Page 1 of 8
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 04
April 2019
Available online: https://ejbss.org/ P a g e | 1406
Problems Faced by Unorganized Sectors: An Indian Perspective
Dr. Madhu Rai
Ph. D. Economics
University of Allahabad
Abstract
The unorganized sector of the economy refers to the house-hold based manufacturing activity
and small scale and tiny sector of industry. An unorganized sector is one in which there is no
stability in profits or gains. Its production is limited and it is confined to limited area. It requires
less man power and investment. The handicrafts, artisan professions, khadi and village
industries, such as handloom sector, beedi making, agarbatti making, hand paper manufacture
and match box industries etc., can be located in the unorganized sector of the Indian economy.
The National Commission for Enterprises in the Unorganized Sector (NCEUS) was established
by the Government of India as an advisory body on the informal sector to bring about
improvement in the productivity of informal enterprises for generation of large scale
employment opportunities on a sustainable basis, particularly in the rural areas. There are
policies and programmes of Indian government for the development of unorganized sectors and
workers of unorganized sectors. The unorganized workers social security act 2008, the
unorganized workers social security rule 2008 , Aam Admi Beema yojana , Rashtriya Swasthya
Beema yojana are being discussed here after. This paper is going to deal with the issues and
challenges of unorganized labour. It refers to the labour engaged in unorganized sector.
Keywords: Unorganized sector, Economy, Handicrafts, Economy, Productivity, Policies
Page 2 of 8
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 04
April 2019
Available online: https://ejbss.org/ P a g e | 1407
Introduction
The Indian economy is characterized by the existence of a vast majority of informal or
unorganized labour employment. As per a survey carried out by the National Sample Survey
Organization (NSSO) in 2009–10, the total employment in the country was of 46.5 crore
comprising around 2.8 crore in the organized and the remaining 43.7 crore workers in the
unorganized sector. Out of these workers in the unorganized sector, there are 24.6 crore workers
employed in agricultural sector, about 4.4 crore in construction work and remaining in
manufacturing and service. The dictionary meaning or we can say the simple description of
unorganized sectors is termed as the unorganized sector of the economy refers to the house-hold
based manufacturing activity and small scale and tiny sector of industry. An unorganized sector
is one in which there is no stability in profits or gains. Its production is limited and it is confined
to limited area. It requires less man power and investment. The handicrafts, artisan professions,
khadi and village industries, such as handloom sector, beedi making, agarbatti making, hand
paper manufacture and match box industries etc., can be located in the unorganized sector of the
Indian economy. Government of India, for the development and welfare of organized sectors and
its workers has established The National Commission for Enterprises in the Unorganized Sector
(NCEUS). The National Commission for Enterprises in the Unorganized Sector (NCEUS) was
established by the Government of India as an advisory body on the informal sector to bring about
improvement in the productivity of informal enterprises for generation of large scale
employment opportunities on a sustainable basis, particularly in the rural areas. The Commission
was mandated to recommend appropriate measures to enhance the competitiveness of the
informal sector in the global economy and to link the sector with the institutional framework in
Page 3 of 8
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 04
April 2019
Available online: https://ejbss.org/ P a g e | 1408
areas such as credit, raw material, infrastructure, technology up-gradation skill development, and
marketing.
Growing prominence of unorganized sector in India
This national level pattern of informal workers occupying around 90% of the workforce is more
or less similar in the case of most of the prominent states in the country. Among the unorganized
sector workers, a considerable proportion (about 65%) is engaged in agricultural sector, which in
turn indicates the prominence of rural segment in the informal economy.
The growth of formal employment in the country has always been less than that of total
employment, indicating a faster growth of employment in the informal sector. Available data
suggests that within the formal sector also the proportions of informal / unorganized workers are
on the increase. For instance, by providing a comparison of the NSSO Employment Data for
55th and 61st Rounds (for 1999-2000 and 2004-05 respectively) the NCEUS (2007) explains that
the country is currently in a state of “informalisation of the formal sector”, where the entire
increase in the employment in the organized sector over this period has been informal in nature.
The major characteristics of the unorganized workers
As the unorganized sector suffers from cycles of excessive seasonality of employment, majority
of the unorganized workers does not have stable durable avenues of employment. Even those
who appear to be visibly employed are not gainfully and substantially employed, indicating the
existence of disguised unemployment.
In rural areas, the unorganized labour force is highly stratified on caste and community
considerations. In urban areas while such considerations are much less, it cannot be said that it is
altogether absent as the bulk of the unorganized workers in urban areas are basically migrant
workers from rural areas.
The unorganized workers are subject to exploitation significantly by the rest of the society. They
receive poor working conditions especially wages much below that in the formal sector, even for
closely comparable jobs, ie, where labour productivity is no different. The work status is of
inferior quality of work and inferior terms of employment, both remuneration and employment.
