Employment in organized & unorganized retail.

AuthorBorkar, Aman


This article examines employment patterns in the organized and unorganized retail enterprises and workers' job satisfaction in the retail sector. Retail is a labor-intensive economic activity and the front-line workers are the major link between the employer and the customers. Retail is universally understood as the final step in the distribution process, in which retailers are organized to sell merchandise in small quantities to the public (ILO, 2011). Ministry of Labor and Employment (2010: 35) broadly classified Indian retail industry as 'organized and unorganized' based on the differences in the conditions of work, remuneration and social security benefits available to the workers. The organized and unorganized retail enterprises are easily distinguishable in terms of enterprise type, format, turnover, operations, working conditions and compensation. Although there are significant differences between these sectors, they share some common features as well. This article brings out multiple dimensions of job satisfaction in organized and unorganized retail sectors, assessing four factors: work environment, employer-employee relationship, training and development, and compensation.

Ishengoma and Kappel (2006) stated that employment factors are more favorable in organized sector and workers employed are more satisfied as compared to in unorganized sector. He further states that informal sector offers jobs that are of low quality, have poor employment and working conditions, poorly remunerated, underemployed, have no social protection; their rights are less respected, and they are excluded from social dialogue and decision making compared to workers employed in the organized retail sector. Drawing cues from the field study, the present authors examined similarities and dissimilarities in employment, in the organized and unorganized retail in an Indian urban agglomeration such as Mumbai.

Sectoral Dualism

To understand the differences in organized and unorganized retail employment, it is important to comprehend the sectoral dualism of Indian labor market. Varma and Awasthi (2010) have described that the Indian labor market can be divided into two segments 'Organized' (Formal) (1) and the 'Unorganized' (Informal) sectors. There are multiple studies depicting the concentration of labor in organized and unorganized sectors that have brought out the vast dichotomy between the two into sharp focus. The percentage share varies between 8-10 per cent for organized sector and 9093 per cent for unorganized sector. Ishengoma and Kappel (2006) stated that organized and unorganized sectors cannot be considered as homogenous bi-polar categories as there is presence of unorganized workers even in organized/formal sector and vice-a-versa. Similarly the employment relationship in the organized sector is not formal as many workers in the formal sector are without any protection and social security. At the same time, Naik (2009) concluded that there are at least a few employees in the unorganized/ informal sector having formal employment relationships. Hence understanding employment factors within organized and unorganized retail sectors is a complex task.

Organized & Unorganized Retail Sectors

Organized and unorganized retail sectors are viewed in multiple ways. Kaur (2007) refers "organized retailing to trading organizations that mostly make use of hired labor and with large enough turnovers requiring registration with the tax authorities". Gill (2006: 112) described that "organized retailing is more visible in urban areas because of people's high aspirations, their high purchasing power and splurging habits due to rising incomes". Organized workers are considered as protected workers because they enjoy legal contractual employment that leads to considerably better employment conditions than unorganized workers.

Indian retail sector is heavily weighted towards unorganized retailing. According to National Commission for Enterprises in the Unorganized Sector (2008:3), "the unorganized sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers". Due to overcrowding in agriculture sector, stagnant manufacturing sector, laborious and relatively lower wages in agriculture, millions of job seekers enter unorganized service sector, as they do not have the necessary skills or education required to be absorbed in the organized sector. "Given the lack of opportunities, it is almost a natural decision for an individual to set up a small shop or store, depending on his or her means or capital, and thus a retailer is born, seemingly out of circumstances rather than the choice"(Guruswamy et al., 2005: 7).

Indian Retail Scenario

Retail in India provides employment to millions of people and several studies have validated the growth and prosperity of Indian retail industry (Kabra, 2003; Singh & Tripathi, 2008). We present here personal and household characteristics of retail workers and features of labor market in urban India using unit level data of National Sample Survey 66th Round. Table 1 explains the personal characteristics of Indian urban retail (2) workers like age, sex, marital status and educational background. It shows that 45% retail workers fall in 15-34 age group while 49% falls in 35-59. It has noted that 89% males and only 11% females are employed in the Indian retail sector.

Data show that 75% of the workers are currently married whereas 21% are never married. Data reveals that 11% are illiterate, 7% are just literate, 11% attained primary education, 20% attained middle level education, 20% attended secondary level education, 16% attended higher secondary, 12% cleared graduation and only 3% are post-graduates.

Table 2 presents household characteristics of retail workers in urban India. Majority of retail workers i.e., 77% belongs to Hindu, 18% from Islam, rest 4% comes from other religions like Sikh, Jain, Buddhists, Zoroastrian and others. Around 2% of retail workers belong to scheduled tribe, 10% belong to scheduled caste, 40% of the retail workers come from other backward classes while other social categories form 49%. Quite importantly, while first three quintiles (capturing lowest to middle range in the scale of monthly per capita consumption expenditure) account for three fourth of distribution the rest falls in next two quintiles.

Table 3 presents type of employment, distribution of informal and formal retail sectors, distribution of retail activities that are represented by National Industrial Classification (NIC) codes. Data reveal that in urban India, slightly more than three fourth of workers are self-employed in the retail business while regular employment and casual employment account for slightly more than one sixth and one twentieth, respectively. In urban India, 96.8% workers in the retail sector are employed in the unorganized/ informal units whereas only 3.2% workers are employed in the organized/ formal units. Moreover, food, beverages and tobacco products emerges as largest category that absorbs workers (44%) while around 14% of retail stores are in textile, clothing and leather. Rest of the distribution-close to 42%- captures other economic activities in retail. Barring a few exceptions, median weekly wage appears to increase with educational attainment in both the organized and unorganized sectors (Table 4). Wage also varies across economic activities (Table 5), ranging between Rupees 728 and Rupees 1000. While retail sale of household appliances, articles and equipments reports highest wage, retail stores specialized in food, beverages and tobacco products report the lowest.


Primary data are collected using semi-structured interview schedule from 102...

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