Tuesday, 8 October 2013

Problems Of Unorganised Sector Workers

Unorganized workers (UW) in India have increased many folds post independence. Around 52% of UW’s are engaged in agriculture & allied sector and more than 90% of the labour work force constitutes these UW. UW contributes 50% to GDP (according to National Commission for Enterprises in the Unorganized Sector i.e NCEUS). So it is of utmost importance to look into the plight of this poverty-stricken and downtrodden class of India.                                                              

  • As per "Ministry of Labour and Employment " definition : Unorganized sector means an enterprise owned by individuals or self-employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than ten.
  • “Unorganized worker” (UW) means a home-based worker, self-employed worker or a wage worker in the unorganized sector and includes a worker in the organized sector who is not covered by any Acts mentioned in Schedule II of the Unorganized Workers Social Act 2008.
  • Labour is a subject under concurrent list.

  • Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA):Problems Of Unorganised Sector Workers flagship program is not implemented through Labour and Employment Ministry (LEM) but is by Rural Development Ministry. LEM has no say in MNREGA.

CLASSIFICATION OF UNORGANIZED WORKERS (UW) According to statistics of Ministry of Labour (2008), UW is classified into four groups :

  •  By Occupation
  •  By nature of employment
  •  Service Category
  •  Special Category 


  • Low productivity compared to formal sector
  • Lower wages to workers
  • Poor working conditions
  • Excessive seasonality of employment
  • Absence of social security measures
  • Negation of social standard
  • Poor human capital base (in terms of education, skill and training) as well as lower mobilization status of the work force
  • Any effective legal action against it is seen as a step of impairing


  • Have limited or no education or other skills.
  • Are hugely scattered and don’t have political pressure groups
  • Don’t have fixed jobs i.e. have seasonality as compared to formal sector workers.
  • Social stratification is more in them in rural areas on the basis of Caste and sub-castes.
  • Still today, they act as “bonded labour” in some cases due to low incomes & permanent indebtedness.
  • Have insufficient labour laws relating to them.
  • Work in very poor working environment.


  • Insufficient labour laws
  • No social security
  • No guaranteed minimum wages
  • Bonded labour (they don’t complain about this because if they do their master may remove them) considering their ignorance)
  • Child Labour (they are the most exploited among them
  • Working Women – issue of harassment at work place
  • Low literacy among them
  • Low incomes which they don’t complain about
  • Vulnerable to diseases



  • Envisages creating National Social Security Board which will be chaired by Union Minister for Labour and Employment & Director General (Labour Welfare) as Member-Secretary [both ex-officio].
  • Envisages creating State Social Security Board at state level which will be chaired by Minister for Labour and Employment of the concerned state & the Principal Secretary or Secretary (Labour) as Member-secretary [both ex-officio].

  • No separate provision for unorganized workers.
  • Only contains available social security schemes in the country.
  • No legal binding on the part of government or the one who employs.
  • No eligibility criteria, no benefit details, minimum wages etc. have been envisaged in the act.
  • Act has a serious lagging on the legislative and intent front. Basically, eyewash which has neither addressed problems nor given solution.


  • Social Security can be defined as “the provision of benefits to households and individuals through public or collective arrangements to protect against low or declining standard of living arising from a number of basic risks and needs.
  • Some examples of social security measures:

  •  Medical care of all sorts
  •  Provident Funds/Gratuity
  •  Medical Care of all sorts

  • Except some medical treatment and age-old pension schemers with meager amount of benefit (around Rs. 100 to 200 per month) there are no special social security measures available for the unorganized workers in the country.
  • The organized sector on the other hand enjoys a lot of social security measures which establishes a question that why it can’t be don’t for unorganized workers.
  • Social Security legislations for mainly urban and organized workers in the country are as follows:

1. Payment of gratuity Act 1971
2. Workmen compensation Act 1923
3. Maternity benefit Act 1971
4. Employees state insurance Act 1948
5. Employees provident fund and the miscellaneous provisions act 1952

Above mentioned legislations do not mention unorganized workers specifically nor do they prohibit coverage of them. In other words they can’t enjoy any social security measure which is freely open for organized workers.

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