Organizing the unorganized workers: the Indian scene.

AuthorSen, Ratna
PositionBy Invitation - Abstract


It has become obvious during the last two decades that globalization in India has created more jobs in the informal sector than in the organized sector, which has also been plagued by redundancies and job losses. The National Commission on Enterprises in the Unorganized Sector (NCEUS, 2009:5) stated that "the net growth of employment in the quinquennium (1999-00 to 2004-05) has been largely of an informal kind, implying that these workers are vulnerable in significant ways. This is true of both formal and informal sectors, which means that even the increase in employment in the formal sector is entirely that of informal employment ... and informalization of the formal sector as far as employment is concerned". Every state in India has seen marked decline in organized share of employment (Shyam Sundar, 2010:8). The trend in informalization has helped to transfer jobs from bargainable to non-bargainable categories and the need for union protection has therefore become more important today as things become more uncertain for most workers (Sen, 2002:210).

However, unionization among the unorganized or informal workforce is relatively low and plagued by a number of problems such as lack of employment security, refusal of employers to recognize or bargain with informal sector unions, and so on. For instance, INTUC's unorganized sector membership was barely 1 % of its total membership in 1980 (Davala, 1994: 8). Even the small number of unions emerging among the unorganized workers, have high mortality rates. The 'turnover' of unions is very high in the small scale sector--in one case only two units have been with the union throughout the last 10 years. Generally membership continues for 3-5 years of the life span of the unit (Vrijendra, 1997: 64). But this needs to be scrutinized to obtain the real picture. Things may not be as disheartening as apparent at first glance.

Organized & the Unorganized: Differences

Organized sector regular workers have relatively more job security, leave and medical benefits, retirement benefits and of course reasonable wages. Workers in the unorganized sector are obviously deprived not only of these, but work much longer hours for much lower wages, lose their jobs easily or get work intermittently, and have no cover for absences, illness or old age. CMIE found in 1980-81 that while organized sector employees earned about Rs 11,000 per year, self-employed and casual workers earned respectively about Rs. 2500 and Rs. 3500 (Davala, 1994: 8). In the public sector, the wage differential between casual workers and permanent workers in the captive power plant of National Aluminium's Orissa plant at Angul in the early 1990s were in the ratio of 1:11 as observed by this author. The NCEUS found that the 'the growth rate of wages of almost all categories of workers (15 out of 16), including casual workers, which concerns the bottom layer, has declined during 1993/94-2004/05 characterized by economic reform compared to the previous decade of 1983-1993/94. This is clearly a case of generalized slow down in the growth of wages when the overall economy registered a higher growth in income during the second period compared to the first (NCEUS, 2009: Table 2.2). NCEUS found in 2004-05 that even among male casual workers, daily earnings in the informal sector were a meager Rs 51.3 as compared to Rs 73 in the formal sector. For casual females the rates were Rs 32.4 and Rs 47.4 respectively (NCEUS, 2009:Box 2.1).In either case, these average daily earnings of casual workers, work out to Rs 62 and Rs 40 for males and females, far less than that of regular workers in the formal sector at the time.

Defining the Informal Sector

As already discussed (Sen, 2012), the NCEUS indicates that the informal 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". Unorganized workers include, "a home based worker, self employed worker, or a wage worker in the unorganized sector ... or those working in the unorganized sector or households, excluding regular workers with social security benefits provided by the employers, and the workers in the formal sector without any employment and social security benefits provided by the employers" (NCEUS, 2009: Sec 2.m).Thus, the informal economy consists of the informal sector and its workers plus the informal workers in the formal sector. This definition enlarges the scope of the unorganized sector considerably and hence proves more comprehensive than the NSSO definition of the 'Unorganized' as all those not being in public sector or government units, and not covered by the Annual Survey of Industries.

This informal sector is huge by all counts. The NCEUS (2009: Table 2.7) estimated that in 2004-05, informal sector in India employed, in agriculture 219 million, in industry 66 million, and in services 101 million, totaling 386 million out of a workforce of 450 million. Between 1993-94 and 2004-05 the net growth of employment had been largely of an informal kind, and that informal employment in the formal sector (private and public) constituted more than 20 million in 1993-94, growing to 25 million by 199900. Hence the informal manpower would add up to 406 million, growing to 411 million at the turn of the century. More recently, in a sample survey done by the Labor Bureau (Government of India, 2011-12: Table 3.2), for every 1000 households surveyed, 344 were found to be self-employed, 423 to be regular wage/salary earning, 152 casually employed and 81, otherwise. This indicates that nearly 50% were either self-employed or casual. The same survey also indicates that out of every 1000 persons, 20 were unemployed by usual principal status. It would therefore be necessary to look at unionization and other types of organizing this huge workforce.


Post liberalization it became clear that the rate of job creation in formal organizations would not keep pace with the growth in labor supply, that informal employment (including self-employment) would keep growing and informal workers would increase in diversity (more women, more varied forms of work, more activities)(Sen, 1997: 333). In particular, eastern India had a larger proportion of informal workers in West Bengal, Bihar, Uttar Pradesh and Orissa accounting for about 50 % of informal enterprises employing 42 % of the all India labor (Chakraborti, 2002:114-15). While this provided trade unions with an opportunity to increase their relevance as a movement, there were major obstructions to organizing informal workers. However, the efforts at organizing have to be viewed in the proper context. Certain facts need to be stated here:

  1. Informalization of industry in India did not begin post liberalization, but from the 1950s...

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