Post on 04-Feb-2022
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Chapter – 1
INTRODUCTION AND REVIEW OF LITERATURE
A major part of the workforce in India and other developing countries work in
informal sector. Informal sector has become an increasingly popular subject of study,
not just in economics, but also in sociology and anthropology. Keith Hart was the first
person to introduce the term ‗Informal Sector‘. In September 1971 soon after this,
International Labour Organisation (ILO) employment mission to Kenya came with its
report ‗Employment Incomes and Equality‘ (ILO, 1972). Hart distinguished formal
and informal (both legitimate and illegitimate) income opportunities on the basis of
whether the activity entailed wage or self-employment (Hart, 1973).Therefore, the
concept of informal sector used by Hart was limited to small self-employed individual
workers. Although Hart‘s concept of informal sector had some limitations, the
introduction of this concept made it possible to incorporate activities that were
previously ignored in theoretical models of development and in national economic
accounts (Swaminathan, 1991).
The term ‗informal sector‘ came in a broader sense in the academic literature
only after the visit of an International Labour Organisation (ILO) employment
mission to Kenya in 1972. The ILO then evolved a conceptual framework and
guidelines for the collection of statistics on informal sector and presented the same in
the Fifteenth International Conference of Labour Statisticians (ICLS) held in
February, 1993 in the form of a resolution. The resolution was then endorsed by the
United Nations Statistical Commission (UNSC) and made a part of the ‗System of
National Account (SNA) 1993‘ by the United Nations Economic and Social Council.
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Though the term ‗informal sector’ gained currency after ILO evolved a
conceptual framework and guidelines for the collection of statistics on informal
sector, there has not been any single definition of informal/unorganised sector in
India. Informal sector remained a matter of discussion among the academicians,
policy makers etc. from the beginning, as a large chunk of workforce is employed in
this sector. Different criteria were being used to identify the informal sector but none
of them was universally applicable in different empirical situations (Papola, 1981). A
study by Mitra (2001) based on Fourth Economic Census of India took the criteria of
own account enterprises and employment establishments employing one to nine
workers to identify the informal sector. The different organisations of India like
National Sample Survey Organisation (NSSO), Directorate General of Employment
and Training (DGET) etc used varying definitions of informal/unorganised sector
depending on the specific requirements of each organisation. Keeping in view the
absence of a uniform definition of informal/unorganised sector in India, the National
Commission for Enterprises in the Unorganised Sector (NCEUS) set-up a Task Force
to review the existing definitions and formulated harmonised definitions of
informal/unorganised sector employment and informal/unorganised employment.
Existing Definitions of Informal Sector
As per System of National Accounts (1993), the informal sector consists of
units engaged in the production of goods or services with the primary objective of
generating employment and income to the persons concerned. These units typically
operate at a low level of organisation, with little or no division between labour and
capital as factors of production and on a small scale. Labour relations - where they
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exist - are based mostly on casual employment, kinship or personal and social
relations rather than contractual arrangements with formal guarantees. The informal
sector forms part of the household sector as household enterprises or, equivalently,
unincorporated enterprises owned by households.
The First Indian National Commission on Labour (1966-69) defined
‗unorganised sector workforce‘ as –―those workers who have not been able to
organise themselves in pursuit of their common interest due to certain constraints like
casual nature of employment, ignorance and illiteracy, small and scattered size of
establishments‖.
The National Sample Survey Organisation (NSSO), which has been
conducting surveys of unorganised enterprises at periodical intervals, generally
adopted the following criteria for the identification of unorganised sector:
i. In the case of manufacturing industries, the enterprises not covered under the
Annual Survey of Industries (ASI) are taken to constitute the unorganised sector.
ii. In the case of service industries, all enterprises, except those run by the
Government (Central, State and Local Body) and in the corporate sector were
regarded as unorganised.
The NSSO also conducted a separate informal sector survey in 1999-2000 and
all non-agricultural enterprises, excluding those covered under the ASI, with type of
ownership as either proprietary or partnership were treated as informal non-
agricultural enterprises for the purpose of the survey.
In the compilation of National Accounts, the term unorganised sector is used
to represent the residual enterprises, which are not included in the ‗organised sector‘.
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The coverage under ‗organised sector‘, however, differed across different segments of
the economy depending on regular data availability from various administrative
sources. The Directorate General of Employment and Training (DGET) considers all
establishments employing ten workers or more as organised sector, though
Employment Exchange (Compulsory Notification of Vacancies) Act, 1959, makes it
mandatory to submit employment returns only for those units ordinarily employing
twenty five or more persons.
Alternative Concepts and Definitions of Formal and Informal Sector in India
The National Sample Survey Organisation (Government of India, 2001: pp. 3-
4) defines the informal sector in terms of all unincorporated proprietary enterprises
and partnership enterprises.
An enterprise is an undertaking, which is engaged in the production and/or
distribution of some goods and/or services meant for the purpose of sale,
whether fully or partly.
An enterprise may be owned or operated by a single household or by several
households jointly, or by an institutional body. The proprietary enterprises are
those where an individual is the sole owner of the enterprise. Partnership
enterprises are those where partners (from the same household or different
households) agree to share the profits of a business carried on by all or any
one of them acting for all.
Alternatively, an enterprise is distinguished between an own account
enterprise (OAE) and an establishment. An OAE is run by household labour,
usually without any hired worker employed on a fairly regular basis. An
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establishment has less than 10 workers with at least one hired labourer on a
fairly regular basis. An establishment is further distinguished between
directory establishment (DE) and Non-Directory establishment (NDE). A DE
(or NDE) employs more than 5 workers (or less than 6 workers) with at least
one hired labourer.
Official statistics (e.g. National Accounts Statistics) in India distinguish
between organised and unorganised sectors in different contexts.
The organised sector comprises of enterprises, and information (e.g. statistical
data) on their activities is available or collected regularly (e.g. registered
manufacturing units). The unorganised sector comprises of enterprises and
information on their activities is not regulated under any legal provision or
regular account on their activities is not maintained by enterprises themselves.
Manufacturing units (e.g. all manufacturing, processing, repair and
maintenance service units) registered (or not registered) under the Factory Act
1948; belong to the organised (or unorganised) sector. That is, factories
employing 10 or more (or less than 10) workers and using power or employing
20 or more (or less than 20) workers without using power, in the reference
year, belong to the registered (or unregistered) manufacturing sector.
Enterprises covered (or not covered) by the Annual Survey of Industries (ASI)
fall under the purview of the organised (or unorganised) sector.
Unorganised and informal sectors also differ in their compositions. In fact, the
unorganised sector includes unincorporated proprietary or partnership enterprises,
enterprises run by co-operative societies, trusts, private and public limited companies
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(non ASI). Thus, informal sector is a part of unorganised sector in India. In essence,
the alternative concepts and definitions imply that the unorganised sector is wider in
scope to include unregistered, unregulated and informal enterprises and
establishments in manufacturing and service sectors.
In India, the term ‗informal sector‘ per se has never been used either in official
statistics or in National Accounts Statistics (NAS) until 1999-2000. The Indian
National Accounts Statistics from the very beginning used the terms 'organised'
and 'unorganised' sector from the point of view of collection of statistics. But
researchers often used the term ‗unorganised‘ and ‗informal‘ interchangeably. In
reality, though the terms are quite similar to each other, they are not truly identical
(Kulshrestha, 1999). The organised sector constitutes those enterprises for which
statistics are available regularly either through published government sources, budget
documents or through the Annual Survey of Industries (for registered manufacturing
industries). On the other hand, the unorganised sector includes those enterprises
whose activities or collection of data is not regulated under any legal provisions and
those who do not maintain any regular accounts (Kulshrestha, 1999). According to the
Central Statistical Organisation (CSO, 1980), the unorganised sector comprises ―all
unincorporated enterprises and household industries — other than organised ones —
and which are not regulated by any of the acts and which do not maintain annual
accounts and balance sheets‖. Non-availability of regular information has been the main
criterion for differentiating the unorganised sector from the organised. Broadly, the
unorganised sector covers the entire agricultural sector except plantation crops,
operation of the government irrigation system, minor minerals, unregistered
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manufacturing units and all units of non-manufacturing activities except those
in public, private corporate and co-operative sector. Further, to survey the
unorganised sector the CSO used to conduct the old-fashioned establishment/
enterprise censuses (and follow-up sample surveys). But these enterprise censuses
failed to capture the diversities of unorganised sector, as they do not take households
as unit of analysis.
In recent years, taking lead from the adoption of new international definition
of the informal sector (ILO, 1993; SNA, 1993), the Department of Statistics in India
constituted an expert group in 1998 to reconcile various concepts and definitions
pertaining to the informal sector. The main purpose behind this exercise was to
develop a uniform and harmonised definition and survey methods on the informal
sector so as to make it internationally comparable and also to count workers and
their contribution to output in a more exhaustive manner. The group after long
deliberations felt that the ‗informal own account enterprises‘ and ‗enterprises of the
informal employers‘ as mentioned in the International Conference of Labour
Statisticians (ICLS), 1993 resolutions are conceptually close to two terms used in
Indian Statistical System, i.e., ‗own account enterprises‘ and ‗establishments‘
(enterprises with at least one hired worker employed on a fairly regular basis).
Therefore, the group recommended implementing, to the extent feasible, the
recommendations of the ICLS (1993) and SNA (1993). The expert group also felt
that this type of enterprise-based definition of the informal sector would provide a
good coverage of enterprises to work out the value addition by industry groups
necessary for NAS.
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The above-mentioned enterprise-based definition of measuring the size and
contribution of the informal sector is definitely a change for better but it was subjected
to a lot of criticisms. The criticisms were mainly from users of informal statistics and
increasingly from activists working with the informal workers. According to them,
though the enterprise-based definition is useful to identify the size of the informal
sector and for national accounts, they fail to count new and emerging categories of
workers and their contribution to output. This is because it is difficult to identify such
workers as enterprises, as they are mostly single person own-account enterprises and
work either-from home or do not have fixed location of workplace. Mostly these
workers consist of home-based workers, home workers, street workers and street
vendors, domestic and other informal wageworkers. All this leads to underestimation
of both workers and output generated in the informal sector. To better capture the new
and emerging type of workers it was suggested to define informal sector in terms of
characteristics of the persons involved or of their jobs (labour force approach) apart
from segmenting them in terms of characteristics of the enterprise. This new formulation
for defining the informal sector was intended to be operationalised by classifying
workers into formal and informal ones by their status in employment in accordance
with the International Classification of Status in Employment.
In the light of the above suggestions, it is necessary that any survey to estimate
the size and output of the informal sector should be a linked one and detail questions
may be put in the questionnaire to identify separately first such unaccounted workers
and subsequently their contribution to output. In this regard, it is suggested to net all
types of above workers first through household survey and then assess their
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contribution to output (in terms of value added) through follow-up enterprise survey.
Thus, it underscores the need to link worker approach with enterprise approach of survey
so as to arrive at a better estimate of both size in terms of employment and contribution
in terms of value added in the informal sector. Accepting the criticisms and loopholes,
the NSSO field-tested the new international definition of the informal sector by
conducting first nation wide survey of informal non-agricultural enterprises along with
the 55th round labour force survey (1999-2000) with certain modification in the
survey methodologies. The survey methodologies were modified to link households with
that of enterprises (linked Household-Cum-Enterprise or Mixed Method). For the
purpose of the survey, the NSSO defined all unincorporated proprietary and partnership
enterprises as informal sector enterprises (as per the SNA definition). This new
definition differs widely from the traditional concept of unorganised sector used in
India. In the unorganised sector, in addition to proprietary and partnership enterprises,
other types of enterprises run by co-operative societies, trusts, private and public limited
companies not covered by Annual Survey of Industries are also covered (Kundu et. al.
2001). Thus, the informal sector is conceptually considered as a sub-set of the
unorganised sector (NSSO, 2001).
In Indian context, the latest version and the most acceptable definition of
‗unorganised sector‘ and ‗unorganised employment‘ has been recently given by the
National Commission for Enterprises in the Unorganised Sector (NCEUS) which has
combined all the definitions as below:
"The unorganised sector consists of all unincorporated private enterprises
owned by individuals or households engaged in the sale and production of goods and
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services operated on a proprietary or partnership basis and with less than ten total
workers".
And
"Unorganised workers consist of those working in the unorganised enterprises
or households, excluding regular workers with social security benefits, and the
workers in the formal sector without any employment/social security benefits provided
by the employers" (NCEUS, 2007, p 3).
In NCEUS definition the terms ‗organised‘ and ‗unorganised‘ are used
interchangeably with formal and informal.
The Contribution of Unorganised Sector
An important feature of labour market situation in India is the predominance
of unorganised employment. The dominance is such that since early 80's and
even before that more than 90 per cent of the total work force has been engaged
in the unorganised sector to earn their income and livelihood. The analysis of
trend and pattern of growth in employment shows that, over the years, formal
employment growth has always been less than that of total employment, indicating
a faster growth of informal employment. Further a broad segment consisting of
agriculture (both organised and unorganised) and organised non-farm sector,
which currently absorbs nearly 70 per cent of total workforce, is showing the
signs of negative growth rate and it is being predicted that these sectors will
cease to absorb more and more labour force (Bhalla & Hazell, 2003). In this
context, informal employment, especially its non farm segment, is being
assigned a dominant role in official committees meant for future additional
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employment generation. For instance the Special Group on ―Targeting Ten Million
Employment Opportunities per year over the Tenth Plan Period (2002-2007) set
up by planning commission was of the view that – exclusively for generating
the desirable high level of employment in the country, one has to target the
unorganised sector, including small and medium enterprises‖ (GOI,2002).
Another contribution of the unorganised sector is its relationship with the
organised sector. Some economists are of the view that there exists a downward linkage
between the organised and unorganised sector implying that the latter lives or dies with the
former (Stark,1982). It is often considered that an exploitative relationship exists between
the two sectors which is the basis of the existence of unorganised sector. This
relationship enables the organised sector to procure cheap semi-finished goods and
services from the unorganised sector and keep its own cost of production low. The
unorganised sector provides cheap consumer products and services such as processed
foods, readymade garments, handicrafts, transport, petty trading etc. to the urban
population. This sector also plays an important role in recycling the waste materials and
producing the goods and services which satisfy the needs of poor people having very low
income.
Thus, in view of its tremendous importance there is a need to focus efforts and
attention to develop a comprehensive understanding about the problems, needs, issues,
and changes that are taking place in this sector. It has been recognised by all sections
of researchers and writers that the working and the labour conditions in the
unorganised sector are deplorable and in fact, the unorganised sector is at a
disadvantageous position deserving supportive policy measures. This, however, in no
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way reduces its significance in populous country like ours. Unorganised sector has
become a perennial source of employment generation. It is surprising to note that this
sector absorbs more than 90 per cent of the total work force in our country. The size
of the unorganised sector has been substantial although it shows a declining trend.
The majority of Indian workers being employed in the unorganised sector also
produce useful products and many organised sector industries depend on informal
sector for the supply of raw materials. Thus, the unorganised sector not only provides
income earning opportunity to the poorer group of population but also feeds the
industries of the country. Unorganised sector has established itself to be the only
source of survival of a large segment of female work force in particular. An
increasingly large portion of women has been absorbed by this sector and importance
of unorganised sector for its role in absorbing the women workers is undeniable.
Furthermore, due to the availability of cheap labour in this sector, there is chance of
more and more activities directed to this sector. Thus, it can be concluded, that the
unorganised sector has a place of its own and plays a significant role in the process of
economic development. It provides substantial employment opportunities to those
who otherwise would have been openly unemployed. Its products and services are
low priced and so they help to keep the cost of production of formal units and cost of
living of the urban population low. If properly nurtured it can expand and develop
optimally and can play an important role in the process of economic development.
Due to the important role of unorganised manufacturing sector, various studies have
been conducted on unorganised sector in general and manufacturing sector in
particular. A few of these studies are highlighted below.
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Review of Studies
Right from early seventies a lot of research has been undertaken in the field of
unorganised sector in general and unorganised manufacturing sector in particular. The
available literature shows that the researchers have chosen three fields in particular
i.e. theoretical studies, micro level case studies and macro level empirical studies. In
order to understand its nitty-gritty we shall have to comprehend the available
literature. In the case of unorganised sector, sufficient literature is available regarding
the scope, concept, usefulness and applicability of this sector. Some of these studies
are given here in chronological order:-
Weeks (1975) used an input-output framework method to analyse the
determinants of growth of output and employment in the informal sector particularly
with reference to the less developed countries. In order to simplify he divided the
economy into informal, agricultural, private formal and government sectors. During
his research he came to the conclusion that the changes in the aggregate demand,
technical changes and changes in consumer tastes are largely responsible for affecting
output and employment in the informal sector. According to him informal sector is a
dynamic and a low wage sector whose development requires concrete development
policies ending special privilege to the formal sector and greater emphasis on
development of agricultural field and encouraging the formal units to grant sub-
contracting to informal sector units. This would lead to strengthening the informal
sector.
Banerjee (1983) conducted a sample survey during 1975-1976 to test whether
informal sector employment is a temporary staying post for the new migrants.
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Evidence showed that fifty per cent of the migrants to Delhi had been attracted by the
opportunities in this sector itself and they had moved to Delhi after pre arranging their
jobs. Earnings were lower in informal sector than in formal but returns in terms of
education and experience were same in both the sectors.
Dhesi and Wadhwa (1983) attempted to analyse the characteristics of the
participants and enterprises in the informal sector and their linkage with the formal
sector in Nangal (Punjab, India). In their study they found that the average
employment per enterprise was only 1.6. The study further pointed out that most of
the entrepreneurs started with little amount of initial capital and the source of
investment for majority of them was their own saving or that of relatives and friends.
Most of the informal enterprises were in the trade sector. It was followed by services
and transport.
Gangrade and Gathia (1983) attempted to study the women and children in
unorganised sector. They aim at examining what is work and what is unorganised?
Why are certain workers excluded in the census measurement and certain others not.
What is the employment structure in this sector? What kind of projects and
programmes will help working women in informal sector to move towards a self
reliant spirit and increase their confidence? How are working women in the informal
sector to be formulated? They classify the working women into three categories on
socio-economic basis-(1) Agricultural worker and those engaged in traditional menial
services. This group is the largest and very poor. Their counterparts in urban areas are
construction labour, migrant workers, domestic servants and self employed women in
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the informal sector. (2) The second category mostly comprises of women who work in
offices or are professionals. They can be called blue-collar women workers. (3) The
third group includes those women who are better educated and enjoy economic
security but they are small in number. Women from this category work for improving
their living standard and for self actualisation. The author concluded that women in
the informal sector face many problems- low wages, long hours of work, insecurity
regarding job and sexual harassment etc. but most of these women work for economic
reasons. In some cases women take up jobs to support the family income. In few
cases, jobs are taken up for leading a life of independence of self actualisation or of
escaping boredom. Some unmarried women have to take up jobs to help save money
for their dowry.
Manohar (1983) discussed the exploitation of women in unorganised sector
with reference to male dominance. He stated that women were dependent and
subservient, which forced them to live under miserable social and economic
conditions. Poverty and other economic difficulties forced them to take up menial
jobs where education is not essential e.g. maximum women workers were employed
in bidi industry, cotton textiles, domestic servants and weaving etc.
Romatet (1983) conducted a survey of Kolkata‘s informal sector to have an in
depth study of its characteristics. He focused mainly on tailoring industry, tanneries
and the plastic processing units situated on the outskirts of eastern Kolkata. He found
that the slums are not only densely populated but are the hubs of intense informal
economic activities. According to him the immediate needs were bank credit at very
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nominal rate, redirecting government demands towards the units directly, removing
the middle man, supply of raw material at reasonable rate and prevention of
exploitation of the informal units at the hands of organised economic agents.
House (1984) conducted a survey of informal sector enterprises in Nairobi. He
found out that the most of the proprietors in the informal sector were urban residents
of long standing and not recent migrants. Though, the initial capital requirements
were low, yet most of the entrepreneurs had cited the capital shortage as their major
problem.
Ahluwalia (1985, 1991) studied for the period 1959 to 1985 to examine total
factor productivity. The studies show that during the two decades of the sixties and
the seventies, total factor productivity in the manufacturing sector declined. However,
there is also a finding that in the first half of eighties productivity growth improved.
The dominant source of the acceleration in total factor productivity has been the
growth of value added.
Bandyopadhyay and Hillary (1985) observed an increase in the participation
of women in the Kolkata labour force, due to a combination of high male
unemployment, falling urban living standards and some increase in employment of a
semi or unskilled kind for which women workers are positively preferred. He opines
that precise effects of women‘s participation in wage work on the family based
household have received little detailed attention until recently. This is particularly the
case in many third world urban contexts where female labour force participation rates
have been traditionally low until the recent emergence of opportunities for women in
new gender-segregated industries, such as electronics assembly.
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Anand (1988) had a deep insight into the conditions of the lower caste Tamil
migrants in Delhi. It was pointed out that women migrants are found to be more
adaptable to their surroundings even though they do not know the language. They get
work easily as compared to their male counterparts. The occupations they enter are
mostly informal in character.
Datta Chaudhary (1989) tried to analyse whether theoretical analysis supports
the assertion that informal sector is dependent on formal sector. Using fixed co-
efficient of production and full utilisation of the available resources, he proved that
the general equilibrium framework of the economy permits expansion of the informal
sector along with shrinking of the formal sector employment and output. It was also
inferred that cheap credit to informal sector would force the formal to fan out its
requirement of intermediate goods to the informal sector. So the informal sector can
expand in the face of contracting formal sector. But when the formal sector
completely specialises in the production of final goods with the informal sector
meeting the total demand for intermediary goods, a stage would arrive where the
informal sector will live or die with the formal sector.
Saran and Sandhwar (1990) studied the problems of the women workers
engaged in unorganised sector of brick kilns, quarries and mines of Bihar and West
Bengal. It was revealed that the women working there were exploited, low paid,
worked for long hours i.e. 14-16 hours in case of migrants and around 10 hours in
case of local workers. Majority of them were illiterate and belonged to scheduled
castes, scheduled tribes and backward classes. Indebtedness was also commonly
found among them. Further, rebuking, cheating, threatening, beating and sexual
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abuses were very common features reported by women working in unorganised
sector.
Shaw (1990) analysed the interactions and linkages between informal sector
and large scale sectors in Thana-Belapur region based on field survey during
September to December 1980. It was found during the study that large units have
important forward linkages with informal sector units but unfortunately the informal
sector workers faced health related risks and labourers were by and large women folk.
Banerjee (1991) attempted to analyse the impact of new export oriented
industries on women workers in India. She had covered main industries viz. leather,
garment, silk spinning etc. The focus was on the relationship between technologies,
market conditions and service conditions of women workers. The conclusions drawn
are that these women did unskilled works, worked for long erratic hours and under
miserable working conditions and terms of work.
Kundu (1993) discussed in detail the problem of comparability of secondary
data relating to unorganised activities in India. Using different sources he tried to
access the macro dimension of the urban informal sector both at the national as well
as state level. In spite of certain limitations accepted by him his study shows that the
informal sector in urban areas has grown at a faster rate as compared to the organised
industries or the rural unorganised industries. During 1961 to 1985 in states like West
Bengal, Maharashtra and Gujarat growth has been largely impressive. Kundu is of the
opinion that the growth of informal sector in the developed areas is primarily because
of the complimentary relationships between formal and informal activities where the
jobs are sub contracted by the former to the latter. The growth of informal sector in
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less developed areas is because of the survival strategy and taking up the traditional
and low productive activities by the poor residents.
Balakrishanan and Pushpangandan (1994) studied total factor productivity
growth for Indian manufacturing from 1970-71 to 1988-89. The statistical analysis
confirms a turnaround if total factor productivity estimates are derived from the value
added single-deflation series. The point however is that if total factor productivity
index is derived by double-deflation there is an absence of an increase in the growth
rate of total factor productivity.
Guhan (1994) has emphasized the importance of protective type programmes
(old age pension, maternity leave etc.) for the unorganised workers. Most of the new
employment in future will take place in unorganised sector which is characterised by
poor condition of work, low earning and lack of any social security. Ensuring basic
minimum measures of social security in unorganised sector should be an important
concern of a public policy. Some of the targeted anti-poverty programmes have
remained unsuccessful because of the problems of centralised approach and review
system. On the other hand the protective type programmes such as old age pensions,
widow pensions, survivor benefits etc, provide a certain degree of financial help to
poor persons. The other benefits of protective measures are their simplicity and
relatively low administrative cost.
Mitra (1994) conducted an empirical study to estimate the nature of
relationship between formal and informal sector employment for various urban
centres in India. The research was based on the secondary data for 1971. He found
that the percentage of informal sector employment in the total work force differed
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from as low as 21.3 per cent in Chandigarh and 39.4 per cent in Howrah to as high as
96.85 in Shahjahanpur and 92 per cent in Dumdum. This percentage was found to be
significantly negatively correlated with the size of the city in terms of population. A
significant negative relationship was found between percentage of informal
employment and percentage of organised industrial employment. However the
relation between the absolute employment in the informal sector and that of in the
formal sector was found to be positive.
Shaw (1994) emphasized in his research to look into the manufacturing
activities in the informal sector in India particularly with reference to the growth of
these activities during 1971 to 1991. According to the data collected by her, the share
of informal sector in the total manufacturing employment reduced from 82.5 per cent
in 1961 to 69.3 per cent in 1981 but after that the trend reversed and the modern
dynamic part of the informal sector expanded slowly. On the other hand, there was a
sharp decline in the traditional home based industries. She found that the states like
Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh and Madhya Pradesh
accounted for nearly 58 per cent of the net value added from the registered small scale
industries. Maharashtra, Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Gujarat, Punjab,
West Bengal and Karnataka were the major contributors. In terms of the employment,
states like Tamil Nadu, Maharashtra, Uttar Pradesh, West Bengal and Gujarat
accounted for the 54 per cent of the total. Maharashtra, Uttar Pradesh, Gujarat and
Karnataka came out to be the leading states in terms of the fixed assets. The main
industries were chemicals and chemical products, basic metal industry, metal
products, electric machinery and its parts, rubber and plastic products and the food
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products. She concluded that the informal sector can develop more with the active
government support both in terms of encouraging investments and providing
infrastructure facilities.
Sultania (1994) conducted a study at micro-level in the major parts of Jaipur
city on the women workers engaged as contract labourers. The main analyses were
based on the causes of inequality of women as contract labourers and its impact. The
characteristics, profile and recruitment were also dealt with. The women workers in
the unorganised sector generally experience sexual and socio-economic exploitation.
They are illiterate, earning fewer wages, experience male dominance, work for 10-12
hours daily, have no medical or leave facilities and so are under pitiable state of
affairs.
Chandola (1995) studied the nature of garment manufacturing units and
women workers in unorganised segment of these units situated in Lucknow, Kanpur,
Varanasi and Delhi. The emphasis was that the industry practised wage exploitations,
the production process was fragmented and decentralised. The decentralisation of
unorganised sector was done with a view to have cheap labour and escape
government regulations. The women worked as piece rate workers; there was easy
entry into the labour market which forces them to seek employment as unorganised
labour leading to exploitation.
Bhagwat (1996) studied analytically the process of gender construction in the
context of urban growth which differs for caste, class and religious backgrounds. This
study mainly focuses on work sphere. The size of sample for the study was 254, with
70 per cent from unorganised sector, invisible labour and housewives. The majority of
22
women in unorganised sector were generally migrants from rural areas. They worked
for 10-12 hours daily, earned low wages, experience sexual harassment and physical
exhaustion.
David (1996) discussed the structure and composition of urban unorganised
sector. It was found that the unorganised sector faced two major problems. Firstly,
this study found that increasingly a large segment of this sector employs work
population which is forced to live at margin of survival. Secondly, given the
availability of cheap labour in urban unorganised sector, employers are likely to divert
activities to the organised sector. The non-institutionalised unorganised sector
comprises workers doing casual work like the domestic servants, sweepers,
scavengers, vendors, hawkers and those who are self employed. The urban women
working here face insecurity, no legal protection, long working hours and are paid
very less.
Funkhouser (1996) tried to examine the patterns of employment and structure
of earning in the urban informal sector. His study was largely based on five Central
American countries like Guatemala, El-Salvador, Honduras, Nicaragua and Costa
Rica. He found that the size of informal employment was between 60-75 per cent of
labour force in the first three countries while in Costa Rica it was about 30-33 per
cent. In Nicaragua it varied from 45 to 63 per cent. There were substantial returns to
human capital and experience in the informal sector in each country. Other significant
findings were negative relationship between level of education and informal sector
employment and higher probability for poor family to get employed in the informal
sectors.
23
Sundaram (1996) drew almost same conclusions with respect to other authors
in this field. He projected that, women workers in unorganised sector were generally
illiterate, had high unemployment rate as compared to men in this sector and worked
under exploitative working conditions. It was also brought forward that these women
were sliding down to low paying or unpaid work, which worsened their conditions.
The factors responsible for the prevailing conditions of women of unorganised sector
were poverty, unequal distribution of income, illiteracy, disparity and male dominance.
Loayza (1997) opines that the increase in the size of the informal sector
undermines growth by reducing the availability of public services for all and one in
the economy and by increasing the number of activities that use existing public
services inefficiently.
Gajalakshmi (1998) empirically analysed women workers employed in
unregistered shoe factories in Tamil Nadu. The women working here are from
backward classes and scheduled castes. They earned low income, have low
educational level, live in poverty and work for long hours. These women mainly work
to supplement the low family income in order to make two ends meet.
Jhabvala, Renana (1998) in her study at macro level, emphasized on the need
for social security for women workers and explored the mechanism for social security
provisions, insurance, social security funds for women in unorganised sector. The
employment based programmes should have social and financial security for women
in the unorganised sector.
Kundu and Lalitha (1998) studied the decline in the share of informal sector in
general and urban informal sector in manufacturing sector employment in particular,
24
in late eighties and early nineties. Using NSSO data and considering OAMEs and
NDMEs as the two components of the informal manufacturing sector, they showed
that the growth profile in the informal manufacturing sector has shown two opposite
trends. While during 1978-84 there was a significant rise in both employment and
number of enterprises whereas the period of 1984-89 saw a complete reversal of the
trend. It is argued that the growth of the units or employment for that matter does not
show any correspondence with improvement in their productivity. Most of the units
have no other alternative because being in business is a survival strategy for them.
Only a very small segment of this sector reacts and responds to the market forces and
is linked to the organised sector and its growth is linked to its productivity. Its
productivity is affected by the varied factors like registration with public agencies and
access to land and credit etc.
Mahadevia (1998) studied the declining importance of Ahmadabad city in the
context of industrial development process of Gujarat. She also analysed the impacts of
informalisation of employment on urban poverty in the context of privatisation,
liberalisation and increase in the urban cost of living etc. According to her the
industrial decline in Ahmadabad is not because of overall industrial deceleration in
the state but because of changing character and pattern of industrial development and
nature of industry. The decline in the growth rate of organised sector can also be
explained by vested interests to make the big cities the residential cities for the elite.
Mitra (1998) tried to estimate informal sector employment. He used several
alternative data sources for this estimation i.e., direct method using economic census
data and residual approach using Census and DGET- EMI data. These states were
25
then ranked according to the relative size of informal sector expressed as a percentage
of total employment in the non-agricultural sector, using these alternative measures. A
close correspondence between the rankings of the states using these alternative
sources was obtained. The association between the incidence of informal employment
and factors like urbanisation and industrialisation were found to be negative, while
that with incidence of poverty was found to be positive. Developing linkage between
formal and informal sector, integrating the informal sector with the main stream of the
economy so that it can take the advantage of globalisation, come out as important
points in their research.
Pandey (1998) examined the nature and types of migrant workers, temporary
(seasonal) and permanent in the light of socio-economic order and analysed the
strategies and employment patterns of the female migrants from Maharashtra. It was
brought forward that in the temporary type of migration in unorganised sector, the
migrants worked for long working hours with low wages and without any legal
protection of job security. The factors aggravating their pitiable conditions are lack of
sanitary facility, unsafe conditions and gender discriminations. These women mainly
worked in unorganised sector to supplement the family income and face all other
hardships of life. These seasonal migrants generally come to workforce through the
contractors as a whole family or at least as a couple.
Rao (1998) studied the general profile of the women workers in beedi industry
at macro-level in India. The production of beedi is at corporate industrial level on the
line of cottage industry. These women‘s earnings are meagre. They work on piece rate
basis and earn as low as 40 rupees for 1,000 beedies rolled. The leading states in case
26
of beedi manufacturing are West Bengal, Kerala and Tamil Nadu. The beedi workers
are exposed to dust and nicotine, causing respiratory diseases and infertility in young
women.
Shah (1998) in her study attempted to examine the growth linkages between
small and large scale sectors and the pattern of small industries cluster and the
implications of such linkages for productivity and employment in the various
segments of the small scale sector. Her research showed that the states of high
incidence of factory sector also have high incidence of unorganised sector
(comprising of three scale based categories of OAMEs, NDMEs and DMEs) which
may be due to the size effect. The study suggests that there is a clear pattern of
upward shift within the scalar hierarchy. The growth of DMEs and the SSI at the cost
of lower categories is considered as a welcome trend, since value added and
emoluments per employee increases as we move upward along the scale category.
The author has emphasized the modern character of the DMEs and its emergence as a
dynamic segment of the unorganised sector.
Sharma (1998) analysed the issue of linkages between the formal-informal
sector and different modes of production. The informal sector is not an independent
exclusive circuit. A variety of linkages help to nurture the growth of this sector. This
depends on the nature and type of linkages. These linkages may be direct in terms of
resource inputs, technology or market. Indirect linkages refer to the demand for goods
and services generated in the informal sector by a clientele whose income is drawn
from the formal sector. The informal sector, therefore, becomes a ‗safety net‘ not only
for the ‗poor‘ but also for others thrown out of jobs especially during periods of
prolonged recession and during structural adjustment programmes.
27
Swarooparani and Galab (1998) conducted a primary survey of sandal making
activities in the slums of Hyderabad city. This study breaks the common belief that
assured market solves the problem of low productivity and low income of the
informal sector. The study was based on sample units which were divided into two
categories. The first group comprises of those operating as untied units and carrying
out independent production. The second group includes those who are operating as
tied production units and carrying out contract production.
Unni, (1998) reviewed the concept of work, production boundary, unorganised
sector, and certain categories of workers. She also analysed various methodologies for
estimation of labour force and contribution to gross domestic product. It has been
stated that the unorganised sector and other hidden economic activities have gained
prominence in the context of structural adjustments, globalisation and other problems.
But emphasis is laid to recognise the work of unorganised sector workers specially the
women workers since their employment in this sector is significant and bear the
maximum brunt.
Chadha (1999) studied the growth dynamics of different segments of informal
manufacturing sector in India between 1984-85 and 1994-95 separately for rural and
urban areas. It was found that OAMEs in order to economise their available capital
and to take full advantage of cheap labour move towards a labour intensive
technology and hence its capital labour ratio is declining. Labour productivity is
higher in the urban manufacturing sector than that of its rural counterparts. His study
also showed that the units having high productivity are not necessarily the units that
have registered high growth in employment or enterprise.
28
Goldar and Mitra (1999) in their study attempted to measure the total factor
productivity growth (TFPG) in informal manufacturing sector in India. The solow
index of TFPG, which is measured as difference between growth rate in value added
and weighted sum of growth rate of capital and labour, is used.
Papola and Sharma (1999) conducted a study that there is marginal increase in
labour force participation of women in unorganised sector. The gender discrimination
for work is more prevalent in unorganised sector labour market. They suggested that
the interventions of non- government organisations, governmental organisations and
women activists for increasing opportunities and strengthening capabilities will
reduce imbalances and bring gender equity in employment.
Ramaswamy (1999) is of the opinion that the lack of strong complementary
relationship between the large and small firms is regarded as one of the major
limitations of the development of small manufacturing sector in India. Of late, sub
contracting and outsourcing are emerging as important developments that connect
small and micro units with larger units to the benefit of the both. He pointed out that
the increased growth of the unorganised sector in recent years was a result of
substantial increase in outsourcing by the organised sector.
Srinivasan (2000) looked into conceptual issues of the unorganised sector
along with profile of women‘s employment and its trends. It was observed that
women workers move to the sectors where they have no legal protection and so have
little bargaining strength. Non-farm employment hailed as the panacea for surplus-
labour in agricultural sector.
29
Bhalla (2001) computed the total factor productivity growth for two periods,
1984-85 to 1989-1990 and 1989-1990 to 1994-1995 in unorganised manufacturing
sector. In the first period she observed a high positive growth in NDMEs in rural areas
and a high negative growth in DMEs in urban areas. Total factor productivity growth
in the second period was negative in both types of enterprises in urban and rural areas.
Juan (2001) has pointed towards the need to provide essential social security
to the work force in the unorganised sector as it has become urgent in the context of
the consequences of economic reforms. There is a need for a new algebra of
efficiency and productivity, which views social policy not as a cost but as a sound
reason: which can quantify, for example, the economic benefits of good industrial
relations, social security and safety measures at work. Basically his emphasis is on the
need to develop the concept of ‗Social Efficiency‘ or in other words, on ‗Marginalised
Economic units and workers who are characterised by decent work deficits: labour
standard deficits, worker productivity deficits, job quality deficits, social protection
deficits and organisational cum-representational deficits‘.
Unni and Rani (2001) presented a broad definition of social protection to
include basic securities, such as income, food, health, shelter and economic securities
including income generating productive work. A conceptual framework was
developed to analyse the causes of insecurities of informal workers, identify the core
needs of social protection, develop instruments and visualise the institutional
mechanism to address these needs. Using evidence from a micro survey of household,
they stressed that the insecurities of informal workers arise not only from random
shocks but also from the structural features of the household and their nature of work.
30
They further discussed the institutional mechanisms for delivering social protection
and underlined the need for innovative methods involving the government, private
sector, NGOs, and civil society.
Azuma and Grossman (2002) showed that a lot of tax burden and red tapism in
the working of the bueareucratic set up discourages the formal sector. On the other
hand, these are not always according to the endowment of the producers because of
ignorance and inaptitude of the state. Resultantly the producers find it convenient and
suitable to work in the informal sector. Thus, informal sector would be bigger in size
if the state tries to maximise its revenue compared to the hypothetical situation when
the state is benevolent and doles out huge subsidies.
Chadha and Sahu (2002) using the data from the NSSO/NAS, reported a
marginal decline in the growth of manufacturing sector employment from 2.2 per cent
in 1983-1994 to 1.8 per cent in 1994-2000. This was accompanied by an increase in
the growth of fixed capital from 5.7 per cent in 1983-1994 to 7.3 per cent in 1994-
2000. There was also a corresponding growth in value added from 6.1 per cent in
1983-1994 to 7.4 per cent in 1994-2000. The trends convey that the growth in the
latter half of 1990s was marked for capital infusion.
Dev and Mooiji (2002) have overviewed the growth-led and support-led social
security arrangement for the unorganised sector in India. For the support led
programmer, the emphasis is laid on the preventive and protective schemes for the
unorganised sector. It has tried to cover the areas like the issues in social security for
unorganised sector, helpfulness of the growth promoting policies to the unorganised
workers, support-led social security arrangements for the unorganised sector at the
31
national and state level and strengthening the effectiveness of the existing
programmes. In the context of marketisation, there is a major section of society which
does not have the resources to enter the market operation and thus the government and
those who are already in the market have the responsibility in providing social
security to the unorganised sector. The need for public-private partnership in
providing social or economic security for unorganised workers is emphasized.
Unni and Rani (2002) studied people‘s social security concerns at the
household level. It was reported that nearly half the workers felt that the nature of
their work had an adverse effect on their health. While this finding may be based on
the perceptions of the individual workers, their poor working environment and low
income status, along with a high proportion of chronic addiction and illness, leads to
insecurity among the households working in the informal sector. The vulnerability of
the poor informal workers increases when they have to pay fully on their own for their
medical care with no subsidy or support. The study found that about 79 percent of the
workers paid for the entire cost of medical care without any support. The precarious
existence of these workers is quite evident. The workers not only suffered a loss of
income due to sickness or ill health but also had to bear the entire cost burden of
healthcare. Further, less than 5 per cent of the workers had some form of medical
insurance. Even this was mainly because the sample consisted of some SEWA
members, a trade union providing some medical insurance cover to its members.
Anand (2003) outlines the policy framework necessary for informal sector
development and the common characteristics of informal sector in general and in
India in particular.
32
Bhalla, (2003) has analysed the traditional & modern segments of unorganised
manufacturing sector of India. She has pointed out that though the productivity of the
modern sector is much higher than the traditional sector and is growing at an even
faster pace, yet the traditional sector has an unmatching contribution to employment
in this sector.
Oldimeji and Ajisafe (2003) analysed the role of micro-credit delivery
organisations in encouraging informal sector in Nigeria. They found out that though
the organisations have been quite successful in expanding credit availability to the
informal sector yet the cost of credit has been observed to be on the higher side,
which pointed towards the need to bring down this cost.
Sinha (2003) is of the opinion that the chances of maternal mortality would be
higher among poor women facing the additional burden of economic activity in the
informal sector where the conditions of work are strenuous. Another concern of the
poor informal women workers is the loss of income during the advanced period of
maternity and immediately after child birth when they are not able to work for some
time. Maternity and child birth also result into a lot of risks and expenses. It leads to
financial crisis among the poor household due to borrowing and high interest
expenditure. This would inevitably result in reduction in income of the poor
household.
Unel (2003) observed that total factor productivity (TFP) growth in aggregate
manufacturing and many sub-sectors accelerated after 1991 reforms. Unel‘s estimate
of average annual growth rate in TFP in aggregate manufacturing is 1.8 per cent per
annum for the period 1979-80 to 1990-91 and 2.5 per cent per annum for the period
33
1991-92 to 1997-98. The estimate is based on value added functional framework,
taking value added as output, and labour and capital as inputs. The income share of
labour and capital are used as weights for computing the growth rate of TFP. Unel has
presented a second estimate of TFP growth, made by assuming the elasticity of output
(value added) with respect to labour to be 0.6 rather than taking elasticity to be equal
to the income share of labour. According to this estimate, the average annual growth
rate in the total factor productivity in Indian manufacturing was 3.2 per cent during
1979-80 to 1990-91 and 4.7 per cent during 1991-92 to 1997-98. Both estimates
indicate acceleration in the total factor productivity growth rate in Indian
manufacturing in the post-reform period, as compared to the pre- reform period.
Gerxhani (2004) studied at length the theoretical literature on informal sector
with a special focus on the public choice approach. The writer provides a comparative
analysis of these writings across developed and developing countries. Interestingly,
not too many theoretical models are available on the informal sector and it has largely
been seen as a complex sector. Recent models have tried to look into the
environmental aspects particularly the damage being caused to the environment by the
informal establishments.
Pushpagandan and Shanta (2004) tried to analyse the growth of informal
sector in India during 1993 to 2000. They concluded that the recent growth has
occurred independent of efficiency gains and therefore its competitiveness is
questionable, especially in reference to the impact of globalisation.
Marjit and Kar (2005) examined whether the informalisation has been
accompanied by an increase in real informal wage, capital investment and value
34
added in manufacturing at the all India level. The study found that as compared to the
pre-reform period (1984-85 to 1989-90), the post-reform period (1989-90 to 1999-
2000) witnessed an increase in informal wage (in manufacturing) accompanied by a
real increase in fixed assets (proxy for capital investment) and value added. These
results hold good for most of the states and union territories. The study pointed out
that in order to understand the impact of reforms on labour market; one has to assess
the working of the capital market as well.
Rajasekhar, et. al. (2005) conducted study in Karnataka and used a
participatory method to derive the perceived social security needs of unorganised
sector workers. Among the workers surveyed, 92.3 percent felt that benefits towards
old age, unemployment, death, sickness and employment injury were relevant for
them. Women in the reproductive age groups also felt that maternity benefits were
important. Each respondent was shown various pictures of these six types of needs
and asked to assign priority to these needs. Workers in the informal sector were not
homogenous and various segments among them had different priorities. Among the
informal workers, agricultural labourers felt that old age was a major concern
followed by unemployment. Among construction workers, unemployment followed
by old age and employment injury was assigned priority. Among domestic workers,
too, old age security was the major concern followed by unemployment and sickness.
An interesting aspect of this study was that about 7.7 percent of the sample workers
were unwilling to rank their priorities for security. It was found that these included the
highly vulnerable category of households for whom all these insecurities were
obviously not important enough since their basic entitlement had not been met.
35
Garg and Karan (2006) have emphasised the need to categorise the risk of
health security requirement on the basis of kinds of illness i.e. minor illness which can
be treated at home and major illness requiring hospitalisation. The latter can be
termed as a catastrophic risk. These risks have been further classified as those wherein
the household health expenditure exceeds either a certain fraction of total household
expenditures or their ability to pay.
Henley, et. al. (2006) discusses in detail the various definitions of informal
sector and its appropriateness (aptness). They are of the opinion that the most
common feature of the informality is absence of social security.
Kannan and Srivastava (2006) overviewed a comprehensive social security
scheme for the unorganised sector which had been proposed for the first time in India.
The proposal by the National Commission for Enterprises in the Unorganised Sector
(NCEUS) sought to develop a healthy workforce that in turn would have a positive
impact on national income and economic growth. The scheme was aimed to cover
sickness, maternity, old age and death and proposed a participatory system with some
contribution from the workers.
Mitra (2006) focused on the reasons of low wages prevailing in the informal
sector. He argued for state support for improving the quality of employment in this
sector, which provides sources of livelihood to a sizeable proportion of the work
force. One important consideration was to raise the wage levels in the informal sector
by improving the productivity. Skill formation and up-gradation, micro-credit and
marketing assistance were some of the ways of enhancing productivity. Other than
this, the role of information dissemination was important for improving the wages
36
within the informal sector. Interventions, which were compatible with the individual
initiatives, could improve the living standards of the workers in the informal sector
without affecting adversely its potential to absorb labour on a large scale.
Prakash and Meher (2006) analysed the data from the four NSSO Surveys and
examined the structural change and productivity trends in the unorganised
manufacturing sector during the period 1985-2001. He noted that in the period after
mid-nineties (i.e. 1995-2001), employment in unorganised manufacturing sector has
grown faster than in the decade before (i.e. 1985-1995). Further, by rural-urban
distinction of units, urban units had registered higher growth in employment than that
of the rural units. This had contributed to a relative higher growth of labour
productivity for rural units.
Sakthivel and Joddar (2006) analysed that the coverage of social security
schemes had been largely against economically and socially vulnerable sections while
regular workers were largely covered by the provident fund regime. The ever
increasing army of casual and contract workers, even in the organised sector appeared
too had been discriminated against, not to speak of the entire self-employed, which
accounted for a significant proportion of India‘s workforce. Although the statutory
provisions of provident fund were supposed to be applicable universally among
industries specified in schedule I, the evidence clearly pointed to a dismal state of
affairs. So there was a crying need to enforce the same in the industries covered apart
from revising the list of industries continuously.
Harris-white and Sinha (2007) noted that in the context of India, it is important
to realise that the informal sector can be far more dynamic than the organised sector,
37
provided, they have the right opportunities to flourish. They were of the view that
contrary to the general wisdom, the informal sector is not synonymous with an entity
that necessarily stagnates in a low level equilibrium trap. Infect, both informal
manufacturing units and self employed units accumulate fixed assets, invest and
prosper and they do so even at a time when their formal counterparts are often mired
in complex regulations and not successful in protecting their self interests in
transition. No doubt, outcomes facing informal units are more likely to be mixed than
uniform, but there are situations when market delivers clear benefits to workers
engaged in the sector. It is however, contingent not only on the degree of the capital
mobility as the pre deployed capital needs to be reallocated from non-viable sectors to
those offering higher returns, but also on institutional capabilities to reformulate
existing regulations.
Mehrotra (2008) analysed the conditions of work (for example, hours of work,
hazardous nature of work, safety conditions and wages rates) in the prevailing labour
market conditions, where there is excess supply of labour. The unorganised sector
workers themselves are fragmented and almost always not organised into unions,
where they suffer from access to imperfect information and are not fully aware of
their limited rights. To make it even more difficult, they are mostly illiterate or barely
literate. If the pre-requisites for improving their conditions of work do not exist, he
suggested that the state should focus its attention on improving the social protection
for such workers, that is, social assistance and social insurance. This implies that the
state should focus on doing the ‗do able‘.
38
Kathuria, et. al. (2010) have analysed the productivity performance of the
organised and unorganised units of the Indian manufacturing sector at the state level
for the period 1994-95 to 2004-05 and have examined the impact of reforms on their
performance. For calculating the productivity levels and growth rates, both partial and
total factor productivity methods are considered. After analysing the production
function they showed that the capital rather than labour played a significant role in the
production process in the organised and unorganised manufacturing sector. The
comparative role of labour in the production processes is less in the unorganised
sector and this has remained a major concern as this sector is a significantly larger
employment provider. The TFP has grown steadily in the organised manufacturing
sector while the same has declined in the unorganised manufacturing sector. The
growth in GVA is driven mostly by productivity and not by inputs in both the sectors.
So it can be seen that most of the studies discussed above highlight the
contribution of the unorganised sector in total employment, productivity trends,
employment inequalities and social security needs of unorganised manufacturing
sector of India. Most of these studies are either region-specific or sector-specific.
Some of the macro level studies have analysed the informal sector in general. The
studies which have focussed on the unorganised manufacturing sector analysed its
performance up to 2000-01 only. So, the present study would not only update the
analysis of the performance of unorganised manufacturing sector in recent times as
compared to the early liberalisation period but also explore a range of aspects viz,
change in employment, wages, productivity, composition and the need of social
security. This study will have the following objectives.
39
Objectives
This study is based upon the following objectives:-
1. To study the growth and determinants of employment and wages in
unorganised manufacturing sector in India since 1991.
2. To examine the composition of unorganised manufacturing sector in India and
the changes in it during the post-liberalisation period.
3. To analyse the determinants of productivity of unorganised manufacturing
sector in India.
4. To examine inter-sectoral, inter-regional and gender inequalities in the
unorganised manufacturing sector in India.
5. To examine the need of policy attention towards unorganised manufacturing
sector
Methodology
This study is based upon secondary data. Source of the study is NSSO
(National Sample Survey Organisation) surveys which provide extensive data on
unorganised manufacturing sector. NSSO provides data for about 23 sub-sectors as
per National Industrial Classification. All classification has been adjusted according
to National Industrial Classification, 98 as per the concordance table provided by
NSSO. This data is further disaggregated into various states and rural-urban segments.
The data provided by NSSO is classified into three types of enterprises namely, Own
Account Manufacturing Enterprises (OAMEs), Non-directory Manufacturing
Enterprises (NDMEs), Directory Manufacturing Enterprises (DMEs). NSSO defines
OAMEs as those enterprises which operate with no hired worker on a fairly regular
40
basis. NDMEs are those enterprises which employ less than six workers including
household workers and DMEs employ six or more workers with at least one hired
worker but not registered under the Factory Act 1948 (NSSO, 2002).For analysing the
data, simple averages, annual compound growth rates and correlation coefficients
have been used.
Chapter Scheme
This study has been divided into the following chapters:-
1. First chapter gives the introduction and review of the relevant literature.
2. Second chapter analyses growth and determinants of employment in
unorganised manufacturing sector in India.
3. The third chapter examines the growth and determinants of productivity in this
sector.
4. The fourth chapter throws light on inequalities in employment in unorganised
manufacturing sector which covers inter-sectoral, inter-regional and gender
inequalities.
5. Fifth chapter discusses about the need of the policy attention towards
unorganised manufacturing sector in India.
6. Finally, the last chapter gives summary, conclusions and suggestions on the
basis of study.
41
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