Author: Divya Shukla

3rd year, School of Law,
 CHRIST (Deemed to be University)

The informal or unorganised sector forms an overwhelming majority of the workforce in India. They contribute significantly to the economic and social growth of the nation. Despite its large numerical strength and contributions to the GDP, the condition of workers in this sector remains dismal which is why it needs urgent adequate attention. The paper therefore aims to study the unorganised sector in India and analyse various laws to weigh the level of protection accorded to them. The author shall rely on doctrinal method of research and employ secondary data so as to collect information regarding unorganised sector workers and the problems faced by them to provide an introduction. The paper will then delve into the legal framework surrounding unorganised sector including provisions enshrined in the Constitution of India, various legislations and schemes enacted, and international instruments. Special considerations will be given to elucidate the Unorganised Sector Social Security Act, 2008 and the inherent problems in the same. Finally, an attempt will be made to articulate certain recommendations.


As per the Unorganised Workers’ Social Security Act, 2008 which is the leading legislation concerning unorganised workers, Section 2(l) defines an unorganised sector to “mean 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”
It must be noted that the Unorganised Workers’ Social Security Act, 2008 does not categorise workmen in any type. As per Section 2 (m) “unorganised worker” means a home-based worker, self-employed worker or a wage worker in the unorganised sector and includes a worker in the organised sector who is not covered by any of the Acts mentioned in Schedule II to this Act. The definition of a home based worker is gives under section 2(b) i.e. “home-based worker” means a person engaged in the production of goods or services for an employer in his or her home or other premises of his or her choice other than the workplace of the employer, for remuneration, irrespective of whether or not the employer provides the equipment, materials or other inputs and as per Section 2(k) “self-employed worker” means any person who is not employed by an employer, but engages himself or herself in any occupation in the unorganised sector subject to a monthly earning of an amount as may be notified by the Central Government or the State Government from time to time or holds cultivable land subject to such ceiling as may be notified by the State Government and as per Section 2(n) “wage worker” means a person employed for remuneration in the unorganised sector, directly by an employer or through any contractor, irrespective of place of work, whether exclusively for one employer or for one or more employers, whether in cash or in kind, whether as a home-based worker, or as a temporary or casual worker, or as a migrant worker, or workers employed by households including domestic workers, with a monthly wage of an amount as may be notified by the Central Government and State Government, as the case may be.


The unorganised labour is characterised as follows[1]:
·       It is in general a low wage and low earning sector.
·       Women constitute an important section of the workers in this sector.
·       Family labour is engaged in some occupations such as home-based ones.
·       Economic activities, which engage child labour, fall within this sector.
·       Migrant labour is involved in some sub-sectors.
·        Piece-rate payment, home-based work and contractual work are increasing trends in this sector.
·       Direct recruitment is on the decline. Some employees are engaged through contractors. An increasing trend to recruit workers through contractors is visible in areas of home-based work. There is a sort of convergence of home-based work and engagement in work through contractors.
·       If some kinds of employment are seasonal, some others are intermittent. As such, under-employment is a serious problem.
·        Most jobs are, for the greater part, on a casual basis.
 Both employed and self-employed workers can be found in a number of occupations.


The unorganised workers suffer from excessive seasonality of employment, lack of formal employer-employee relationship and inadequate social security protection[2]Based on some of the specific characteristics, the unorganised enterprises could be distinguished from formal sector like no paid leave, no written job contract, and no social security to the workers.[3] It was noted by the Report of Second National Commission on Labour that workers are not often organised into trade unions or associations which makes bargaining for their interests difficult. This also lowers mobilisation and makes them vulnerable. Debt bondage is very common among the self-employed workers in the unorganised sector. They also have less access to capital, whatever little they have is from sources other than the banks since they are unwilling to give them loans. Workers in the unorganized sector are usually subject to indebtedness and bondage as their meagre income cannot meet with their livelihood needs.  Health hazards exist in a majority of occupations.[4] This sector faces eventual deficiencies in regulations over employment, remuneration pattern, poor employer and employee relationship and casual work culture[5]. The workplace is often scattered and fragmented and there are no stable durable avenues of employment. Disguised unemployment also lingers because those who seem employed are not always engaged in substantial and gainful employment. In rural areas, the unorganized labour force is highly stratified on caste and community considerations due to which they are subject to exploitation by the rest of the society. The working conditions are poor compared to the formal sector, even for closely comparable jobs, i.e. where labour productivity is not different. The sector also suffers from a low productivity syndrome, compared to the formal sector because of lower real wages and poor working and living conditions.  Additionally, the advent of globalization and resultant reorganization of production chains has 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. This has increased reliance over unorganized sector.[6] Unorganised workers are exposed to hazardous working conditions which adversely affect their health.  Health problems increase due to low nutrition and heavy physical labour. They are also unable to afford health care.[7]


           1.1.                   INTERNATIONAL INSTRUMENTS

India is a signatory to major international instruments like Universal Declaration of Human Rights(UDHR), International Covenant on Civil and Political Rights(ICCPR) and International Covenant on Economic Social and Cultural Rights (ICESCR). Article 22 of UDHR declares that “Everyone, as a member of society, has the right to social security and is entitled to realization, through national effort and international cooperation and in accordance with the organization and resources of each State, of the economic, social and cultural rights indispensable for his dignity and the free development of his personality.” Article 9 of the ICESCR states that “The States Parties to the present Covenant recognize the right of everyone to social security, including social insurance”. India is also a signatory to the Treaty of Versailles and member of the United Nations Organisation and is a permanent member of International Labour Organisat
ion (ILO). It participates in the deliberations of ILO in the issues of policy making. India ratified around 43 conventions, among which four are fundamental human rights conventions viz.,  Forced  Labour  Convention  (C-29),  Equal  Remuneration  Convention (C-100), Abolition  of  Forced  Labour  Convention (C105)and  Discrimination  (Employment  &  Occupation)  Convention (C-111). The Ministry conducts  regular  meeting of  the  Committees  on  Convention  (CoC), a  tripartite  working body  to explore  the  possibility of  ratification.  India also supported for  the adoption  of Social Protection  Floors Recommendation (R-202) in 101st Session of the  International Labour Conference  held in Geneva in June, 2012 to protect the rights and welfare of all workers including unorganised sector.

      1.2.                   DOMESTIC FRAMEWORK

1.2.1.   Constitution of India

It must be noted at the outset that ‘Labour’ as a subject falls under the Concurrent list (List III, Schedule VII) of the Indian Constitution i.e. both the Central and State Governments are competent to  enact  legislations  on  the  subject. Fundamental Rights (under Part III) relating to labour include the Right  to  Equality  (Article  14-16), Right to Freedom (Article 19(1)(e) and (g), Protection of life and personal liberty (Article 21), Right against exploitation  (Article 23), Prohibition of employment of children(Art 24), and finally Right to Constitutional Remedies (Article  32) The Directive Principles of  State Policy in  Part IV (Articles 39(a)(d)(e), 41, 42,43,  46,47 ) are a  set of  guiding principles  for the governance of the country. Article 51 (c) states that the State shall endeavour to foster respect for international law and treaty obligations in the dealings of organized peoples with one another;

1.2.2.   Legislations

There are various legislations relating to social security of the workers i
ncluding Employee’s Compensation Act (1923), the Industrial Disputes Act (1947), the Employees State Insurance Act (1948), the Minimum Wages Act (1948), the Coal Mines Provident Funds and Miscellaneous Provisions Act (1948), The Employees Provident Fund and Miscellaneous Provisions Act (1952), the Maternity Benefit Act (1961), the Seamen’s Provident Fund Act (1966), the Contract Labour Act (1970) etc.
The main legislation with regards unorganised sector is the Unorganised Workers’ Social Security Act, 2008. A bare reading of the Act would lead one to the conclusion that this was a hurried legislation and that it lacks legislative wisdom. Beginning with the very Preamble of the Act which boldly declares that it is “An Act to provide for the social security and welfare of unorganised workers and for other matters connected therewith or incidental thereto”, the Act fails to define what exactly constitutes social security and what specific rights are available to the employees. Instead of adding novel and well-defined social security measures, the act merely lists out existing measures. Unless the rights are well-defined, their enforcement becomes difficult. There are no penalties prescribed under the act which causes an alarm. The definition of ‘unorganised sector’ as defined under section 2(l) places a numerical limit of employees in the establishment to be less than 10, this might come across as a violation of Article 14 of the Constitution i.e. right to equality since there seems to be no possible justification as to why an unorganised sector is to be characterised by only less than ten employees. The definition of a ‘self-employed worker’ under section 2(k) is also notorious as it paves the way for government to engage in misuse as it allows the government to fix the monthly limit on earnings, the government in order to evade responsibility may fix a limit which is arbitrary. Additionally, the social security schemes are embodied in the Schedule of the Act which implies that they may be easily changed by a government issued notification and not by an act of Parliament. It must also be noted that most of these schemes can only be availed by members who live Below Poverty Line (BPL) which may not always be the case in case of a person engaged in the unorganised sector. What strikes most concern is that the Act fails to provide any grievance redressal mechanism.

1.2.3.   Schemes

Major schemes framed by government include Indira Gandhi National Old Age Pension Scheme, National Family Benefit Scheme, Janani Suraksha Yojana, Handloom Weavers’ Comprehensive Welfare Scheme, Handicraft Artisans’ Comprehensive Welfare Scheme, Pension to Master craft persons, National Scheme for Welfare of Fishermen and Training and Extension, Janshree Bima Yojana, Aam Admi Bima Yojana, and Rashtriya Swasthya Bima Yojana.

1.2.4.   Miscellaneous

Apart from Government, a large number of voluntary and people’s organization are involved in providing social security measures to unorganized sector workers in our country. Self-employed women’s association (SEWA) [Gujarat], Cooperative Development Service (Andhra Pradesh), Sangamitra (Karnataka), Grameen Development Service (Uttar Pradesh), ANKURAM (Andhra Pradesh) and NIDAN (Bihar), DHAN, Anna Puma Mahila Mandal (Maharashtra) etc. are some of the NGOs which provide social security measures in India. The only scheme with some National coverage is the National Social Assistance Programme (NSAP) which covers only people aged above 65 years. In addition, the judiciary has also played a pro-active role in upholding the rights of workers by means of various judicial pronouncements.


As with every other law, there is a problem of education and awareness and thus the State should engage in creating awareness about various laws and schemes. Considering the fact that the nature of the informal sector enterprises is dynamic since enterprises in today’s world start and end in the blink of an eye, the collection of data once every five or ten years is problematic as it would give way to variations thereby making it difficult for the policy makers to enact suitable policies. As noted by Report of Working Group on Social Security, The presence of large number of schemes creates a lot of confusion for the beneficiaries as to what exactly they are entitled to.[8]There is multiplicity of social welfare schemes run by different Government units at both the central and state level which warrants the problem of duplication of efforts, record keeping, huge administrative costs and possible misuse (since different benefits might reach the same person under different schemes.). To overcome this problem, there should be a single centralised data base for all social security schemes. The role played by labour unions to bargain is widely recognised and therefore the unions should mobilise the unorganised workforce and lobby in order to ensure that social security extends to the unorganised sector.

As per the provisions of the Unorganised Workers’ Social Security Act, 2008 the Social Security Boards have only advisory role which render them ineffective and hence they should be given power to administer and enforce the provisions contained in the Act. The Act should also provide for the mandatory registration of an employer of an unorganised worker and penalty must be awarded in case of non-registration. The Act should address special problem of migrant workers in the unorganised sector, especially inter-State migrants and special provisions must be made with regards women and adolescents engaged as workers in unorganised sector. An audit mechanism should also be included in the act to ensure financial accountability.

[1] Report of Second National Commission on Labour, (2002), pp.604-605

[2] ILJ, “Special Article: Sixty Seven Years of Independence-A Kaleidoscopic View of Labour Activities”, Vol.55, 9 (2014) p.930.

[3] Government of India, Report on Employment-Unemployment survey, Vol.I, Ministry of Labour and Employment, (2013-14) p.5

[4] Report of Second National Commission on Labour, (2002), pp.604-605

[5] Issues Of Unorganised Labourers In India, P.Sathya, Indian Journal of Applied Research, Volume 6 April-2016, pp.44-46

[6] Mariappan  K,  „Employment  Policy  and  labour  Welfare  in  India‟,  New  Century  Publications, New Delhi, 2011, p.78.

[7]M. D. Pradeep, B. K. Ravindra & T. Ramjani Sab, “A Study on the Prospects and Problems of Unorganised Labours in India”, International Journal of Applied and Advanced Scientific Research, Volume  2, Issue 1, Page Number 94-100, 2017.

[8] Government of India, Report of the Working Group on Social Security for the Twelfth Five Year Plan, (2012-17), p.11.
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