class of workers. Even when women are not employed in the
sense of contributing to the national output, a considerable share of their
time is consumed by socially productive and reproductive labour. The
living conditions of migrants who work as agricultural labourers, contract
workers and women workers are extremely poor. Government has come
up with various policies in favour of migrants and with an intention to
help them survive in urban areas.
4.10 SUMMARY 1. Explain Migration as a livelihood stategy
2. Explain the issue of Migrant Workers.
4.9 REFERENCES  Tulpule, B. 1997. ILO Initiative on Contract Labour. Economic and
Political Weekly.
 Breman, Jan. (2001): An Informal Labour System: End of Labour
Market Dualism, Economic and Political Weekly 36 (52)
 Munck, R. (2002): Globalisation and Labour: The New ‘Great
Transformation’, Delhi: Madhyam Books, pp . 111 -117
 Scott, A. M. (1994): Divisions and Solidarities: Gender, Class and
Employment in Latin America. London: Routledge munotes.in

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51 Migration as a Livelihood Strategy  Sen, Amartya (2000): Work and Rights, International Labour
Review, Volume 139, no. 2
 Standing, G. (1999): Global Labour Flexibility, London: Macmillan
 Tulpule, B. 1997. ILO Initiative on Contract Labour. Economic and
Political Weekly. Agricultural Workers .

*****
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52 5
WORKERS IN INFORMAL SECTOR
Unit Structure
5.0 Objectives
5.1 Introduction
5.2 Women and Work
5.3 The sexual division of labour
5.4 Feminization of work
5.5 The informalisation of women’s work
5.6 Characteristics of women workers
5.7 Problems fa ced by women at work
5.8 Contract workers
5.9 Agricultural Workers
5.10 Summary
5.11 Questions
5.12 References
5.0 OBJECTIVES  To introduce you to the problems of the workers in the Informal
sector
 To understand the concepts like Feminization of Work a nd Sexual
division of labour
5.1 INTRODUCTION In recent times it is observed that regional imbalances in development
within the country along with rising unemployment have accelerated the
pace of migration which is indirectly a cause for increase in the in formal
sector. The rural poor, especially from the low productivity eastern and
central states, migrate to western and southern India where jobs are being
created especially in urban centres. Rural -urban migration is found to be
temporary or semi -permanent . Migrant casual workers belong to the
poorest sections of the population characterised by meagre human
capabilities and capital assets. It is the absence of resources or lack of
access to resources in their native places that force them to migrate to
other regions to eke out a living. Migrant labour is a compensating
mechanism used by households to reduce their disadvantageous position.
Poor migrant households are characterized by lower education levels,
lower levels of income from agriculture, and an infe rior geographical
location .
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53 Workers in Informal Sector 5.2 WOMEN AND WORK The extent of empowerment of women is determined largely by three
factors - economic, social and political identity. Women’s contribution to
the economy remains significantly invisible in national accounts. D ue to
as social -cultural environment in India statistical invisibility is particularly
predominant. Studies conducted have shown that women are looked upon
as secondary and are compelled to work for low wages without social
security measures that are exten ded to an industrial workers in general.
Hence they are the last to be hired and the first to be fired.
5.3 THE SEXUAL DIVISION OF LABOUR Discrimination on the lines of gender is visible in subtle forms such as
work performed, the skill required to perform work and the valuation of
the skills and technology used by men and women. Occupational
segregation represents a form of discrimination when large segments of
the labour force are in essence restricted from entering any occupations.
Occupational segregati on is found in the Textile industry, Health sector,
education sector and agricultural sector etc.
In the textile industry the jobs of the supervisors and machine operators
are male -dominated, while the preparatory work of making fibre, spinning
and winding are dominated by women. In tailoring, sewing and
embroidery work women dominate work. In the health sector, women are
concentrated in work as nurses, and midwives and are likely to be paid
low wages than men. In the education sector, men are found in high er
education in comparison to women who work in rural areas and pre -
primary schools. In the construction industry, they are concentrated as
casual workers. In the ceramic industry and brick kilns, the skilled activity
performed by women is valued as the lo west. In the agricultural sector
ploughing and harvesting are done by men whereas women do the
weeding.
5.4 FEMINIZATION OF WORK Globalization is a gendered phenomenon (Hawkesworth 2006). This
means that globalization affects men and women differently and that the
socio -economic changes it brought about also affect the power relations
involved in masculine domination. In some areas, patriarchal domination
is modified to accommodate global capital, whereas, in others, we witness
the process of depatriarchali sation –the progressive dismantling of
patriarchal mechanisms.
In the past 20 years or so more and more women are entering the paid
workforce. This comes in addition to the informal work they do as well as
the subsistence work they provide free to their fa milies. This increase in
the number of women in paid employment is referred to as the
feminization of the labour force. It means that by and large, the proportion
of female workers has increased in different sectors of the economy,
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54 Sociology of Informal sector
54 globalization. The feminization of labour is made up of 2 components, i)
changes in the percentage of women of working age who are either
economically active and are seeking such activity ( ie trends in female
labour force participation), ii) changes in women’s economic rates activity
relative to those of men ( ie trends in women’s share of the labour force).
The feminization of the workforce is also part of a general shift towards a
service economy which is divi ded into well -paying and male -dominated
sectors such as law, Financial Services and information technology and
low-paid, highly feminised sectors such as Home Care, elder care, child
care, retail or domestic labour and cleaning services. The greater number
of female professionals in the high -paying sector in core countries has
immensely increased the demand from semi -peripheral and peripheral
countries needed to do housework and care work. Finally, the feminization
of the labour force also means the feminiz ation of working conditions
through the process of informalisation and flexibility of employment.
Informalisation refers to a process whereby workers are employed not
directly by the company that will sell the products of their work but by a
subcontractor or sometimes layers of subcontractors.
5.5 THE INFORMALISATION OF WOMEN’S WORK The feminization of labour is taking place over time and paid work is
becoming increasingly informal. Though women’s economic activities
have been characterised by a considerabl e degree of informality, unpaid
productive labour on farms and family enterprises, paid work in domestic
service in other people’s households, street trading and sex workers are
some of the examples of more traditional informal activities in which
women ar e disproportionately represented. Informal employment
continues to make up a much larger share of women’s non -agricultural
employment than men in most developing countries. The search for
increasing flexibility of labour has provided for new processes of
informalisation that affect the pattern of women’s labour market activity.
Banerjee (1985) in a study in urban West Bengal found that the decline in
the percentage of women in domestic service, the main source of
employment in the urban context, was accompa nied by an expansion of
various kinds of non -traditional forms of work. This increase in female
labour force participation reflected efforts by large -scale formal
enterprises to circumvent labour legislation and union activity by
increasingly subcontractin g orders to smaller workshops in the informal
economy or to home -based workers. The process of informalisation has
led to the displacement of women from formal employment and their
replacement by informal forms of female labour. Home -based workers
working on their account or subcontracted basis have been found to make
a variety of products for the local as well as a global economy, ranging
from clothing and footwear to artificial flowers, carpets electronics and
tele services.
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55 Workers in Informal Sector 5.6 CHARACTERISTICS OF WOMEN WORKERS A high proportion of working women in India are employed in the
unorganised sector mainly in agriculture, livestock and forestry. There are
certain broad features of working conditions of women in the unorganised
sector. They are
 The exploitation of women in the unorganised sector is on an increase
concerning wages. Women are not paid equal remuneration.
 No job security for women workers is there in these industries. Due to
the restructuring and modernisation of industry women are the first to
be fired.
 Younger women are often subjected to sexual exploitation in the
workplace.
 The basic facilities like first aid medical facilities rest room and
crèches are not provided to them.
 Equal Remuneration Act, Factories Act and Plantation Labour Act are
not implemented properly.
 The new forms of employment are fragile and insecure. Women’s
livelihood in rural areas has been affected by the agrarian crisis. In the
industrial sector, women are engaged in the informal sector without
job security. Within manufac turing, they predominate in garments,
textiles food and electronics.
 The seasonality of work and lack of other avenues for work makes
them vulnerable to exploitative practices. One finds an increase in the
tertiary sector with more women in trading, retai ling and caring
activities which offers them less in terms of remuneration or a skill
endowment.
5.7 PROBLEMS FACED BY WOMEN AT WORK Problems faced by women workers have increased several times with the
advent of the neo -liberal policies of globalization, liberalisation and
privatisation. In the era of globalisation working women have become
more vulnerable to exploitation, there are exposed to more risks and are
forced to endure more stress both physically and mentally.
The problems faced by unorganized s ector women works in workplace
are:
1) Wage discrimination and poor working conditions:
The women workers are paid lower than their male colleagues. They are
given work that is often unskilled or low -skilled and low -paid.
Availability of work is irregular and when work is available they have to
work for longer hours. They work in poor working and living conditions. munotes.in

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56 Sociology of Informal sector
56 2) Weak collective bargaining capacity:
The collective bargaining capacity of the women is weak and therefore
they cannot pressurise the employe r for their rights which leads to their
exploitation.
3) Lack of facilities:
Women working in the informal sector do not have any childcare
facilities. They also do not have the benefit of several laws such as the
Minimum Wages Act or the Factories Act.
4) Sexual harassment at work:
Sexual harassment is another hazard faced by women working in the
unorganised sector. A large number of working women face sexual
harassment at the workplace that makes them vulnerable.
5) Lack of social security measures:
Women lack social security and are not guaranteed even the minimum
wage. The elements of job quality, job security, working conditions and
remuneration as per the work, social protection are missing in the informal
sector. They work around the year with no regu lar employment and are
not entitled to any social security benefits. The International Labour
Organisation termed women as the ultimate entrepreneurs for their ability
to sustain livelihoods with very little capital.
6) Health problems:
Women get less mon ey for the work, get no medical and other benefits
that the employment rules provide. Women bear the triple burden of the
production, reproduction and domestic work. A large number of women
workers complained of frequent headaches, back pain fatigue and
emotional and mental disorders. Poor nutritional status, and anaemia,
poverty and cultural practices lead to fatigue among women. Lack of basic
facilities like toilets, dining spaces etc. at the workplace add to the fatigue.
Unemployment, underemployment and temporary work are common
among women. With no social security and Health Care benefits, the work
related illnesses which they suffer from remain hidden. A large number of
women workers complained of symptoms such as irritability, mood
swings and depressi on, concentration problems which are related to work
and work conditions.
7) Double burden of work:
The major problems of working wives arise out of the dual responsibilities
of housework and the office work. Women are paid less and therefore
their status in decision -making is low. Though women contributes
substantially to the family income as well as look after the children and
other family responsibilities they are not respected and valued.
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57 Workers in Informal Sector 8) Social restriction and control:
The fact that women workers h ave restricted mobility because of which
their capacity to engage in economically productive work is restricted is
clearly brought out by their place of work. Lack of clear cut employer -
employee relationship in the case of self -employed and home workers an d
lack of designated place of work for the majority adds to the problem of
invisibility of such enterprises. Workers engaged in enterprise on casual
basis tend to change employers frequently. It is easy for the employer then
not to recognise the worker and deny them any additional benefits.
Unorganised workers in both self -employed and wage employed
categories remain by and large legally unrecognised as workers which
implies that the existing laws relating to minimum wages or social security
are not applied to them. Besides lack of legal recognition, lack of
designated business place also worked to increase their vulnerability and
exposes them to exploitation by the authorities.
9) Exploitation:
Female and children domestic workers constitute a large portion of the
migrant worker population. They are most at the risk of exploitation and
rights abuse. Working in the unregulated domain of a private home,
mostly without the protection of national labour legislation, allows for the
female domestic workers to be m altreated by the employers with
impunity. Women are subjected to long working hours and excessively
arduous tasks. They are frequently victims of sexual abuse and rape and
torture. There are subjected to subhuman conditions of work with no job
security, no benefits and no dignity. Due to lack of education and skills
and become easy victims of exploitation. They are excluded from labour
laws that look after the employment related issues such as Work, wages,
security, old age pensions and maternity leave.
10) Dependence on middlemen:
The homeworkers are dependent on the subcontractors for supply of work,
raw material and sale of finished goods. They are also isolated from their
fellow women workers in the same trade. Their dependence on the
contractor together with their isolation undermines their ability to bargain
for a higher piece rates, time rates or overtime payment. Delayed payment
and arbitrary cuts in wages on the pretext of poor quality also add to the
hidden costs.
11) Globalisation:
Globalization ha s posed new challenges to women working in the
unorganised sector. In the changed economic scene, privatisation,
competition, free marketing and specialisation have systematically kept
the women out from the production processes. With the onset of economic
liberalisation and globalization of the Indian economy, it is likely that
women from the disadvantaged sections will be further marginalised. The
higher the technology, the greater is the demand for basic skills and
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58 Sociology of Informal sector
58 The overall picture that emerges from the above is one of greater
disadvantage for women workers in general:
They gain access only to low paid work available. Women migrant
workers face even greater insecurity and are more prone to exploitation
than their ma le counterparts. Women casual workers are largely engaged
at construction sites, fishing industry as in the case of coastal areas or
more prominently as domestic maids. Their presence is also visible in
brick -kilns, personal services such as entertainment, housekeeping, child -
care in the unorganised sector. Millions of women migrants face hazards
that reflect the lack of adequate rights, protection and opportunity to
migrate safely and legally. Migrant women workers are a marginalized
group and there is a g ross neglect of their concerns. This can be attributed
to their lower socio -economic status and the under -valuation of their work.
Their situation is weakened by the gender stereotypes and biases, leading
to discrimination, besides the additional fear of s exual assaults and
exploitation. As per 1991 census there were almost 3million migrant
women who cited employment and business as the reasons for migration .
The states that reported higher women migration for economic reasons are
Tamil Nadu, A.P, Gujarat, Karnataka, Kerala and Maharashtra.
Interestingly, these are also the states with relatively higher levels of
industrialisation, commercialisation of agriculture and a higher share of
workers outside agriculture. It is plausible that changes in aspirations that
accompany economic growth and diversification are also factors that
propel more women to migrate for work. Women are more concentrated in
the shorter duration and distance (more intra -state than inter -state)
migration than their male counterparts.
Migrant women suffer from difficulties of gaining employment compared
to migrant men. Even when they are hired, the terms and conditions are
more adverse and wages paid lower than for men and local female
wageworkers. Very often the norms of the Minimum Wage Act 1948 are
not followed. They are paid in piece rate and are hence preferred by
employers as it helps them in cost cutting. There is no fixity of working
hours. They are made to work for long hours with no increase in wages.
Work conditions are extremel y arduous. Often, as in the construction
industry, women workers are illiterate and unskilled. They are unaware of
the prevailing wage rates and accept work at lower wages. Most women
remain manual, load carrying and unskilled workers. Wages are not paid
in time and are more like a subsistence allowance. Women migrant
workers are even more insecure because of the odd work hours. They face
exploitation in terms of adverse working conditions, lower wages and
insecure living conditions and, at times, sexual ha rassment.
Living conditions are deplorable with workers residing in make -shift
shanties and huts with no access to drinking water and other basic
amenities. Often women workers move with the family and have the
additional burden of domestic chores and chil d rearing. Inevitably, their
health suffers. They also suffer from malnutrition. That maternity benefits
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59 Workers in Informal Sector also lacking subjecting their children to the hazards at the workplaces
when they have to accompany their parents to the work site. They are thus
also deprived of basic education. The conditions of migrant domestic
servants bring out the many facets of deprivation, vulnerability and
exploitation faced by women.
5.8 CONTRACT WORK ERS With globalisation, the employment structure in the Indian economy has
been undergoing certain changes. It has given rise to several non -
permanent employment structures in the form of casual workers, contract
workers and subcontractors. A contract labo urer is defined in the Contract
Labour Regulation and Abolition Act, 1970 as one who is hired in
connection with the work of an establishment by a principal employer
through a contractor. While a contractor tries to produce the given results
with the help of contract labour for the organisation, a principal employer
is a person responsible for the control of the establishment.
A contract worker changes principal employers quite often, as per the
arrangements of the contractor. Contract labour already provid es
employers with a highly flexible system of employment which fits in well
with the objective of a flexible labour market.
The principal reasons for the increase of the contract labour system are;
(i) The cost of employing contract labour is way below tha t of an
equivalent regular labour force. This is because wages paid to
contract workers are far lower than those paid to regular employees,
the gap is rarely less than 40 per cent and often as large as 70 per
cent of the regular workers' wages. Besides , the fringe and
terminal benefits payable to contract labour are very few if at all;
(ii) Contract labour has no job security thereby giving to the principal
employer a high degree of flexibility in the volume of labour
employed;
(iii) Enforcing high wor k norms on contract labour is easy since such
labour is highly vulnerable to summary dismissal;
(iv) It has also been reported that during recent years, the government
imposed a freeze on fresh recruitment of regular employees and
hence many public sector units are compelled to employ contract
labour to make good the vacancies in regular cadres and also to meet
contingencies in the volume of work to be performed;
(v) In most units it was found that work which is perennial and an
essential part of the work of the unit is given out on contract in
violation of the relevant law. Such work includes maintenance and
actual operation of equipment, transportation of materials within and
outside the premises of the unit, cleaning and housekeeping, canteen
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60 Sociology of Informal sector
60 employed in clerical work, stenography, office equipment operation
and so on.
(vi) A set of contractors remains on the scene in many of the units
bidding for and securing contracts of work as they arise. A bulk of
the labour working under contractors also generally remains on the
scene though individual workers may work under different
contractors from time to time and also on different jobs;
(vii) Contract labour is largely non -unionised because workers fear
victimisation at the hands of the contractors if they try to form
unions. But in a few units, they are unionised usually with the active
help from the unions of regular employees. In some cases, contract
workers are organised in the same unions as the regular employees.
5.9 AGRICULTURAL WORKERS The definition of agricultural worker is given by the Agriculture Labor
Enquiry Committee.
Agricultural labourers are those people who derive their source of income
mainly by working on farms and lands of other people. They work for the
wages.
The work of the agricultural labour involves cultivating the soil, growing,
or harvesting any agricultural crop or horticulture commodity, and
management of livestock, bees, cows, goats, etc.
The agricultural labour enable s the backward and other low classes of
people to come to the level of other people. The people work for their
living. The common problems such as underemployment,
underdevelopment, and the surplus population are overcome by
agricultural workers.
Agricult ural labour increases the production of goods and commodities
and encourages the traditional way of agriculture. In the early times, the
lands were available in plenty. So, people who were not capable of getting
a job decided to earn their living by farmin g.
Problems Faced by the Agricultural Workers :
Marginalization of Agricultural Labourers:
The cultivators and agricultural labourers were about 97.2 million in the
year 1951. And it increased to 185.2 million in the year 1991. Between the
years 1951 to 19 91, this number increased from 27.3 million to 74.6
million. Hence, we can conclude that the number of labourers increased
three times from the year 1951 to the year 1991. And the percentage
increase from the year 1951 to the year 1991 was 28 per cent to 4 0 per
cent. Thus, we can say that the casualization of the workers in India kept
on increasing at a faster rate. The cost of the shares of the land and the
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61 Workers in Informal Sector Reorganization of the agricultural labour:
The agricultural labourers in India are unorganized and scattered. They are
ignorant and illiterate. As a result, the agricultural labourers have no
ability to bargain and fight for their daily fare.
Wages and income:
The wages of the workers and the f amily income are very less in India.
The money wage rates started increasing, but the wages of the labourers
did not increase. To date, the labourers are getting only Rs. 150 per day.
This amount is not sufficient to support the living of a family.
Employ ment and working conditions:
As we have already discussed, agricultural labourers face problems such
as underemployment and unemployment. They work only for some part of
the year, and the rest of the time, they remain idle because there is no
work on the farm or there is no alternative work available for them.
Indebtedness:
Banking systems are not available in the rural areas of the country. So,
when the farmers and agricultural labourers face a lack of money, they
borrow from the landlords at a high rate of interest (sometimes 40 % to 50
%), which eventually leads them into debt.
Low wages for women in agricultural labour:
In a country like India, the system of the male patriarch is still dominant.
The women are allowed to work very hard on the farms and the lands, but
they are paid less as compared to their male counterparts.
High incidence of child labour:
The rate of child labour in India is very high. It is concluded from a survey
that the number of child workers varies between 17.5 million to 44
million, which is very, very high. About one -third of child labourers in
Asia are in India.
Increase in migrant labour :
The wages of the labourers in the irrigation areas are less compared to the
wages of the labourers in the rain -fed areas. This led to the migration of
the labourers from the dry areas to the heavy rain areas.
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62 Sociology of Informal sector
62 Steps taken by the government to improve the conditions of the
Agricultural Workers :
Abolition of Bonded Labo ur:
Several attempts have been made to wipe out the bonded labour as it i s
exploitive, inhuman, and violative. Legislative attempts have also been
made to remove bonded labour. In 1976, the Bonded Labo ur System
(Abolition) Act was passed. According to this act, about 2.51 lakhs of
bonded labourers were identified and freed in d ifferent parts of the
country.
Minimum Wages Act:
This act was passed in the year 1948. It started to fix the minimum wages
of agricultural labourers.
Distribution of Landless Laborers:
According to this Act, the State Government was advised to distribu te
surplus lands to the agricultural labourers.
Various employment schemes:
Various employment schemes are run by the government to ensure the
employment of the workers:
 Rural Works Programme
 Crash Schemes for Rural Employment
 Food for Work Programme
 Jawahar Rozgar Yojana
5.10 SUMMARY The Informal sector , even though if it provides an opportunity to earn
some amount to the workers, who otherwise would have been left out of
the workforce, it comes with its own set of disadvantages. Due to lack of
support, constant opposition, lack of knowledge, the workers continue to
suffer. The women, contractual workers and agricultural workers suffer
from a range of difficulties throughout their life. Living conditions are
deplorable with workers residing in make -shift shanties and huts with no
access to drinking water and other basic amenities. Often women workers
move with the family and have the additional burden of domestic chores
and child rearing. Inevitably, their health suffers. They also suffer from
malnutritio n. That maternity benefits are not provided further worsens munotes.in

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63 Workers in Informal Sector their situation. Child -care facilities are also lacking subjecting their
children to the hazards at the workplaces when they have to accompany
their parents to the work site. They are thus also de prived of basic
education. The conditions of migrant domestic servants bring out the
many facets of deprivation, vulnerability and exploitation faced by
women.
5.11 QUESTIONS 1. Explain the condition of workers in Informal Sector
2. Explain the hardships faced by women in informal
3. Explain feminization of work.
5.11 REFERENCES  Bhowmik, Sharit K. (2012): Industry Labour and Society, New Delhi:
Orient Black Swan.
*****
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64 6
CONDITIONS OF WORK AND WAGES –
HOME BASED WORKER, LEATHER
WORKERS, SANITATION WORKERS
Unit Structure
6.0 Objectives
6.1 Conditions of Work and Wages in Informal Sector
6.2 Home based Workers
6.3 Leather workers
6.4 Sanitation workers
6.5 Summary
6.6 Questions
6.7 References and further readings
6.0 OBJECTIVES  To learn about the conditions of work for home based, leather,
sanitation workers.
 To understand the impact in their lives due to their nature of work.
6.1 CONDITIONS OF WORK AND WAGES I N INFORMAL SECTOR In this chapter we will discuss about the nature of informal sector jobs and
three different informal jobs like home based, leather workers, sanitation.
Contract and casual labor, where contract labour is compensated less by
contractors and casual labour fills in for absent employees, are
characteristics of the informal sector. The workers in this industry deal
with a number of issues, including job insecurity, low pay, a lack of skills,
disorganised working conditions, the nature of the work being both
official and unofficial, a large proportion of women and children being
used as labor, and the usage of a contract system. The absence of weekly
off days, inconsistent and interchangeable work, and alternative revenue
sources are other tra its of the informal economy. More than 92% of the
workforce in India is employed in the informal sector, which is
substantial. Creating connections between the formal and informal sectors
through training, managerial and entrepreneurial skills transfers, c an bring
an impact in this sector. Both time wage workers, who sell their labour
power in exchange for low -paying time rates of wage, and piece wage
workers, who operate autonomously but are controlled by employers, are
employed in the informal sector.
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65 Conditions of Work and Wages – Home Based Worker, Leather Workers, Sanitation Workers 6.2 HOME BASED WORKERS Home -based workers, sometimes known as industrial out -workers, are a
category of workers who use conventional skills and labor, frequently
from the comfort of their own homes. They work on a range of projects,
including producing clay pots, rolling beedis, and stitching. There are two
types of home -based workers: independent contractors who bear all risks
and expenses, and subcontracted employees who are employed by
business owners or organizations. This personnel deal with difficultie s like
unreliable job orders and late payments. There are many industries that
allow for remote employment, including information technology,
electronics, and textiles. Home -based employees contribute significantly
to their families, communities, and econo mies, yet it is still difficult to
count them due to insufficient reporting and a lack of statistics.
Self-employed and subcontracted home workers are the two categories
into which home -based workers fall. Self -employed individuals are liable
for any risks associated with operating as independent contractors and are
in charge of acquiring their own supplies, tools, and raw materials. They
mostly sell their final goods to local clients, but they also occasionally sell
to foreign markets. Contrarily, subcontr acted labour are hired by
individual business owners or organizations, frequently through a
middleman, and are typically provided with the raw supplies as well as
paid per piece. However, they pay for a lot of manufacturing expenses,
including the workplac e, tools, materials, utilities, and transportation.
They frequently don’t know where or for whom the finished things will be
marketed, and they rarely sell the finished goods themselves.
Both varieties of home -based workers deal with issues like poor pay,
irregular or cancelled work orders, an unstable raw material supply, late
payments, and returned goods. Larger economic factors that affect both
groups, but especially the self -employed, such as shifting demand and
rising input prices, are dealt with by th ese employees.
Traditional labour -intensive occupations like those in the textile, apparel,
and footwear manufacturing industries are not the only ones that may be
done from home. High -end modern sectors including the production of
aeroplane and automobile parts, electronics assembly, and pharmaceutical
packaging all employ people who work from home nowadays. Home -
based administrative work as well as higher -skilled jobs in information
technology, communications, telemarketing, and technical consulting have
increased, particularly in developed countries.
Home -based employees contribute significantly to their families and
communities despite the difficulties. Their income frequently keeps their
families from living in abject poverty. They can provide care for children
and the elderly and uphold the standard of family life because they work
from home. Since they do not commute daily and frequently use bicycles,
foot traffic, or public transportation, home -based workers also minimise
emissions and traffic. They c reate goods at cheap costs for domestic and
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66 Sociology of Informal sector
66 services at affordable prices. Home -based workers are economic actors
who spend money on supplies, equipment, raw materials, transportation ,
and services. While businesses farther up the supply chain that sell pay
taxes on the raw materials, supplies, and equipment they purchase.
Despite recent improvements in data on home -based employees,
difficulties still exist in compiling statistics for this ―invisible‖ sector. In
certain nations, questions about the workplace are omitted from
demographic and labour force surveys. The answer to this query will help
you identify home -based workers. Home -based workers should be
reported as simply performing (unpaid) domestic work because
enumerators are frequently not trained to count them. Additionally, many
people who work from home do not consider themselves to be ―workers‖
or disclose it. The figures are substantial, even when understated. For
instance, the National Sample Survey Organization (NSSO) of India
estimated that 37.4 million people in India worked from home in 2011 –12.
It has been discovered that workers who work from home participate in
the informal economy, which can make it difficult to cont rol and oversee
working conditions, including concerns about health and safety.
Additionally, many of these workers lack social security and have limited
access to benefits like paid time off, pensions, and healthcare.
Home -based employees continue to play a significant part in many
economies throughout the world despite the difficulties they encounter.
Governments and legislators are becoming more aware of the need to offer
these employees support and protections, including initiatives to enhance
working c onditions, guarantee fair pay, and increase access to social
protections. The relevance of home -based work is probably going to
continue to increase given the growth of the gig economy and the
increasing tendency of remote labour.
6.3 LEATHER WORKERS At both the local and international levels, India’s leather sector has a huge
social and environmental impact. The effects of the sector include
underage labor, unjust wages, discrimination against Dalits, exposure to
harmful chemicals, and challenges with tra de union formation. A study on
the labour practises in the leather industry was undertaken by the India
Committee of the Netherlands, which revealed that three major
manufacturing centres —Kolkata, Agra, and Tamil Nadu —supply hides,
leather, clothing, and f ootwear for export. According to the research,
Dalits, women, and children are most likely to experience human rights
breaches. Caste prejudice still exists despite the modernity of the leather
industry. Additionally, among the most vulnerable workers are women
who work from home on a particularly labor -intensive aspect of the shoe
industry, along with little children who often are seen to be working in
very small tanneries and workshops.
The waste water from tanneries contains hazardous substances that ha ve a
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67 Conditions of Work and Wages – Home Based Worker, Leather Workers, Sanitation Workers known for having a substantial environmental impact. Solid and liquid
garbage that has been dumped into the environment contains harmful
substances like residual chromium. Ca ste and gender discrimination are
among the structural problems that the research notes as having an impact
on labour conditions in the Indian leather sector. Big brands also use the
Indian leathers for cloths and accessories making it as a luxurious produ ct
but the wage labourers earns very little. The report also points out that
nearly 2.5 million workers in the leather industry belong to the Dalits,
Muslim.
This section addresses the leather and footwear industries in three different
Indian states: Tami l Nadu’s Vaniyambadi -Ambur cluster, West Bengal’s
Kolkata, and Uttar Pradesh’s Agra. In India, these areas are home to 90%
of the country’s tanneries. With 70 to 75 export -oriented factories that
primarily ship to Europe, Agra is an important hub for the p roduction of
footwear. There are thought to be 5,000 small -scale businesses with a
combined annual production capability of 200 million pairs of shoes and
sandals. With about 500 tanneries, 1,500 leather products manufacturing
facilities, 3,000 shoe manufa cturing facilities, and 240 industrial glove
manufacturing facilities, Kolkata is the second -most significant tanning
centre in India. Vaniyambadi and Ambur are the primary centre for leather
and leather products in Tamil Nadu. There are thousands of peopl e
employed by these informal units even though they are not regulated or
recorded. It can be also observed that there are subcontracts more in the
northern India while in the Southern part of India the leather work is
carried out in large factories.
Envir onment and Impact on Health :
Due to the use of chemicals like chromium sulphate, the leather industry
in India is the main cause of the country’s high pollution levels. For every
500 kg of leather, up to 250 kg of chemicals are used in the tanning
process. Chromium and other hazardous substances found in the solid and
liquid waste from tanneries are released into the environment, severely
polluting the Vaniyambadi -Ambur cluster and the Tamil Nadu tannery
belt. The river Palar is contaminated by tannery effl uent discharge, which
creates a major drinking water crisis in the nearby settlements. The water
and air pollution brought on by burning leather trimmings and toxic waste
water also has an impact on the Kolkata region.
Given that leather workers are expos ed to harmful chemicals, which can
cause serious health issues like fever, eye irritation, skin conditions, and
lung cancer, their health and safety are a key worry as well. Tannery
workers are not adequately protected or trained to ensure their safety, an d
the dangers of the toxic workplace have occasionally led to accidents and
fatalities.


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68 Sociology of Informal sector
68 Check Your Progress
1. Discuss some of the environment impact of leather industry
2. Home workers lack social security and have limited access to benefits
like paid time off, pensions, and healthcare – do you agree to this –
comment.
6.4 SANITATION WORKERS Cleaning public spaces, wet latrines, septic tanks, gutters, and sewers by
hand is known as manual scavenging. In India, this practise is stil l
widespread and due to caste, patriarchy, as well as differences in class and
money. Many manual scavengers in the nation are from marginalized
castes and subcastes. While men normally clean septic tanks, gutters, and
sewers, women are typically responsib le for cleaning, removing, and
transporting waste from toilets. These are the lowest -paying employment,
with some employees earning as little as 150 rupees a month and a few
slices of bread. Additionally, these jobs pose serious health concerns.
Additional ly, there are serious health dangers associated with these tasks,
and each year, inadequate safety precautions and lack of protective gear
result in at least 1,370 fatalities. Due to ongoing exposure to toxic gases
and disease -causing bacteria, workers in this occupation are more likely to
have health issues like nausea, skin infections, anaemia, diarrhoea,
vomiting, jaundice, and trachoma. Additionally, cardiovascular
deterioration, musculoskeletal issues, infections, skin diseases, and
respiratory conditi ons are frequently experienced by labourers. These
workers experience undernourishment and have insufficient access to
healthcare services as a result of their low earnings.
In the past 20 years, the central government has attempted to address the
issue of such work and its conditions by passing two laws. The
Employment of Manual Scavengers and Construction of Dry Latrines
(Prohibition) Act, 1993, which aimed to control the conditions of such
work rather than outright prohibit it, also included no actual pr ovisions for
penalising those who disobeyed. It comes as no surprise that it has little to
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69 Conditions of Work and Wages – Home Based Worker, Leather Workers, Sanitation Workers The Prohibition of Employment as Manual Scavengers and their
Rehabilitation Act, 2013, was the result of persistent agitation and
lobbying by the Safai Karmachari Andolan (SKA) and others. This law
made it illegal to build or maintain unsanitary restrooms and to engage in
or employment of anyone as a manual scavenger. Additionally, it
prohibited hi ring people for dangerous sewer or septic tank cleaning (i.e.,
without sufficient safety equipment and other safeguards), even in an
emergency. Violations might result in a year in jail, a 50,000 rupee fine, or
both. Even with safety equipment and other sa feguards, if a worker
perished while conducting such task, the company was obligated to
compensate the family with Rs 10 lakh.
In addition, the law compelled the government to survey, estimate, and
take rapid action to rehabilitate such workers with other jobs. Each
municipal authority, cantonment board, and railway authority was given
the mandate to survey any filthy (dry) latrines under its control and build
sanitary community latrines. All of this was further strengthened —at least
legally —by the 2014 Saf ai Karamchari Andolan v. Union of India
decision, in which the Supreme Court demanded the execution of
rehabilitation programmes for such workers and ordered the end to the
practise of manual scavenging. Regrettably, it appears that very little has
been ac complished despite all of this, with ineffective implementation and
scant punitive action. Those still the practice has continued.
The SKA calculates that there are roughly 1.2 million manual scavengers
in India, which is closer to more than six times the 1,806,57 found in the
Socio -Economic Caste Census of 2011. Given that the country had an
estimated 2.6 million dry latrines in 2011 and that many more had been
built since then, the latter option appears more logical.
Public entities rather than private c ontractors are some of the worst
perpetrators of manual scavenging. For instance, the Indian Railways
employ the most manual scavengers. Since they are considered
―sweepers,‖ it is impossible to say how many are needed, but the number
must be enormous give n that the vast majority of trains in the system rely
on open bathrooms that spill faeces onto railroad tracks. The majority of
the labourers hired through contractors and have to clean this up
(manually, of course) make a daily salary of at most Rs 200, they are
lucky to receive gloves and receive very little else in the way of safety or
protection. (If they did get these, they are not seen as manual scavengers
as they are temporary labourers and do not receive any benefits which a
permanent employees rece ived. At present only 1/3 of all the coaches have
the bio toilet fitted in them.
During the Covid 19 the sanitation workers faced the highest risk and
working long hours facing both mental and physically challenging work.
Many a times, they workers had to loose their jobs once the covid 19 got
over even though they take the biggest risk of saving and helping lakhs of
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70 Sociology of Informal sector
70 Every day is a challenging one for a Sanitation worker who cleans gutter
like when he gets into manholes there are many a times gl ass pieces lying
and which hurts his legs, hands, bodies. There are also poisonous gases
released which has even killed the workers immediately and as they are
contract labourers there is no voice for them. The contractor refuses to
take the responsibility and the buildings who hire the contractor neither
take the responsibility in a way, it is the family and the dependents who
suffer.
Check Your Progress
1. According to Safari Karamchari Andolan how many manual
scavengers are in India.
2. List acts which prohibits manual scavenging.
6.5 SUMMARY Home -based employees continue to play a significant part in many
economies throughout the world despite the difficulties they encounter.
Governments and legislators are becoming more aware of the need to offer
these employees support and protections, including initiatives to enhance
working conditions, guarantee fair pay, and increase access to social
protections. The relevance of home -based work is probably going to
continue to increase given the growth of the gig economy and the
increasing tendency of remote labour. This chapter also discusses the
workers who work in the leather industry. At both the local and
international levels, India’s leather sector has a huge social and
environmental imp act. The effects of the sector include underage labor,
unjust wages, discrimination against Dalits, exposure to harmful
chemicals, and challenges with trade union formation. A study on the
labour practises in the leather industry was undertaken by the Indi a
Committee of the Netherlands, which revealed that three major
manufacturing centres —Kolkata, Agra, and Tamil Nadu —supply hides,
leather, clothing, and footwear for export. According to the research,
Dalits, women, and children are most likely to experien ce human rights
breaches. Caste prejudice still exists despite the modernity of the leather
industry. Additionally, among the most vulnerable workers are women munotes.in

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71 Conditions of Work and Wages – Home Based Worker, Leather Workers, Sanitation Workers who work from home on a particularly labour -intensive aspect of the shoe
industry, along with ch ildren. The chapter also discusses the working
conditions of the sanitation workers who are many a times employed as
contract labourers and who working in the worst conditions. The chapter
also discusses the health impact on these workers due to the nature of the
work they carry out.
6.6 QUESTIONS 1. Write a note on the condition of leather workers
2. Write a note on the condition of sanitation workers
3. Discuss the condition of home -based workers
6.7 REFERENCES AND FURTHER READINGS  https://idsn.org/report -dalit-workers -indias -leather -industry -suffer -
serious -rights -
abuses/#:~:text=A%20report%20released%20by%20the,due%20to%2
0their%20marginalised%20status.
 Raveendran, G., Sudarshan, R., & Vanek, J. (2013). Home -based
workers in India: Statistics and trends . WIEGO.
 Raju, S. (2013). The mater ial and the symbolic: Intersectionalities of
home -based work in India. Economic and Political Weekly , 60-68.
 Kantor, P. (2003). Women’s empowerment through home –based
work: Evidence from India. Development and change , 34(3), 425 -445.
 Salve, P. S., & Jungar i, S. (2020). Sanitation workers at the frontline:
work and vulnerability in response to COVID -19. Local
Environment , 25(8), 627 -630.
 Oza, H. H., Lee, M. G., Boisson, S., Pega, F., Medlicott, K., &
Clasen, T. (2022). Occupational health outcomes among sani tation
workers: A systematic review and meta -analysis. International
Journal of Hygiene and Environmental Health , 240, 113907.
 Dixit, S., Yadav, A., Dwivedi, P. D., & Das, M. (2015). Toxic hazards
of leather industry and technologies to combat threat: a
review. Journal of Cleaner Production , 87, 39-49.
 https://www.indiatimes.com/news/india/700 -sanitation -workers -
covid -warriors -fired -from -jobs-in-tamil -nadu -531945.html



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72 Unit III
7
TOWARDS DECENT WORK AGENDA
Unit Structure
7.0 Objectives
7.1 Introduction
7.2 What is decent work?
7.3 Right at work
7.4 The Sustainable Development Goals and decent work agenda
7.5 Questions
1.6 Summary
7.7 References
7.0 OBJECTIVES  To learn about the meaning of decent work
 To understand the different aspects of decent work agenda.
7.1 INTRODUCTION Underemployment and irregular employment are the main issues in
developing countries: 1.4 billion people work in jobs that are unstable or
have no regulation followed. Individuals accept working under difficult
circumstances. These jobs have little pay and have a substantial turnover
for the companies employing. Many even admit to being underemployed
and juggling multiple jobs in an effort t o make ends meet. As a result,
there are a lot of working poor in emerging countries.
Informal employment is the norm in the majority of developing countries,
with women and children being the most susceptible. In the majority of
developing countries, the percentage of population working in informal
sector is 82% in South Asia, 66% in Sub -Saharan Africa, 65% in East and
Southeast Asia, and 51% in Latin America. Out of which the informal
employment makes up more than 50% of all non -agricultural employment.
Let’s first study what “decent work” is before learning about the Decent
Work Agenda.
7.2 WHAT IS DECENT WORK? The concept of decent employment has changed since the ILO was
established in 1919. Philadelphia Declaration in 1944, ILO constitution
revision in 1946, Universal Declaration of Human Rights in 1948, first
Human Development Report in 1990, World Summit for Social
Development in 1995, ILO Declaration on Fundamental Principles and munotes.in

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73 Towards Decent Work Agenda Rights at Work in 1998, World Economic Forum in 1999, Global
Compact in 2000, and United Nations Global Compact in 2001 are just a
few of the significant turning points along the way which contributed to
the discussion of bringing positive change for informal workers.
Throughout this process, we can observe the concept’s deve lopment and
operationalization, as well as its institutionalisation and political
distribution also changed (2).
According to the International Labour Organization (ILO), productive
employment for women and men with freedom, justice, security, and
human di gnity is known as decent work. In decent work there is fair pay,
steady employment and safe working conditions, equal chances and
treatment for everyone, social security benefits for employees and their
families, opportunity for personal growth, and soci al integration. The work
is also seen as respectable. The employees also have rights through which
they can come together and express their concerns.
The era of globalisation and economic liberalisation began in the 1990s.
The socialist bloc, which includ ed the USSR and Eastern Europe, had
disintegrated. Afterwards, these nations rebuilt their economies by
reducing protectionism and opening up. India is one of the nations that
underwent liberalisation and re -construction. Although the
liberalization polici es may have contributed to increasing prosperity, they
also contributed to greater inequality. The nature of employment was one
of the obvious shifts. It was evident that employment in the formal sector
had declined while employment in the unorganised sect or had expanded.
This was caused by a number of factors, including the outsourcing of
production to less developed nations, the disappearance or replacement of
high-paying positions in industrialised nations, and the modification of
labour laws in an incre asing number of nations. Hence, a large number of
unorganized sector labourers emerged who were unprotected too. These
workers live in constant threat of working under pressure and have to
perform better every day in their work or else they could lose thei r work.
This leads to both physical, mental pressure on these individuals.
In the context of this crisis, the ILO came up with the concept of decent
work as a way to give workers back their dignity. The fundamental
principles of decent employment include freedom, equity, and dignity,
where freedom would imply that employees’ rights were safeguarded.
Equity suggested fair compensation for labour, and dignity would entail
social protection. Also, it indicated that everyone would have complete
access to chanc es for employment. Four pillars —right at work, right to
employment and work, social protection, and social dialogue —form the
foundation of decent work. Let’s examine further detail on each of these
points.
7.3 RIGHT AT WORK The concept of decent work enc ompasses more than just the right to a
permanent job; rather, it also has a wide range of ethical and legal
consequences for all aspects of decent labor. First and foremost, there munotes.in

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74 Sociology of Informal sector
74 shouldn’t be any form of bias in the workplace. No one can be
discriminated on the basis of Gender, ethnicity, religion, and in India,
caste and language. Although the Equal Remuneration Act of 1975 was
passed to prevent gender discrimination in some occupations like
construction, plantation labour, mining, and agriculture. Wo men continue
to earn less than males, according to our research. Women’s rights are
regularly ignored or infringed at work.
While having laws in place to protect workers is important, it is even more
crucial that these laws are enforced. Although India and other countries
have comprehensive laws for safeguarding workers, they are often not
properly implemented. The World Bank believed that policies to protect
workers should be replaced with free market policies, as providing greater
protection to workers co uld discourage foreign investment. The
government did not modify existing laws but instead introduced measures
that weakened them. Under the previous laws, employers could not shut
down a workplace or factory if it was unprofitable. To circumvent this, the
state introduced a scheme called voluntary retirement from service (VRS),
which allowed companies to downsize and let go of permanent employees.
As a result, many businesses were able to reduce their workforce.
While the VRS policy helped companies reduc e their workforce, it also
led to the displacement of many permanent workers who had spent years
serving their respective employers. This had a significant impact on the
social and economic conditions of affected individuals and their families.
Additionall y, the weakened labor laws made it easier for employers to
exploit their workers and violate their rights without facing legal
consequences.
Despite these issues, there has been a growing movement in recent years
towards improving workers’ rights and stren gthening labo ur laws.
Advocates for workers’ rights have been pushing for greater
accountability for employers who violate labo ur laws and for the
government to take a more proactive role in enforcing these laws. Some
have also called for reforms to the VRS policy to provide greater
protection for workers who are affected by downsizing.
Overall, it is clear that having laws to protect workers is not enough on its
own - these laws must also be effectively implemented and enforced.
Without proper enforcement, w orkers remain vulnerable to exploitation
and abuse, and their rights and wellbeing are put at risk. As such, it is
important for governments and employers alike to take a proactive role in
ensuring that labor laws are enforced and that workers are treated fairly
and with respect.
Many countries are worried about the issue of child labour. In India, the
use of child labor is not entirely prohibited like it is in other developing
nations. The Child Labour Act of 1986 establishes the minimum
employment age at 14 and prohibits children from working in hazardous
industries. While these laws are designed to prevent child labour, they
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75 Towards Decent Work Agenda families are unable to earn sufficient income to meet their b asic needs, and
as a result, children are sent to work in order to bridge the income gap.
Employment:
Decent work encompasses various types of employment opportunities,
including wage -based jobs, self -employment, home -based work, and
casual work for men, women, and children. The provision of employment
is a critical element of decent work, and it should provide workers and
their families with a remuneration that meets their basic needs. The issue
of a need -based minimum wage is essential to consider when d iscussing
employment. In India, there are measures in place to determine the need -
based minimum wage, and laws such as the Payment of Wages Act of
1935 and the Minimum Wages Act of 1948 enforce the payment of wages.
Therefore, it is crucial to acknowledge the importance of employment and
the need for a fair wage to support workers and their families.
Check Your Progress
1. List out two acts connected to wages.
2. Explain the meaning of Decent work.
The legislation established the standa rds for how wages should be paid,
and if a company chooses a minimum wage, it is required to pay it to all of
its employees. The minimal wage would allow a family to live honourably
and perhaps even advance the general welfare of the dependent members.
In other words, the family’s children would be able to receive an adequate
education, and women would also gain certain advantages. Employment
would come with a fair income, as well as protection from accidents,
unsafe and unpleasant working conditions, and l ong hours. A worker also
needs some form of social security, such as a pension, health insurance,
and savings account. Smaller companies have thin profit margins, which
leads to spending very less money for the employee’s welfare and for their
needs.
Social Protection:
People typically experience a lot of insecurity in their daily lives,
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76 for the working class is work, and if a person is not a permanent
employee, the fear lasts in the mind that whether there will be employment
the following day. There is no protection for workers in India’s informal
economy who are subject to this kind of instability. The vast majority
(93%) of working -class people are employed in the informal sector,
although they do not receive the majority of the benefits. For instance, the
worker does not receive benefits when he becomes too elderly to work. As
a result, he is forced to rely completely on his savings or the income of his
children or on certain social security benefit programs, including a life or
health insurance program. This segment of the population had access to
free healthcare facilities earlier. But, following liberalization, government
hospitals began taking fees for admission, procedures, and medications.
Social protection is not only available in hospitals. Its goal is to offer
protection from a range of events and weaknesses, such as sickness,
maternity demands, accidents, and civil unrest.
All segments of the population should have access to social protection, not
just the employment. Only after this we can discuss the viability of decent
job. More importantly, it is essential to recognize the contribution that
membership -based organizations and trade unions have made to
expanding the reach a nd coverage of social security programs in India.
Social Dialogue:
The fourth element of decent work is social dialogue, which comes after
workers’ rights, employment, and social protection. This chapter discusses
the significance of negotiations. Social d ialogues emphasize the need of
having a conversation about issues at work with both the employer and the
employee. Together, they can come up with answers to these issues.
Hence, social discourse fosters methods for peaceful resolutions and aids
in avoidin g conflict. From the perspective of the worker, social dialogue
gives the contributors to the production process a voice and
representations. It gives them the tools to advocate for their priorities,
express their concerns, and enter into negotiations.
Many workers lack institutional representation, which means they lack
organizations that advocate for their interests. These people include
hawkers on the street, housewives, temporary employees, etc. Some of
these businesses, like street vending, may be deem ed illegal, and the state
makes little effort to even hear about their issues. Others, like domestic
employees and home -based workers, are numerous but unstoppable, so the
state may ignore their issues. Institutional representation is particularly
necessar y in these situations.
The legal protections that employees in the formal employment sector
enjoy are not available to those working in the informal sector. Very few
laws exist to protect these workers, and the government makes no real
effort to support in stitutional representation so that they may communicate
their issues as a group. The recent Street Vending Act exists but the
implementation is still not completed. The various organizational
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77 Towards Decent Work Agenda dialogue. It cannot represent the opinions of a single group within the
work source. The state must foster the formation of diverse associations
for negotiation if social conversation is to be successful. The marginalized
groups would gain influence as a result, giving them a voice. Additionally,
it suggests that the state must foster the conditions necessary for their
production.

Chart showing areas where the ILO is working to provide Decent Work
7.4 THE SUSTAINABLE DEVELOPMENT GOALS AND DECENT W ORK The new 2030 Agenda for Sustainable Development was adopted during
the UN General Assembly in September 2015, and it included decent work
and the four tenets of the Decent Work Agenda: employment creation,
social protection, rights at work, and social dialogue. The ILO and its
stakeholders are going to concentrate heavily on Goal 8 of the 2030
Agenda, which calls for the development of sustained, inclusive, and
sustainable economic growth, full and productive employment, and decent
work. Furthermore, se veral of the other 16 goals of the UN’s new
development vision include fundamental components of decent
employment as aims this vision. Remarks made by leaders and plans for
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78 Sociology of Informal sector
78 ‘‘Decent Work for All” serv es as the ILO’s guiding philosophy. By
committing to the Asian Decent Work Decade (2006 –2015) to advance
this objective, the ILO’s Asia Pacific members reiterated their
commitment to provide all of their citizens with full, productive, and
decent employmen t by the year 2015. The following five regional priority
areas have been chosen to aid in achieving the Decade’s goals:
Promoting sustainable businesses in Asia and the Pacific; Labour market
regulation in Asia and the Pacific; The youth employment crisis in Asia
and the Pacific; Protecting migrant workers; and Local development for
decent work are some of the topics covered under the headings of
competitiveness, productivity, and jobs.
These priorities support the unique objectives of each member nation,
which are listed in their National Decent Work Country Programmes. By
2030, there must be around 600 million additional jobs just to keep up
with the growth of the working -age population. i.e. creating About 40
million jobs for people annually. Additionally , we must enhance working
conditions for the 780 million men and women who are employed. but not
earning enough to escape the $2 per day poverty trap for themselves and
their family. We have to create more chances for decent work as well as
more robust, in clusive, and poverty -reducing growth if we prioritise job
creation in economic policy -making and development strategies. The
developing and rising nations that made the greatest investments in high -
quality employment starting in the early 2000s expanded mo re quickly
each year after 2007 and had fewer income disparities.
Job-focused economic expansion generates aims at generating income for
women, youth, small businesses, providing safety for workers.
Check Your Progress
1. By 2030, there must be around __ ___________additional jobs just to
keep up with the growth of the working -age population. Fill the above
blanks.
2. Why was equal renumeration act passed?
7.5 SUMMARY The decent work for all is the ILO directive for providing social justice fo r
the marginalized people and for sustainable and inclusive growth. The
goal is Decent for work for all. It aims through the sustainable
development goal of 2030 to provide decent work encourage small
business, creation of job for youth, reduce child labou r, provide safe
working conditions, social welfare schemes for the people. The ILO munotes.in

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79 Towards Decent Work Agenda through the decent work agenda aims at providing support for fisher men,
reducing child labour, providing education, reduce poverty, reduce hunger,
provide clean energy, san itation etc.
7.6 QUESTIONS 1. Elaborate on the concept of decent work
2. Explain right to work
3. Write a note on social dialogue
4. Discuss the Sustainable Development Goals and decent work agenda
7.7 REFERENCES  https://international -partnerships.ec.europa.eu/policies/ sustainable -
growth -and-jobs/employment -and-decent -work_en
 Ferraro, T., Dos Santos, N. R., Pais, L., & Mónico, L. (2016).
Historical landmarks of decent work. European Journal of Applied
Business and Management , 2(1).
 https://www.ilo.org/global/topics/decen t-work/lang —en/index.htm
 https://www.ilo.org/asia/decentwork/lang —en/index.htm
 https://ilo.primo.exlibrisgroup.com/discovery/delivery/41ILO_INST:4
1ILO_V2/1246589040002676 for ILO PPT/ PD F

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80 8
SOCIAL SECURITY AND
ROLE OF THE STATE
Unit Structure
8.0 Objectives
8.1 Introduction
8.2 Defining Social Security
8.3 Labour Laws in India
8.4 Challenges for Informal Workers to Access Social Security
8.5 Summary
8.6 Questions
8.7 References and Further Readings
8.0 OBJECTIVES  To understand the importance of social security for informal workers
 To familiarize students with the situation of social security in India.
8.1 INTRODUCTION A key concern related to the functioning of labour markets is how social
protection policies can impact the conditions and incentive mechanisms
that underpin the informal economy. This concern is in particular relevant
among low - and middle -income countries where informal employment
represents between 80 –90 and 35 –60 per cent of total non -agriculture
employment, respectively.
Workers in the informal economy perform productive activities outside
regulatory frameworks and conventional labour standards; usually do not
pay taxes on income and capital, or contribute to so cial security systems,
but neither do they benefit from contributory social insurance benefits or
tax credits. Consequently, they are often subject to precarious working
conditions, exploitation, and hazards, and are exposed to, and unprotected
from, idios yncratic and covariate risks associated with economic and
political business circles, weather, and health shocks as well as life -course
contingencies.
India’s social security system, whose origin dates to 1947, carries little for
the workers in the inform al sector. However, over the years, a large
majority of the Indian workforce has joined the informal sector. Lack of
social security to this section of workers is a serious question mark on the
productivity of the entire Indian economy. The Indian labour m arket has
been, and continues to be, predominantly informal. In the year 2018 -19, munotes.in

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81 Social Security and Role of the State the nature of employment for around 90 per cent workers in India’s labour
market was informal.
These workers are either inadequately covered or not at all covered under
the existing labour legislations, social protection schemes, and other
employment benefits. Due to lack of governmental oversight, a large
proportion of these workers work in exploitative and precarious
conditions. According to the International Trade Union Co nfederation,
India is amongst the 10 worst countries in the world in terms of worker
rights in 2020.
The National Commission for Enterprises in Unorganized Sector
(NCEUS)was commissioned by Government of India in 2004 to take an
in-depth look at the issue s that enterprises in the informal sector faced and
suggest a way forward. In its report, it asserted that providing social
security should not be seen as a burden to the economy, and instead, is an
important bedrock for a developing country to build from.
In the context of widespread chronic poverty and unrelenting wealth
inequality, social security can offer resilience against socio -economic
shocks. Research has also shown that a comprehensive social security net
in developing economies can enhance labou r-market efficiency and
stimulate socio -political and economic growth. Government of India has
introduced several policy initiatives on labour and welfare to extend social
security benefits to informal workers in the country. Despite that, their
reach rema ins limited.
8.2 DEFINING SOCIAL SECURITY The concept of social security has evolved over time. One of its earliest
mentions was in the Beveridge Committee Report in 1942, where it was
described as “freedom of want,” and its provisions were limited to
maintenance of employment, children’s allowances, and comprehensive
health services. Subsequently, in 1952, the International Labour
Organisation (ILO) proposed a more nuanced understanding of social
security - as protective measures against social and economi c distress.
These included protective measures against abrupt reduction or stoppage
in income resulting from sickness, maternity, employment injury,
unemployment, disability, old -age death, and provision for medical care.
ILO’s approach to social security was criticized for being limited to the
experience of developed countries. Developing countries had and continue
to have a much larger informal sector, higher levels of poverty, low levels
of industrialization, among other constraints. They require a wide r
conception of social security. Jean Drèze and Amartya Sen argue that, in
developing countries, social security should be seen more broadly as pro -
poor measures implemented through public means.
Thus, in developing countries like India, social security i s best understood
as pro -poor measures that can be: a) promotional, aiming to augment
income, such as through the Mahatma Gandhi National Rural Employment munotes.in

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82 Sociology of Informal sector
82 Guarantee Act (MGNREGA); b) preventive, aiming to forestall economic
distress, such as through Provid ent Funds (PF); and c) protective, aiming
to ensure relief from certain external shocks, such as remuneration
provided through insurance schemes in the case of injury or death of a
primary breadwinner.
Check Your Progress:
1. What is social security?
8.3 LABOUR LAWS IN INDIA To ensure social security in unorganized sector, the schemes like Public
Distribution System (PDS), Targeted Public Distribution System (TPDS),
Annapurna Scheme, Antyodaya Anna Yojana and Mid -day Meal Scheme
(MDMS) have been launched especially to provide food security to all age
groups in unorganized sector. Similarly schemes like Food for Work
Programme (FFW), Jawahar Rozgar Yojana (JRY), Sampoorna Gram
Swarozgar Yojana (SGSY), Jawahar Gram Samridhi Yojana JGSY,
Employment A ssurance Scheme (EAS) and Pradhan Mantri Gram Sadak
Yojana (PMGSY) have been launched to provide employment
opportunities in informal sector. Schemes like National Old Age Pension
Scheme (NOAPS), National Maternity Benefit Scheme (NMBS) and
Janani Suraksha Yojana (JSY) are undertaken to provide social security
for workers in unorganized sector. These schemes are basically
implemented at national level.
The Government of India has initiated major labour law reforms in the
country in recent years. Following t he recommendation of the 2nd
National Commission of Labour, the Ministry of Labour and Employment
had begun categorizing all existing labour laws into four ‘Labour Codes’.
The four Labour Codes are: (a) The Code on Wages, 2019; (b) The
Occupational Safety, Health, and Working Conditions Code, 2020; (c) The
Code on Social Security, 2020; and (d) The Industrial Relations Code,
2020.
The Code on Social Security was passed by the Parliament in September
2020. The Code on Social Security, 2020, directs the Union and the state
governments to consider designing welfare schemes to provide social
security to gig economy workers such as, online -platform based taxi
drivers, delivery persons, etc. The Code provisions for the Union
government to introduce social security schemes for workers. Such social
security measures include schemes such as: Employees’ Provident
Scheme; Employees’ Pension Scheme; schemes for the benefit of
unorganized workers, etc. It also directs governments to consider the munotes.in

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83 Social Security and Role of the State welfare of gig economy wor kers such as for -hire drivers or delivery
persons.
There are multiple thresholds for eligibility in different schemes,
depending on the number of workers employed in the establishment and
the income being drawn. As per the Code, to provide social security for
unorganized workers, gig workers and platform workers, the Union
government can frame suitable welfare schemes on matters relating to life
and disability cover, health and maternity benefit, old age protection, and
education. Similarly, the state gove rnments can frame schemes on aspects
such as provident fund, employment injury benefit, and housing,
educational schemes for children, etc.
Check Your Progress:
1. What is Social Security Code, 2020?
8.4 CHALLENGES FOR INFORMAL WORKERS TO ACCESS S OCIAL SECURITY Of late, the issue of provision of social security to the growing segment of
unorganized sector workers gained enhanced significance in the
development discourse in India. Various efforts of the Government of
India, in recent years, such as designing of new social security schemes,
recasting of earlier schemes, introduction of innovative methods towards
effective identification and enrolment of beneficiaries, contemplation of
comprehensive legislations to ensure social protection for unorgan ized
sector workers and so on testify a paradigm shift in the social security
front.
However, key benefits are not available to informal workers in Social
Security Code 2020. Besides, there are some key challenges, that informal
workers face in getting soc ial security, such as:
Registration barrier :
To avail social security, an informal worker must register herself on the
specified online portal to be developed by the central government.
Absence of definition:
The absence of definite and unambiguous provi sions in the present code
would further complicate achievement of universal registration.

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84 Sociology of Informal sector
84 Lack of awareness:
Experience shows that there is an awful lack of awareness among informal
workers regarding social security schemes.
Lack of digital literacy:
Online registration places a further challenge as most informal workers
lack digital literacy and connectivity.
Lack of documents:
Informal workers also find it difficult to furnish all documentary papers
required as part of the registration process.
 Furni shing proof of livelihood and income details in the absence of
tangible employer -employee relations is very difficult.
For the most vulnerable, exclusion from social security benefits they are
entitled to, can be debilitating. In fact, for many schemes, th e issue of
exclusion has been identified long back.
Check Your Progress:
1. Explain the reasons for least social security being utilized by the
informal workers.
8.5 SUMMARY Informality in developing economies is often characterized by low human
capital, low productivity, limited access to basic services, limited financial
inclusion, low earnings, and irregular, unpredictable income. Despite these
vulnerabilities, informal economy workers are not typically covered by
social protection programs. Sa fety net programs exist in most countries,
but coverage is low and most provide support only to extreme poor.
Social security means the overall security for a person in the family, work
place and society. Social security, as a system to meet the basic nee ds as
well as contingencies of life in order to maintain an adequate standard of
living, is not charity but the right of all workers, because they are the
contributors towards the national income of the country. Social security is
defined as labour right b ecause it is originated from work and is claimed
out of the income towards which the labour has contributed.

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85 Social Security and Role of the State
8.6 QUESTIONS 1. Why is social security important for countries like India?
2. What challenges do the informal workers face?
3. What is the state i ntervention for providing social security in India?
8.7 REFERENCES  ILO. (1952). Social Security (Minimum Standards) Convention, (No.
102). International Labour Organisation.
 Justino, P. (2003). Social Security in Developing Countries: Myth or
Necessity? E vidence from India. Poverty Research Unit at Sussex
working paper no. 20.
 MAJUMDAR, A., & BORBORA, S. (2013). Social Security System
and the Informal Sector in India: A Review. Economic and Political
Weekly , 48(42), 69 –72.
 Sarkar, S. (2004). Extending Soci al Security Coverage to the Informal
Sector in India. Social Change, 122 - 130. Sarkar, S. (2019)


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86 9
ORGANIZING THE UNORGANIZED:
SELF -HELP GROUPS AND
MICROFINANCE
Unit Structure
9.0 Objectives
9.1 Introduction
9.2 Understanding Self -help groups
9.3 Understanding Micro finance
9.4 Difference between Self help groups and microfinance
9.5 Summary
9.6 Questions
9.7 References and further readings
9.0 OBJECTIVES  To learn about the self help groups
 To understand about microfinance
9.1 INTRODUCTION In this chapter we are going to study about two important topics namely
self help groups and microf inance. The number of people who are
dependent on informal jobs, blue collar jobs are large. There is also large
section of women who do not work. It is due to multiple reasons like lack
of skills, education and opportunities, guidance. To solve these prob lems
of unorganized sector the self -help groups, microfinance play a important
role. Let us look into it in details.
Origin of Self -help groups :
Muhammad Yunus is associated with creating the idea of self -help groups
and being the father of microfinance. (SHGs). Yunus, a professor of
economics in Bangladesh, developed an interest in exploring strategies to
assist the underprivileged in gaining access to credit and other financial
services in the 1970s. He established the Grameen Bank in 1983 to offer
micro-loans to the underprivileged who lacked access to conventional
financial institutions. The technique proved to be quite effective in
decreasing poverty and empowering women. The loans were issued to
groups of five persons, who were jointly liable for rep ayment. Yunus
advocated the creation of SHGs because he understood their potential to
offer financial services to the underprivileged. SHGs as a means of
encouraging self -help and fellowship among the underprivileged. The
Grameen Bank model was adopted by several nations, and the idea of munotes.in

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87 Organizing the Unorganized: Self-Help Groups and Microfinance SHGs has subsequently evolved to encompass a variety of development
initiatives outside of microfinance. Yunus is now regarded as a pioneering
social entrepreneur and has won various honours including prestigious
Noble priz e for his efforts to fight poverty and advance social enterprise.
Self-Help Groups (SHGs) first emerged in India in the 1980s, when a
number of non -governmental organisations (NGOs) began to experiment
with microfinance initiatives intended to empower rura l women. The Self -
Employed Women’s Association (SEWA), which was established in the
state of Gujarat in 1972, was one of the first NGOs to introduce SHGs in
India. When SEWA realised that women in rural areas frequently
encountered considerable obstacles f or obtaining credit and other financial
services, it started to group women into small groups in order to facilitate
credit access, skill development, and mutual support.
The Indian government started assisting SHG establishment in the late
1980s and early 1990s as a means of advancing financial inclusion and
eradicating poverty. The National Bank for Agriculture and Rural
Development (NABARD) was founded in 1982 to offer financing and
other forms of assistance to rural areas. As a means of reaching the poo rest
and most marginalised communities, NABARD started to promote the
development of SHGs.
9.2 UNDERSTANDING SELF -HELP GROUPS Self-reliance is the guiding philosophy of self -help groups. These were
started to address the shortcomings of traditional finan cial institutions that
mobilise common individuals savings and successfully recycle them. In
the Self -help groups, the participants combine their resources, which
makes it possible to meet the credit demands of the underprivileged. It
facilitates the creat ion of a forum for the exchange of experiences through
accumulated knowledge and the development of problem -solving abilities.
The self help groups help the underprivileged, particularly women,
develop their confidence and ability to make decisions, plan a head, and
collaborate democratically. The guiding idea of self -help groups is “all in
all.”
Self-help groups are for the people, by the people, and of the people, and it
is primarily focused on the poor. It is a tiny, micro -scale volunteer self -
help organi sation with a lot of potential for raising awareness about daily
issues, promoting savings, and building assets. Based on the concepts of
reciprocal collaboration and interdependence, they are made up of 15 –20
individuals from a certain location and simila r socioeconomic origins in
rural India. One of the important features is to encourage people to not
rely on government or non -governmental organisations and to improve
infrastructural facilities in the villages. Preference is given in membership
to the poo rest of the poor, handicapped, deserted, dalits, and traders for
becoming group members.
As a result, during difficult financial circumstances, Self help
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88 Sociology of Informal sector
88 through mutual support. It is an unof ficial organisation that is owned, run,
and managed by the members who have the want to engage in group
activity. The funds can be used for both consumption and production by
rural or urban males or females of any socioeconomic class. As a result, it
is a microfinance institution that participates in the rural credit delivery
system. Generally, one individual from a family becomes a member as this
would give a chance to have larger number of people joining Self help
groups. There are mixed groups too like m en and women or there is many
a times only womens group too found.
Objectives of Self -help groups :
1) Develop the practise of banking and saving
2) Increase confidence and trust between bankers and the
underprivileged
3) To foster group interaction through various welfare and development
initiatives in accordance with members’ perceptions.
4) To achieve the women and child welfare program by including
women in a small intimate family, national immunization programs,
etc.
Norms for group management bind members. There are weekly scheduled
meetings. Members are free to discuss issues and contribute to decision -
making. The Group Corpus Fund, which is utilised to extend loans, is a
minimum voluntary savings requirement that must be met by the group.
Simple fundamental records are kept, such as a cash book, loan register,
attendance register, etc. Transparency is therefore necessary. As a result,
the groups are distinguished by their limited size, shared interests,
common occupation, homogeneity, and iss ues. They are adaptable and
quick to respond when needed.
Although there are leaders, there is also collective leadership, which
promotes group awareness, empowerment, and solidarity. It is based on
the members’ own resources i.e. within themselves like ne ighbors, people
of same area, and the members are aware of the rules, aims, and
objectives. These groups may receive help from outside organisations like
NGOs. All of the members are jointly responsible for repaying the loans
taken out from outside sources . A registered or unregistered group could
be involved. Social workers, health professionals, village workers,
bankers, farmers clubs, and the Nabard Vikas Volunteer Vahini project.
All of these organisations are crucial in the development of self -help
groups.
Benefits of Self -help groups :
Self help groups encourages the practise of saving, offers access to a legal
pool of resources, acts as an outlet for greater technical and career
development, and increase credit availability, increases access to vari ous
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89 Organizing the Unorganized: Self-Help Groups and Microfinance frequently visit the community to understand the issues, meet with elders
and local leaders, sensitise and inspire community members through street
plays and puppet shows, and give a cle ar explanation of the self -help
group programme. It is crucial that the impoverished are made aware of
the importance of teamwork in resolving issues that seem insurmountable
to solve on their own. often on the basis of gender, neighborhood,
community from a similar social background, and occupation, these
groupings can be found. etc., like the Self -Employed Women’s
Association (SEWA). The SEWA members engage in a variety of income -
generating activities rather than just one. They therefore have a variety of
jobs that provide revenue.
Therefore it provides full employment through greater work security,
income security, social security like health care, child care insurance,
shelter and self -reliance through asset creation, leadership development
and so on. SE WA have different cooperatives for eg - Vendors, midwives,
rack pickers , weavers cooperatives. There are also men self -help groups,
mixed self -help groups. Self -help groups can have linkages with the banks
or the groups formed by the NGOS or banks enable t he poor to have easy
access. Government organisations also form Self -help groups to carry out
their developmental activities like irritation development, forest
developments and so on.
By providing the members with skills and vocational training in a vari ety
of crafts and occupations, by using self -help groups poverty and standard
of living of people has improved to a large extent. Different strategies are
being implemented in numerous districts that are socioeconomically
backward in terms of high mortalit y and illiteracy rates and the self -
employment of the first rural poor women.
In India, self -help groups have taken on various occupations where people
have been trained for, for example, the productive activities that they have
been involved in occupation s like hand loom, weaving, toy making,
making agarbattis, etc. A large number of self -employment opportunities
have been created under the developmental programmes in the informal
sector, which consists of agricultural labor, self -employment, small scale
and cottage industries. The total export production has increased as a
result of self -help groups’ expansion in the informal sector. and it has also
made a contribution to GDP. A lot of NGOs are supporting self -help
groups focused on by offering financial l oans. The group’s members are in
charge of managing and administering the credit. Banks get in as outside
financial arbitrators and offer credit facilities to self -help organisations.
Thus, in today’s time the shgs are playing the role a participatory
mech anism through which there is change in the society for the
marginalized groups and creating social development.
Through self help groups in today’s time women are becoming aware
about their rights, learning about gender equality there is also political
empowerment as the members are able to form a group. As a result, there
are skill sets like leadership qualities development and they ask for the
rights. There is also mushrooming of small business -like candle making, munotes.in

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90 Sociology of Informal sector
90 pickle making, growing vegetables at kit chen, in fields and marketing
them among their own members as these are daily consuming products.
People are also making use of the Kisan Vikas Kendra where through it
these women sell their products. Let it be turmeric powder to home made
soaps. The self -help groups has also improved the savings habit among the
people. As now they are able to save even small amount like Rs. 50 -100
and are able to pay it as instalment for the loan they have taken. In the
state of Maharashtra there are 2800 self help groups across the fifteen
districts at present. There are also accounts that Maharashtra has some
earlier informal SHG as old as in 1947. Where people saved as little as 25
paise. Later in 1988 the Chaitanya Gramin Mah ila, Bal Yu vk Sanstha
started promoting SHGs in Pune.
The impact created by self help group is not just financial but its huge. For
example – In many households women stay whole day at home and are
cooking, cleaning, taking care of elders. Since, through self help groups
they are bringing some mone y into the home their importance increase,
they are able to learn a skill and earn in their free time. In fact, it gives
them atleast a reason to step out of their house, routine and interact with
fellow women from different background. The group acts as a community
where by competitions are held like rangoli, chief guest are invited to
deliver speeches which inspires these women. These women step out of
their home in new sarees to attend meetings this shows the importance
they share to the group.
There ar e though some difficulties like those who do not have the same
village address in any legal document let it be Aadhar card are not
included in the groups, specially if the females is married from another
village in some self help groups. There is also grou p defaulting members
and thereafter breakage of the group or turning into a bad debt etc. Though
the positive impact is higher than the negative impact through self help
groups.
The Reserve bank of India talks about the guidelines for forming an Self
help group like SHGs should be in active existence for at least 6 months
as per their books of accounts (and not from the date of opening of S/B
account). (ii) SHGs must be practicing ‘Panchasutras’ i.e., regular
meetings, regular savings, regular inter -loanin g, timely repayment and up -
to-date books of accounts.
Case Study :
The State Women’s Development Corporation of the Government of
Maharashtra, known as Mahila Arthik Vikas Mahamandal (MAVIM), was
created on February 24, 1975, in honour of International Wo men’s Day.
On January 20, 2003, the Maharashtra government designated MAVIM as
a Nodal agency to carry out various programmes for women’s
empowerment through Self Help Groups (SHGs). The corporation’s stated
goals are to “achieve gender justice and equalit y for women by investing
in their human capital and their capacity -building, thereby enabling them
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91 Organizing the Unorganized: Self-Help Groups and Microfinance A community -based programme in Kerala called Kudumbashree aims to
reduce poverty by empowering women through self -help organisations. It
has more than large number of members and has been successful in raising
Keralite women’s socioeconomic level.
Jeevika is a self -help group initiative with an emphasis on eradicating
poverty and rural development in Bihar. It has been effective in raising
women’s socioeconomic position and contributing to the growth of the
neighbourhood economy. The chief minister has said that there are nearly
1 crore people associated with the group at present from the state. Jeevika
is also known as jeevika didi which has empowered lot of people.
Check Your Progress
1. SHGs must be practicin g ‘Panchasutras’ what are these ?
2. What are the objectives of SHG?
9.3 UNDERSTANDING THE MICROFINANCE Giving low -income customers financial s ervices is known as
microfinance. It is also the process through which there is a supply of
appropriate financial services to substantial numbers of low -income,
economically active persons in order to enhance their situations and local
economies. A bundle of financial services (loans, savings, insurance)
are offered to underprivileged people and households is also referred to as
micro -finance. This is viewed as a crucial instrument to increase social
and economic empowerment and helps to lessen the vulnera bility of the
poor. The parties involved in introducing, promoting, and maintaining
microfinance practises are the State and NGOs. The RBI has defined
microfinance as a collateral -free loan to a household having an annual
income up to Rs 3 lakh, among othe r changes.
A wide range of services, including deposits, loans, payment services,
money transfers, and insurance products, are provided to low -income
people and microbusinesses under the umbrella of microfinance. With the
help of microfinance, high -cost de bt from unofficial sources can be
replaced, boosting discretionary income. It fosters financial responsibility,
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92 Sociology of Informal sector
92 to savings, goods, credit, and insurance. Microfinance has contributed to
the expansion of the breadth of financial services in low -income nations
with weak institutional infrastructure.
Those who are arranged into self -help groups are frequently given
financial credit. The establishment of The Indian Co -Operative Act
(1904) , which allowed cooperative credit societies to operate at various
levels and issue loan facilities, was one of several causes that led to the
emergence of microfinance as a development approach. In 1969, the
government nationalised a few consumer banks. W e also have a system of
local rural banks that was set up in the 1970s to satisfy the needs of
development objectives.
The government pushed the financial organisations to make it easier for
rural residents to access formal loan options. Yet several people , however,
continue to rely on money lenders because of institutional rigidities that
prevented them from repaying the loans. Later, a number of anti -poverty
initiatives aimed at particular target populations were funded by financial
grants obtained throu gh connections with commercial banks, such as the
Mutually Aided Cooperative Societies, the Swarna Jayanti Swarozgar
Yojana (S GSY), and the Integrated Rural Development Program (1980 –
1981). (MACS). Local banks also made an effort to affect change. For
instance, the SJSY gave the poor access to income -generating assets by
offering credit options and government subsidies, especially for those who
were living below the poverty line.
NGOs in India that took measures to experiment with the microfinance
throughou t the 1970s. With time the Self Employed Women’s Association
(SEWA), a pioneer in microfinance in India created in 1974 to address
various challenges affecting women. The SEWA bank was established to
provide credit to women working in the informal sector b ut also to
encourage them to save. This highlighted credit as a crucial component in
its strategy. Other women’s organisations, such as the Working Women’s
Forum (WWF) and the Annapurna Mahila Mandal (AMM), also engaged
in savings and credit, established c ooperatives, and mobilised women on
gender -related issues including dowry and domestic violence.
NGOs pick women and place them in self -help groups so they can benefit
from funds that are also offered by foreign organisations. They have done
this because t hey have had limited access to the formal financial system.
With the money these women have saved, they often start new businesses
or expand their current ones, which will boost their income and allow
them to buy assets like jewellery, livestock, and real estate, among other
things. In the new economy, micro -finance becomes a potent tool for
eradicating poverty. The SHGs -Banks connection Programme, which aims
to provide a cost -effective framework for providing financial services to
the underserved poor, dom inates the microfinance landscape in India.
The self -help group -bank linkage initiative was also run by the NABARD.
With 500 districts in 30 states and union territories, this initiative is
thought to be the biggest and fastest microloan programme. There a re munotes.in

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93 Organizing the Unorganized: Self-Help Groups and Microfinance 2800 NGOs in all, and there are 30000 branches of 500 banks involved in
microcredit programmes. With the NABARD, the government has begun
urging NGOs to support microfinance for women’s emancipation. For the
impoverished, microcredit has created a sizab le market, especially for
credit, helping them to get past the dire circumstances on the financial
market. Yet, structural issues like the unequal distribution of wealth,
education, and basic amenities must be addressed. Moreover, there must
be efficient m onitoring systems in place to guarantee the timely flow of
funds.
Challenges of microfinance :
The microfinance sector in the nation, however, also saw significant
difficulties in the 2010s, particularly with regard to excessive debt and
high interest rate s. In order to address these problems, the Reserve Bank of
India (RBI) enacted policies that included capping interest rates and
required MFIs to register as non -banking financial firms. Despite these
obstacles, microfinance in India nevertheless contribut es significantly to
economic growth and the reduction of poverty. It has also given low -
income people better access to financial services as well as chances for
entrepreneurship and revenue generating.
9.4 DIFFERENCE BETWEEN SELF HELP GROUPS AND MICROFINA NCE Despite considerable differences in their methods and goals, self -help
groups (SHGs) and microfinance are both significant tools for advancing
financial inclusion and economic development.
Low-income people who band together to save money and lend to one
another as a, community -based organisations is Self helf group. SHGs’
primary goals are to help members support one another and achieve
financial independence. SHGs frequently revolve around a particular
social or economic activity, including small bus iness development,
agriculture, or handicrafts it can be as simple as buying a cattle, sewing
machine.
Contrarily, microfinance refers to a variety of financial services that are
offered to low -income people and groups who do not have access to
typical ban king services, including loans, savings accounts, and insurance.
Microfinance’s major goals are to support financial inclusion and give
individuals who are shut out of the conventional financial system access to
financial services.
SHGs and microfinance in stitutions (MFIs) differ significantly in that
SHGs are normally self -managed by its members whereas MFIs are
typically managed by professional employees. SHGs also place more of an
emphasis on community building and helping one another, whereas
microfinan ce places more of an emphasis on financial inclusion and
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94 Sociology of Informal sector
94 Another distinction is that SHGs might not always charge interest on loans
as their primary goal is to foster financial independence among its
members. MFIs , on the other hand, generally add interest to their loans to
cover costs and make a profit. Notwithstanding certain differences, self -
help groups and microfinance are both crucial tools for advancing
financial inclusion and economic development, and they can combine their
efforts to accomplish the goals.
Check Your Progress
1. List out two differences of SHG from microfinance.
2. List out challenges of microfinance
9.5 SUMMARY In this chapter we learnt about the self help groups which became popular
through the Bangladeshi Professor Muhammad Yunus. Self -reliance is the
guiding philosophy of self -help groups. These were started to address the
shortcomings of traditional financial institutions that mobilise common
individuals savings and successfully recycle them. In the Self -help groups,
the participants combine their resources, which makes it possible to meet
the credit demands of the underprivileged. It facilitates the creation of a
forum for the exchange of experiences through accumula ted knowledge
and the development of problem -solving abilities. The self help
groups help the underprivileged, particularly women, develop their
confidence and ability to make decisions, plan ahead, and collaborate
democratically. The guiding idea of self -help groups is “all in all.” The
goal is to empower the marginalized section to become financial
independent. So, that they could start a business or learn some skill set so
that they could earn and lead their livelihood and improve their standard of
living. On the other hand, the chapter also discusses about the
microfinance. Giving low -income customers financial services is known
as microfinance. It is also the process through which there is a supply of
appropriate financial services to substantial number s of low -income,
economically active persons in order to enhance their situations and local
economies. A bundle of financial services (loans, savings, insurance) munotes.in

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95 Organizing the Unorganized: Self-Help Groups and Microfinance are offered to underprivileged people and households is also referred to as
micro -finance.
9.6 QUESTIONS 1. Discuss the origin of Self -help groups
2. Discuss the difference between microfinance and that of self -help
groups
3. Write a note on self help groups.
9.7 REFERENCES AND FURTHER READINGS  https://www.outlookindia.com/national/work -by-self-help-groups -
garnering -praise -from -different -parts -of-world -nitish -news -
259742#:~:text=He%20noted%20that%20the%20number,1.30%20cr
ore%20in%20the%20state.
 https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=1
2360#:~:text=(i)%20SHGs%20should%20be %20in,to%2Ddate%20b
ooks%20of%20accounts.
 RBI on SHGs.
 https://economictimes.indiatimes.com/markets/stocks/ne ws/rbis -new-
guidelines -to-make -microfinance -stronger/articleshow/90639257.cms


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96 UNIT IV
10
INFORMALIZATION OF WORK
Unit Structure
10.0 Objectives
10.1 Introduction
10.2 Meaning and Nature
10.3 Growing Informalization and Challenges for Workers
10.4 Summary
10.5 Questions
10.6 References and Further Readings
10.0 OBJECTIVES  To understand the concept of informalization of work
 To familiarize students with its ramifications
10.1 INTRODUCTION Urban way of life is generally considered to be associated with industrial
production. Reality in most third world cities, however, indicat es
otherwise. Only half and sometimes less of urban population finds
employment in factories or similar organizations. Rest all are engaged in
‘informal’ economic activities which are casual, unskilled, with no fixed
working hours, low income, with nature of work largely fluctuating and
seasonal. Several studies and reports have come out in last twenty years,
which depict the miserable working conditions of India’s informal sector
workers.
While workers in the informal sector contribute a considerable amou nt of
output to the country’s GDP, the conditions under which they labour are
usually deplorable. Although precise data is not available, we can safely
say that nearly all workers in the informal sector lack any form of social
security. India has a labour force of nearly 400 million persons, about 13
percent of the entire world’s labour force. More than 70 percent of the
nonagricultural labour force is in informal employment. If we include
agriculture into this, it will be over 90 percent.
Work in the info rmal sector is so common today that it is almost a norm.
Today, due to policies of globalization, facilitated by advances in
technology, labour is losing its formal and organized character. Workers
are divided into two groups, who are employed and who are in the reserve
army of labour, willing to do anything to obtain employment. Large
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97 Informalization of Work wander between cities, town and villages, living in different phases of
employability in seasonal cycles.
10.2 MEANING AND NATURE India’s total workforce can be disaggregated according to two dimensions:
(a) sector of work, based on the type of enterprise or production unit
where the person is employed; and (b) type of employment, defined in
terms of employmen t status and other job -related characteristics. Sector of
work can further be sub -divided into three categories: the formal (or
organized) sector; informal (or unorganized) sector; and the household
sector. Similarly, the type of employment can be categori zed as formal
and informal.
The informalization of the workforce refers to a situation where the
workforce in the informal sector increases to the total workforce of the
country. According to the composition of the workforce in India, it has
been divided i nto two categories; Formal or Organized Sector and
Informal or Unorganized Sector. The Formal Sector consists of jobs that
have specific working hours and fixed wages; whereas, the Informal sector
is where the workers or employees don’t have fixed working hours and
wages.
Predominance of informal employment has been one of the central
features of the labour market scenario in India. While the sector
contributes around half the GDP of the country, its dominance in the
employment front is such that since earl y 1980s and even before that,
more than 90 percent of total workforce has been engaged in the informal
economy. As per the estimates of the National Commission for Enterprises
in the Unorganized Sector (NCEUS), the unorganized sector/informal
sector worker s comprise about 86 per cent of workforce in the Indian
economy in 2004 -2005 and informal employment, both in the organized
and unorganized sector as 92 percent. This national level pattern of
informal workers occupying around 90 percent of the workforce i s similar
in the case of most of the prominent states in the country.
Among the unorganized sector workers, a considerable proportion (about
65 percent) is engaged in agricultural sector, which in turn indicates the
prominence of rural segment in the info rmal 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. Temporal data suggests that within the formal sector also the
proportion of in formal/unorganized workers are on the increase. The
enhanced prominence of the informal sector is duly recognized in the
recent policy documents of the Government of India, which discusses the
ways and means of employment generation, to benefit the growing mass
of unemployed. It has been 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
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98 Sociology of Informal sector
98 Further, the sector is characterized by excessive seasonality of
employment (especially in the farm sector), preponderance of casual and
contractual employment, atypical production organizations and work
relations, absence of social security measures and we lfare legislations,
negation of social standards and worker rights, denial of minimum wages
and so on. Poor human capital base (in terms of education, skill, and
training) as well as lower mobilization status of the workforce further add
to the vulnerabili ty and weaken the bargaining strength of workers in the
informal sector. Thus, the sector has become a competitive and low -cost
device to absorb labour, which cannot be absorbed elsewhere, whereas any
attempt to regulate and bring it into more effective le gal and institutional
framework is perceived to be impairing the labour absorbing capacity of
the sector.
Expansion of the informal sector has meant the introduction of new
economic activities which are informal employment or are within informal
sector alo ng with a predominant process of shrinkage of the existing
formal sector and conversion of the formal to informal. These tendencies
are dynamic in nature and broadly define the process of informalization.
Interestingly, in India, along with employing a lar ge population, the
informal sector also employs around 94% of the country’s female
workforce. Considering the employment generated by the informal sector,
women account for a greater employment level than men in India.
Check Your Progress:
1. What is ‘info rmalization of work’?
10.3 GROWING INFORMALIZATION AND CHALLENGES FOR WORKERS 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. A growing body of literature suggests 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 vulnerabilit ies 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
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99 Informalization of Work The alarming expansion of informal sector, in recent t imes, has adversely
affected employment and income security for most of the workforce,
along with a marked reduction in the scale of social welfare/security
programmes. Thus, an important challenge raised by the exploding
informal economy is the need for e nsuring adequate social safety nets and
welfare measures to provide social security to the growing segment of
unorganized sector workers. Accordingly, during the past decades,
government in India, both at the centre and state levels, as discussed in the
previous units, have been striving towards designing and implementing
more effective measures to strengthen and expand the social protection in
the unorganized sector workers.
The phenomenon of increasing informalization of industrial labor is a
serious iss ue because if industrialization does not create many good jobs
for people to shift from low productivity occupations, it cannot make a
significant contribution to economic development. Available data show
that wages and employment benefits received by casu al workers are much
lower than those of regular salaried/wage workers and the incidence of
poverty is much greater among casual workers than regular salaried/wage
workers.
Casual workers not only get a significantly lower wage, they are also
deprived of v arious benefits and social security. Increasing casualization
implies not only increase in vulnerability in terms of employment and
earnings, but also means that a larger proportion of workers have neither
social protection nor productive resources to fall back upon, as most
casual laborers are without assets.
Check Your Progress:
1. What challenges do workers face due to increasing informalization of
work?
10.4 SUMMARY Employment relations across the world are going through a significant
transfor mation after the inducement of economic reforms in many
developed and developing countries. In India, significant changes are
taking place in the labour market, viz. expansion of platform economy,
development of global value chains and embedded labour proc esses,
declining share of labour share in the production processes and replacing
standard regular jobs with precarious ones. The most significant of these
changes is the rise of precarious workers.
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100 Sociology of Informal sector
100 10.5 QUESTIONS 1. Why is informal sector significant in India?
2. Does informal sector contribute significantly to the Indian economy?
Explain why?
10.6 REFERENCES  Benería, L. (2001). Shifting the Risk: New Employment Patterns,
Informalization, and Women’s Work. International Journal of
Politics, Culture, and Society , 15(1), 27 –53.
 Jayaram, N. (2019). Protection of Workers’ Wages in India: An
Analysis of the Labour Code on Wages, 2019. Economic Political
Weekly.
 Palsane, V. (2014). Informalization of Labour: Recent Trends in
India’s Urban Economy.
 Sapkal, R.S. , Chhetri, N. (2019). Precarious Work, Globalization, and
Informalization of Workforce: Empirical Evidence from India. In:
Shyam Sundar, K.R. (eds) Globalization, Labour Market Institutions,
Processes and Policies in India. Palgrave Macmillan, Singapore.

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101 11
DOWNSIZING, OUTSOURCING,
NETWORK SOCIETY AND
THE ROLE OF ICTS
Unit Structure
11.0 Objectives
11.1 Introduction
11.2 Downsizing & Informal Sector
11.3 Outsourcing & Informal Sector
11.4 Network Society
11.5 ICTs & Informal Sector
11.6 Questions
11.7 References and Further Readings
11.0 OBJECTIVES  To understand the concepts such as downsizing, outsourcing, Network
society and ICTs.
 To familiarize students with the interconnections between the
informal sector and these concepts.
11.1 INTRODUCTION The Information and Communication Technology (ICT) has been a
pioneer and a powerful catalyst in addressing the needs and interest of the
informal sector’s income in developing countries like India. Globalization
has had deep inroads in the India since po st 1990s. It sets off, inter -alia,
market liberalization and emergence of IT sector. IT industry enjoys
natural comparative advantages of 12 -hour time gap with most of the
overseas countries. In India, a large part of the economy is informal sector
or unor ganized sector where low -tech tools are widely used. There is also
a growing literature on the use of ICTs by informal workers, largely
focused on the use of mobile phone applications to facility financial or
payment services. Some informal workers are usi ng digital platforms or
mapping software in their work.
There is also growing interest in innovation within the informal economy.
It is imperative to understand how ICT sectors location and utilization
improve or impede the competitive business environment under which the
informal sector operates. Various authors have outlined the importance
and impact of ICT on development. Better ICT services expand overall
economic potential by allowing firms to be more accessible and hence
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102 Sociology of Informal sector
102 Therefore, there are strong overlapping interconnections between the
informal sector on one hand, and ICTs, network society, downsizing and
outsourcing on the other. India is well -known around the world for its
rapid economic growth rates over the last thirty years or so, fueled by the
spectacular growth in its export -oriented software and ICT based services
sector. India is also one of the model countries for global outsourcing.
Informality has thus had a strange infl uence on these latest facets of
globalization.
Individuals find the informal sector an attractive source of income because
entry is easy, it requires little capital and equipment, it can easily
accommodate a small, one -percent operation, and the skills r equired are
low. Further, labourers in the informal sector are poorly protected; they
have no formal labor contracts and rarely can improve their skills through
formal training. Hence, as we shall explore ahead, the informal sector has
not been able to esc ape from the global phenomena.
11.2 DOWNSIZING & INFORMAL SECTOR Over the past three decades, despite predictions to the contrary,
employment in the informal economy has risen rapidly in all regions of the
developing world and various forms of non -standard employment have
emerged in most regions of the developed world. However, in the wake of
the repeated financial crisis, most of these countries experienced a
substantial decline in formal wage employment and a concomitant rise in
informal employment. Among a set of reasons for the rising informal
sector, economic restructuring, and economic crisis are also seriously
responsible.
Available evidence suggests that during periods of economic adjustment,
whether due to economic reforms or economic crises, the i nformal
economy tends to expand. This is because, retrenched workers move into
the informal economy when public enterprises are closed or the public
sector is downsized. Downsizing is the process whereby a corporation
makes itself smaller in response to ch anged market circumstances.
Although downsizing implies a reduction in assets, it is not (as its critics
often maintain) merely a reduction in human assets. Other terms have been
used to distance the concept from its association with ruthless job -
slashing —for example, rightsizing and restructuring.
There has been a long -standing concern that the competitive pressure
introduced by trade reforms could induce reallocation of firms and
workers from the formal to the informal sector. The basic argument is that
negative demand shocks would push formal firms to downsize, hire a
larger share of informal workers, or exit altogether. Workers laid off from
the formal sector would subsequently seek employment in the informal
sector, and potential entrants could be disco uraged to enter the formal
sector and choose informality instead.
During economic transition there is the shrinkage of the public sector and
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103 Downsizing, Outsourcing, Network Society And The Role Of Icts expansion of both the formal and informal private sectors. As such, during
the rapid downsizing of the public sector, the informal sector expanded
more rapidly than the formal private sector. Further, the links between the
formal and informal sectors are complex and differ by gender.
Check Your Progress:
1. Why has the informal economy continued to expand and grow?
11.3 OUTSOURCING & INFORMAL SECTOR Under a more “entrepreneurial” view of the informal sector, outsourcing is
seen as a vehicle for the modernization of the informal sector. The formal
firms establish outsourcing relationships only with modern informal firms.
Outsourcing has been described as a strategy for formal firms to cut costs
and increase flexibility considering India’s strict labo ur regulation and
increased competition following the economic reforms of the 1990s.
Formal firms wishing to reduce labo ur costs outsource activities to
informal firms, which by means of evading legal restrictions can offer
lower labo ur costs.
By their superior status in terms of size and capital, formal firms can
impose stringent conditions on informal firms regarding prices, thus
extracting most of the value added and leaving informal firms stagnated.
In fact, formal firms can benefit from the “race -to-the-bottom” in terms of
labour costs in the informa l sector, as it directly translates into higher
profitability from outsourcing.
Stagnant, survivalist informal firms are part of the traditional segment of
the informal sector. Thus, formal sector growth can occur at the expense
of the modernization of the informal sector when exploitative
subcontracting relationships are the norm. An increase in the incidence of
outsourcing (as a result of competitive pressures brought about by trade
liberalization, for example) would only result in expansion of the
tradit ional segment of the informal sector.
In undertaking the decision of outsourcing, formal firms have three aims:
first, minimizing costs, so that the price of the outsourced activity is as
low as possible; second, maximizing the quality of the outsourced pr oduct,
so that the quality standards of the final product are not compromised; and
third, minimizing the risk of vertically disintegrating the production
process, so that the decision of outsourcing does not compromise the
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104 Sociology of Informal sector
104 In the Indian context, pressure to cut costs and increase flexibility,
together with strict labo ur laws affecting only formal firms, form clear
incentives for formal firms to outsource activities to the informal sector.
Check Your Progress:
1. What is ‘outsourcing’?
11.4 NETWORK SOCIETY The network society is an emerging societal structure where human
relationships are increasingly organized around technologically assisted
information “flows.” This spaceless and timeless world without
boundarie s has transformed elements of human identity, relationships,
consumption, and work. It is also changing worldwide economies and
state powers. It has created unprecedented opportunities while sharpening
inequalities related to technological access.
Accordin g to Manuel Castells, network society is “structured in its
dominant functions and processes around networks.” Network Society is
structured from a historical convergence of three independent processes
 The Information Technology Revolution
 Restructuring o f capitalism and of statism in the 1980s
 The cultural social movements of the 1960s, and their 1970s
aftermath.
Amongst its main features, flexi -workers remain significant feature of
network society. Under this, development of the network enterprise
trans lates into downsizing, subcontracting, and networking of labo ur, but
while it encourages flexibility and individualization of contractual
arrangements for the workers, the industrial age concept of job tenure and
social benefits associated with a ‘permanen t’ job is reversed; the
‘organization man’ is out, the ‘flexible woman’ is in. Individualization of
work, and therefore of labo ur’s bargaining power, is the major feature
characterizing employment in the Network Society.
Eventually, globalization of the ec onomy and individualization of labo ur
weaken social organizations and institutions that represented/protected
workers in the Information Age, particularly labo ur unions, and the
welfare state. Further, with greater levels of individualization come
inequali ty, social polarization, and exclusion.
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105 Downsizing, Outsourcing, Network Society And The Role Of Icts Check Your Progress:
1. What do you mean by network society?
11.5 ICTs & INFORMAL SECTOR In the contemporary world, ICTs have emerged as a powerful tool to
organize every aspect of life of the people in th e society. Now ICT has
been a tool for communication, networking and work participation of
every segment of the population. The workers in the informal sector, who
are predominantly from the socially and economically marginalized
section of the society, ha ve met ICTs an efficient tool in their everyday
working life.
Digital technologies empower the lives of the people who have access to
them and those with little or no access face social and economic
inequalities. Informalization is to be found in both tra ditional jobs as well
as new jobs that are emerging with the rapid development and accelerated
adoption of information and communication technology (ICT). For
example, a lot of traditional jobs (like courier or janitorial services) have
become short term a nd contractual while new technologies (ride hailing
apps, online freelancing) have enabled a new kind of employment
relations that have given rise to what is called the “gig economy.”
With the expansion of the gig economy, new employment opportunities
are being generated. In India, multinational companies and large firms
have embraced the concept of gig economy rapidly, but start -ups were the
early adopters. However, the scope for high -skilled freelancers is limited
relative to low -skilled freelancers. Und er the gig economy workers are
termed as “liquid workforce” because there is no fixed term benefit and
workers are given short -term contracts. They are independent contractors
and freelancers instead of fulltime employees.
Digitization and information tec hnology have played a seminal role and
have transformed the Indian market with the emergence of several
business models such as Uber, Ola, Airbnb, OLX, Quikr, UrbanClap and
Magic bricks. These applications generate employment for drivers,
cleaners, gardene rs, housekeepers, electricians, plumbers, carpenters,
beauticians, teachers, air conditioning technicians and other tradespersons,
all adding to ever increasing informal economy.
There is an extensive literature on the role of ICT in facilitating escape
from poverty in developing countries for millions of poor people involved
in running tiny informal enterprises. It has been argued that use of ICT can
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106 Sociology of Informal sector
106 market integration and enhanced acc ess to social capital through easy
access to information. However, the impact of ICT on development of
informal enterprises is uneven, since the informal sector itself is
heterogeneous.
While information technology may have streamlined the business process ,
it has also created job redundancies, downsizing, and outsourcing. ICT can
make someone more efficient at their job; a company can therefore
employ less people to complete that job. For example, in a factory, skilled
technicians and machinists cab be rep laced by computer -controlled robots
which can work faster, for longer and more consistently.
11.6 QUESTIONS 1. What have been the form and extent usage of ICTs in informal sector?
2. How have the ICTs been able in bringing change in the working
condition in Informal Sector?
3. How do ICTs and network society influence the informal workers?
4. What are the consequences of outsourcing and downsizing on the
informal sector?
11.7 REFERENCES  Dimova, R., Gang, I. N., & Landon -Lane, J. (2005). The informal
sector during crisis and transition (No. 2005/18). WIDER Research
Paper.
 Marjit, Sugata, and Saibal Kar, ‘Outsourcing, Informality, and
Informal Wages’, The Outsiders: Economic Reform and Informal
Labour in a Developing Economy.
 NabanitaDe, & Chatterjee, P. ( 2017). The Role of ICT in Expanding
Economic Growth and Development in the Informal Sector of India.
International Journal of Current Advanced Research, 6(10), 6617 -
6621.
 Pieters, J., Moreno -Monroy, A. I., & Erumban, A. A. (2011).
Outsourcing and the size and composition of the informal sector:
evidence from Indian manufacturing. Working paper draft (mimeo).
 Siggel, E. (2010). The Indian informal sector: the impact of
globalization and reform. International Labour Review, 149(1), 93 -
105.
 Southerton, D. (Ed. ) (2011). (Vols. 1 -3). SAGE Publications, Inc.
 Ulyssea, G. (2020). Informality: Causes and Consequences for
Development. Annual Review of Economics, 12(1), 525 -546. doi:
10.1146/annurev -economics -082119 -121914.
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107 12
LABOUR REFORMS AND ITS IMPACT;
PROBLEM OF UNIONIZATION AND
LABOUR BOARDS
Unit Structure
12.0 Objectives
12.1 Introduction
12.2 Labour Reforms in India
12.3 Key Issues for the Informal Workers
12.4 Indian Labour and Unionization
12.5 Summary
12.6 Questions
12.7 References and Further Readings
12.0 OBJECTIVES  To understand the various kinds of labour reforms and its impact on
the informal sector
 To familiarize students with the problems associated with labour
unions
12.1 INTRODUCTION Labour falls under the Concurrent List of the Constitution. Therefore,
both Parliament and state legislatures can make laws regulating labour.
The central government has stated that there are over 100 state and 40
central laws regulating various aspects of labour s uch as resolution of
industrial disputes, working conditions, social security, and wages. The
Second National Commission on Labour (2002) (NCL) found existing
legislation to be complex, with archaic provisions and inconsistent
definitions. To improve ease of compliance and ensure uniformity in
labour laws, the NCL recommended the consolidation of central labour
laws into broader groups such as (i) industrial relations, (ii) wages, (iii)
social security, (iv) safety, and (v) welfare and working conditions.
In 2019, the Ministry of Labour and Employment introduced four Bills on
labour codes to consolidate 29 central laws. These Codes regulate: (i)
Wages, (ii) Industrial Relations, (iii) Social Security, and (iv)
Occupational Safety, Health and Working Condi tions. While the Code on
Wages, 2019 has been passed by Parliament, Bills on the other three areas
were referred to the Standing Committee on Labour. The Standing
Committee submitted its reports on all three Bills. The government has
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108 12.2 LABOUR REFORMS IN INDIA Salient Features of Four Labour codes:
1. The Code on Wages, 2019:
 It seeks to regulate wage and bonus payments in all employments
where any industry, trade, business, or manufacture is carrie d out.
 Subsumes 4 Labour Acts, namely, the Minimum Wages Act, 1948;
the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965
and the Equal Remuneration Act, 1976
 Universalizes minimum wages to all employees in all sectors as
against employees of sch eduled employment, at present
 Central Government to fix National Floor Wages
 Revision of minimum wages ordinarily at an interval of 5 years
 Universal applicability of provisions of timely payment of wages
2. The Industrial Relations Code, 2020:
 Subsumes 3 Labour Acts, namely, the Industrial Disputes Act, 1947;
the Trade Unions Act, 1926; the Industrial Employment (Standing
Orders) Act, 1946.
 The IR Code, 2020 has been notified on 29.09.2020.
 Recognition of trade unions or federation of trade unions by the
Central and State Government to replace Code of discipline
 Concept of Recognition of Negotiating Union/Council introduced
 Definition of Worker (limit for declaring supervisor to be notified)
and definition of Industry
 Fixed Term Employment worker category included
 Re-skilling Fund for training of retrenched employees
 Concerted casual leave by 50% or more workers on a day to be
treated as strike
 Set up Industrial Tribunal by replacing multiple adjudicating bodies
like the Court of Inquiry, Board of Conciliat ion, Labour Courts.
 Reference of dispute to Industrial Tribunal by Appropriate
Government done away.
 Two Members Industrial Tribunal. Each individual Member can
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109 Labour Reforms And Its Impact; Problem Of Unionization And Labour Boards  Dispute of registered trade unions included within the purview of
Industrial Tribunal as demanded by Trade Unions
 Incorporation of 14 days’ notice period for all strikes and lockouts
which was earlier required for public utility services only
 Introduction of provisi on of compounding of offences
3. The Occupational Safety, Health and Working Conditions Code,
2020 :
 Subsumes 13 Labour Acts relating to Factories, Mines, Dock,
Construction Workers, Plantation, Motor Transport & Beedi and
Cigar, Contract Labour & Interstat e Migrant Workers.
 The OSH Code, 2020 has been notified on 29.09.2020.
Code envisages:
 Occupational Safety standards for different sectors Health and
Working Conditions: ventilation, drinking water, etc.
 Hours of Work, Overtime hours, Leave, Holiday, etc.
 Welfare provisions: canteen, crèche, rest rooms, first aid, etc.
 Mandatory provision for granting appointment letter by the employer.
 Annual health check -up / examination had been provided in respect of
tests etc. as prescribed for such employees or descri ption or class of
employees or establishments or description of establishments above
the prescribed age, and the cost for the same to be borne by the
employer
 Duties of employers, employees, manufacturers, etc.
 Registration of establishments including deem ed registration,
 Common Licence for contract worker, Factories, Beedi & Cigar.
 Definitions in various Acts rationalised Including in case of “worker”,
“establishment”, “industry”. Definitions reduced to 65 as against 160
in the 13 Acts.
 One registration fo r establishments having 10 or more employees as
against separate registrations under 6 Central Acts including BOCW
Act, The Contract Labour Act, Inter -State Migrant Workmen Act,
Motor Transport Workers Act, Plantation Labour Acts and Factories
Act.
 The amb it of the benefit to ISMW have been replaced to provide (a)
lumpsum allowance for undertaking journey by migrant worker to
visit his native place in a period to be decided by appropriate
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110 Sociology of Informal sector
110 of benefits of public distribution system and portability of benefits to
a worker who is engaged in building and other construction work in
one State and move to another State by appropriate Government.
 An all -India license de -linked from “work order” intro duced to avoid
obtaining of repeated license for each work under existing Contract
Labour Act.
 Ambit of cine worker has been expanded to include all audio -visual
workers and workers in the electronic media
 Multiple committees under five labour Acts have be en merged into
one National Occupational Safety and Health Advisory Board.
Provision of state advisory board has been provided.
 Different applicability thresholds for welfare provisions like crèche,
canteen, first aid, welfare officer etc in different Acts have been
rationalized.
 Compounding of offences has been introduced.
 A part of the penalty for any violation of the provisions of the Code
leading to death or serious bodily injury to any person, can be given to
the victim or the legal heirs of the victim by the Court.
 Web -based inspection introduced.
 Number of returns reduced
4. The Code on Social Security, 2020 :
 Subsumes 9 Labour Acts including Employees’ Provident Funds &
Miscellaneous Provisions Act, Employees’ State Insurance Act,
Payment of Gratuity Act, Maternity Benefit Act, Employees
Compensation Act, Building and Other Construction Workers
Welfare Cess Act.
 The Code on Social Security, 2020 has been notified on 29.09.2020.
 Proposes to create a comprehensive framework legislation for social
securit y
 A right based system for phased universalization of social security
contribution to be made by the employer/employee
 Government may contribute for deprived category of worker
Check Your Progress:
1. What are the reforms in labour laws in India? munotes.in

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111 Labour Reforms And Its Impact; Problem Of Unionization And Labour Boards 12.3 KEY ISSUES FOR THE INFORMAL WORKERS The 2nd National Commission on Labour (NCL) recommended
consolidation of central labour laws. It observed that there are numerous
labour laws, both at the centre and in states. Further, labour laws have
been added in a piecemeal manner, which has resulted in these laws being
ad-hoc, complicated, mutually inconsistent with varying definitions, and
containing outdated clauses. For example, there are multiple laws each on
wages, industrial safety, industrial relations, a nd social security; some of
these laws cater to different categories of workers, such as contract labour
and migrant workers, and others are focused on protection of workers in
specific industries, such as cine workers, construction workers, sales
promotio n employees, and journalists.
Further, several laws have differing definitions of common terms such as
“appropriate government,” “worker”, “employee”, “establishment”, and
“wages”, resulting in varied interpretation. Also, some laws contain
archaic pro visions and detailed instructions. The Commission emphasized
the need to simplify and consolidate labour laws for the sake of
transparency, and uniformity in definitions and approach. Since various
labour laws apply to different categories of employees an d across various
thresholds, their consolidation would also allow for greater coverage of
labour.
While the Codes consolidate and simplify existing laws to some extent,
they fall short in some respects. For example, the Codes on occupational
safety and soc ial security continue to retain distinct provisions of each of
the laws that these Codes subsume. For example, while the Occupational
Safety Code contains provisions on leaves for all employees, it continues
to retain additional leave entitlements for sale s promotion employees.
Similarly, while the Codes rationalize definitions of different terms to a
large extent, they are not uniform in all respects. For example, while the
Codes on wages, occupational safety and social security contain the same
definition of “contractor”, the code on industrial relations does not define
the term. Finally, while the government stated that 40 central labour laws
would be subsumed, the four Codes only replace 29 laws.
Contrary to the notions that such reforms create formal employment, they
deteriorate the quality of jobs, and the nature of employment then being
created can only be characterized as semi -formal. This is mainly because
the current reforms are located within the longer -term processes of
informalization, contrac tualization and casualization of work in the
country. Providing legal and social protection to the informal or
unorganized sector workers — one of the key objectives of the labour law
reforms being planned may be easier said than done.
For one, no one even knows the actual size of the informal workforce,
least of all the government. The sector being virtually out of legal
protections, the working conditions and social security for informal
workers are understandably poor. These rules, for example, mandate t he
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112 Sociology of Informal sector
112 Portal to be able to receive any form of social security benefit. Now, on
the one hand, this would lead to Aadhaar -driven exclusion and, on the
other, workers will most likely be unab le to register on their own due to
lack of information on the Aadhaar registration processes. Also, a
foreseeable challenge is updating information on the online portal at
regular intervals, especially by the migrant or seasonal labour force.
The codes als o seem to fail to extend any form of social protection to most
informal sector workers which is predominant in rural areas including
migrant workers, self -employed workers, home -based workers, and other
vulnerable groups. The Code does not emphasize social security as a right,
nor does it refer to its provision as stipulated by the Constitution.
Check Your Progress:
1. What are the issues associated with the labour reforms?
12.4 INDIAN LABOUR AND UNIONIZATION There are many registered trade unio ns, including several within an
establishment. There are no criteria to determine which unions can
formally negotiate with the management. Settlements made with unions
are only binding on the participating unions. This has affected collective
bargainin g rights of workers. Further, questions have been raised on the
extent to which non -employees may be permitted in trade unions.
As of 2015, there were 12,420 registered trade unions in India with an
average membership of 1,883 persons per union. A large n umber of
unions within an establishment hampers the process of collective
bargaining as it is difficult to reach a settlement with all of them.
Employers may also seek legitimacy for a favourable settlement by
reaching an agreement with a compliant union though it may not have the
support of most workers. The NCL recommended giving ‘recognition’ to a
union with the support of 66% members.
If no union has 66% support, then unions that have the support of more
than 25% should be given proportionate represe ntation on a negotiation
college. The vote for recognition may be cast based on a regular
subscription to a union through deduction from the wages of a worker –
this system of regular payment of subscription would verify relative
strength of different uni ons on a continuing basis. In establishments with
less than 300 workers, the mode of identifying the negotiating union may
be determined by Labour Relations Commissions to mitigate any
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113 Labour Reforms And Its Impact; Problem Of Unionization And Labour Boards Further , to counter low unionization in the unorganized sector, it was
recommended that a specific provision may be made to enable workers in
the unorganized sector to form trade unions (with any number of workers)
and get them registered even where an employer - employee relationship
does not exist or is difficult to establish. The Industrial Relations Code
makes provisions for recognition of a negotiation unions with 51%
membership. In the absence of such support, a negotiation council may be
formed. However, t he Code does not clarify how vote will take place.
Further, no changes have been made to the extent of participation of
outsider (up to 33%, subject to a maximum of five members). Up to 50%
may be outsiders in unorganized sector unions. However, the Co de
weakens collective bargaining rights by requiring a two -week notice for
strikes.
Check Your Progress:
1. Do the informally employed want to be organized by trade unions?
12.5 SUMMARY Today, the unorganized or the informal sector account for m ore than 90
per cent of the workforce in the country and almost 50 per cent of the
national income evolves from this sector. Ever since the initiation of the
liberalization policies in the early nineties, informalization of jobs has
become a matter of conc ern. Growing competition combined with
increased market opportunities and limited resources have led to the
emergence of an informal economy. The predominance of the informal
sector has led to a situation of the benefits of economic growth being
concentrat ed among few with a growing proportion of the population
living as working poor. Though the Government changed its policy
strategy to that of inclusive and sustainable growth in the last decade, the
fundamental issues leading to growing informalization are yet to be
targeted.
12.6 QUESTIONS 1. What is the main aim of these labour reforms?
2. When were the Labour Reforms introduced?
3. How does the labour reforms affect the processes of unionization?

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114 12.7 REFERENCES  Das, K. (2023). Labour and the State in India: Casualisation as
Reform. In Global Labour in Distress, Volume I: Globalization,
Technology and Labour Resilience (pp. 409 -414). Cham: Springer
International Publishing.
 Jha, S. (2014). Labour reforms in India: Issues & challenges. Journal
of Mana gement & Public Policy .
 Papola, T. S. (2018). Role of labour regulation and reforms in
India (Vol. 23). Geneva: ILO.
 Roychowdhury, A. (2018). Labour law reforms in India: All in the
name of jobs . Taylor & Francis.
 Sodhi, J. S. (2013). Trade unions in Indi a: changing role &
perspective. The Indian Journal of Industrial Relations , 169 -184.


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Faculty of Humanities
TYBA
(Choice Based Credit System, CBCS) Semester V and Semester VI Question Paper Pattern for T.Y.B.A
(CBCS) applicable to all the papers from Paper IV to Paper IX.
As per University rules and guidelines With Effect From 2018 -2019 (Time: 3 Hours)

Note: 1. Attempt all questions
2. All questions carry equal marks
(Total = 100 marks)

Q.1 (Based on Module I) (20 marks)
a.
or
b.
Q.2 (Based on Module II) (20 marks)
a.
or
b.
Q.3 (Based on Module III) (20 marks)
a.
or
b.
Q.4 (Based on Module IV) (20 marks)
a.
or
b.
Q.5 Attempt any two short notes. (Based on Module I, II, III and IV)
(20 marks)
a.
b.
C.
d. munotes.in