Informalisation of Indian Workforce

What are Formal Sector?

All Public Sector Establishments and All private sector establishments having 10 workers or more are called Formal Sector

What is Informal Sector?

All establishments other than Formal Sector and Workers working in it are called Informal Sector

Example - Owner of small enterprises, farmers, labourers etc

Which Sector employs more labour - Formal or Informal?

Informal Sector

Informal Sector employs 94% of total workforce

Only 6% are employed in formal sector

How is the gender vise distribution of Formal and Informal Sector?

Key points

Majority of workforce is male (both in formal as well as informal sector)

However, share of women is higher in informal sector rather than formal sector

Write a Short Note on Formal Sector Employment

Important Points about Formal Sector

Who collects Data on employment in formal sector?

It is Collected by Ministry of Labour of Central Govt through Various Employment exchanges in India

Who is major employer in formal sector?

Government is main Employer

Many people work in Govt Departments as well as Govt Companies (Public Sector Enterprises)

In 2012, out of 30 million formal sector employees, 18 million employees worked in formal sector

What is benefit of working in formal sector?

People working in formal sector get social security benefits like PF, ESI etc

Peole receive Retirement benefits like PF, Gratuity

They also get regular income and job security

What are problems being faced in Informal Sector?

1. Employees do not have regular income
2. They do not get protection or regulation from govt.
3. Technology used in informal sector is outdated
4. Informal Sector enterprises do not maintain any accounts

What Steps govt have taken to promote informal sector?

Govt has taken steps of:

1. Modernisation of Informal Sector Enterprises (By encouraging use of new technology)
2. Provision of Social Security measures to Informal Sector (Getting them Registered for PF/ESI Schemes)

What is PF?

1. PF is a scheme where
2. Some amt is contributed by Employer
3. Some amt is contributed by Employee
4. Total Amt with Interest is Received by Employee on Retirement/ Death etc
5. It is compulsory if no of employees are more than 20

What is ESI?

1. It means Employee State Insurance
2. It is like an insurance for free treatment of employees if they fall sick
3. Here also, Some amt is contributed by employee and some by employer
4. It is compulsory if no of employees are more than 10

NCERT Questions

Question 6

An establishment with four hired workers is known as ____ (formal/informal) sector establishment.

Question 18

Is it necessary to generate employment in the formal sector rather than in the informal sector?

Why?

Question 22

How will you know whether a worker is working in the informal sector?

Other Books

Question 1

What do you mean by formal and informal sector?

Discuss the conditions of workers in each of these sector.