Unorgansied sector in India


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  • National commission on labour
  • Unorgansied sector in India

    1. 1. Unorganised Sector Problems and Prospects By: Annupam Iyer (7) Arjun Ramakrishnan (8) Bhoomika Diwan (10) Chandni Agarwal (11) Manish Singh (2??) Tarun Rustagi (5??)
    2. 2. Agenda <ul><li>Definition </li></ul><ul><li>Relevance </li></ul><ul><li>Problems </li></ul><ul><li>Prospects </li></ul>
    3. 3. Definition: <ul><li>Part of the workforce who have not been able to organize in pursuit of a common objective because of constraints such as </li></ul><ul><ul><li>casual nature of employment </li></ul></ul><ul><ul><li>ignorance and illiteracy </li></ul></ul><ul><ul><li>small size of establishments with low capital investment per person employed </li></ul></ul><ul><ul><li>scattered nature of establishments </li></ul></ul><ul><ul><li>superior strength of the employer </li></ul></ul><ul><li>“ The unorganized Sector consists of all private enterprises having less than ten total workers, operating on a proprietary or partnership basis.” </li></ul><ul><li>- by National Commission on Enterprises in the Unorganized/Informal Sector in 2004 </li></ul>
    4. 4. How this can be Identified <ul><li>On the basis of the nature of work that workers or employees are engaged </li></ul><ul><li>On the number of employees in undertakings </li></ul>
    5. 5. Few examples <ul><li>Forest workers </li></ul><ul><li>Tribal trying to follow traditional vocations within their traditional habitats </li></ul><ul><li>Fishermen who venture out to sea in vulnerable canoes </li></ul><ul><li>People working in their homes with software </li></ul><ul><li>People assembling parts for a highly sophisticated product </li></ul>
    6. 6. Categories of unorganized labour <ul><li>Contract labour including construction workers </li></ul><ul><li>Casual labour </li></ul><ul><li>Labour employed in small scale industry </li></ul><ul><li>Handloom/power-loom workers </li></ul><ul><li>Beedi and cigar workers </li></ul><ul><li>Employees in shops and commercial establishments </li></ul><ul><li>Sweepers and scavengers </li></ul><ul><li>Workers in tanneries </li></ul><ul><li>Tribal labour </li></ul><ul><li>Other unprotected labour </li></ul>
    7. 7. <ul><li>Provides income earning opportunity to the largest number of workers in India </li></ul><ul><li>Forms the basis of livelihood for millions </li></ul><ul><li>Employees both men and women </li></ul><ul><li>Employees children in some industries </li></ul>Relevancy of Unorganised Sector
    8. 8. <ul><li>Part of the labor market which is unregulated and to a large extent unprotected </li></ul><ul><li>Attempt to improve the socio-economic conditions for the unorganised sector will create hurdles in the smooth functioning of market led economy. </li></ul>Relevancy of Unorganised Sector
    9. 9. Contributions to national product and Net domestic product <ul><li>92% of the total workforce in a country were employed in the unorganized sector </li></ul><ul><li>370 million worker constitute the work force of unorganized sector. </li></ul><ul><li>Over 60% share as per current price in NDP. </li></ul><ul><li>Contribute Significantly to National Product </li></ul>
    10. 10. Estmd Contribution to Employment Year: 1999/00 (Total labour force: 406 million) (GDP share: 63%) Industrial Category No. of persons (in millions)   Formal Sector Informal Sector Agriculture 1.39 238.87 Non-Agriculture 26.68 131.5 Mining & Quarrying 1.01 1.25 Manufacturing 6.71 37.07 Electricity, Gas And Water 1 0.04 Construction 1.17 16.36 Trade, Hotels And Restaurants 0.49 40.37 Transport, Storage & Comm. 3.15 11.48 Financial Services 1.65 3.29 Community Services 11.49 21.64 All Sectors 28.07 (93%) 370.37
    11. 11. Labour Force Characteristics Year: 1999/00 Urban Share (in percentage)   Male Female Total 1. Employed 51.8 13.9 33.7 2. Unemployed 2.4 0.8 1.6 3. Labour Force (1+2) 54.2 14.7 35.3 4. Not counted in the labour force 32.8 71.7 51.4 5. Working age population (3+4) 87 86.4 86.7 6. Non-working age population 13 13.6 13.3 7. Population (5+6) 100 100 100 Rural Share (in percentage)   Male Female Total 1. Employed 53.1 29.9 41.9 2. Unemployed 0.9 0.3 0.6 3. Labour Force (1+2) 54 30.2 42.5 4. Not counted in the labour force 30.3 53.9 41.7 5. Working age population (3+4) 84.3 84.1 84.2 6. Non-working age population 15.7 15.9 15.8 7. Population (5+6) 100 100 100
    12. 12. Contribution to savings and capital formation <ul><li>Sharing of only household sector in Total Gross Domestic Saving mainly unorganised sector is about three fourth. </li></ul><ul><li>More than 30% of National Income comes from Unorganized Sector. </li></ul>
    13. 13. How is it calculated? Various Methods used by National Commission for Enterprises in the Unorganised Sector Item CSO Kolli & Hazra Sub Group Definitions of unorganised sectors Follows different criteria for different industry groups mainly dictated by availability of data Enterprises employing upto 5 workers with certain exemptions as informal sector which is a sub set of the CSO's unorganised sector. Proprietary and partnership enterprises employing less than 10 workers Share of Unorganised Sector Varies between 57 and 60 percent since 1993-94 58.5 % of NDP belongs to unorganised sector of which 47.7 % is informal in 2001-02. 55.42% in 1999-2000 and 49.94% in 2004-05 Methodology The GDP estimates of unorganized sector in each compilation category are initially prepared for a bench mark year by using labour input method. The labour input data is obtained from Census of Small Scale Industry, NSS surveys on Employment & Unemployment, DGET etc. For the subsequent years, the benchmark year estimates are extrapolated with appropriate physical indicators and the relevant price indices. Employment estimates from 55th round for all compilation categories.Value added per worker for services from 57th round and for the rest of the sectors from 55th round. Multiplying the employment with value added per worker to arrive at the informal sector estimates. Keeping the overall unorganised sector as defined by CSO constant. Value added per worker estimated from 55th, 56th and 57th round unorganised sector surveys. Employment estimates from 55th and 61st Round EUS survey. Apportioning was not limited only to unorganised sector GDP. In the services sector total GDP was apportioned.
    14. 14. Problems of Unorganized Sector <ul><li>Problems of the workforce </li></ul><ul><ul><li>90% of workforce in vast informal sector </li></ul></ul><ul><ul><li>Little awareness of workplace hazards </li></ul></ul><ul><ul><li>Living areas close to work areas </li></ul></ul><ul><ul><li>Extended work hours, exploitation </li></ul></ul><ul><ul><li>No concept of occupational safety/services </li></ul></ul><ul><ul><li>Lack of implementation of Health & Safety legislation </li></ul></ul><ul><ul><li>No concept of Trade/Labour Union </li></ul></ul>
    15. 15. Problems of Unorganized Sector <ul><li>Women workers and ‘beedi’ workers </li></ul><ul><ul><li>Desperately poor </li></ul></ul><ul><ul><li>Low wages, fraudulent contractors, disease causing environments, </li></ul></ul><ul><ul><li>Child labour, and >50% women </li></ul></ul><ul><ul><li>Deplorable social conditions </li></ul></ul>
    16. 16. Problems of Unorganized Sector <ul><li>Problems faced by Govt. </li></ul><ul><ul><li>Problem of definition and identification </li></ul></ul><ul><ul><li>Workforce uneducated about the benefits of organized sector </li></ul></ul><ul><ul><li>Scattered nature of sector </li></ul></ul><ul><ul><li>Employers avoid any form of regulation </li></ul></ul><ul><ul><li>Unorganized sectors contribute to almost 60% of GDP (apart from providing livelihood to population) </li></ul></ul><ul><ul><li>Same labour laws cannot be applied </li></ul></ul>
    17. 17. Problems of Unorganized Sector <ul><li>Problems from the Organized Sector </li></ul><ul><ul><li>Unfair competition (Walmart, Reliance) </li></ul></ul><ul><ul><li>Loss of employment </li></ul></ul><ul><ul><li>Legal “bullying” </li></ul></ul><ul><ul><li>Buyer preference for the “cleaner” retail stores </li></ul></ul><ul><ul><li>Financial aid not available to the unorganised sector easily to compete </li></ul></ul>
    18. 18. What can be done for this sector <ul><ul><li>Govt has formed National Commission to address the peculiar issues with this sector </li></ul></ul><ul><ul><li>Mainly working on Social security – recently approved Rs 1000 cr for this </li></ul></ul><ul><ul><li>Adopted a concept of Growth pole to link this sector with organised sector </li></ul></ul><ul><ul><li>Availability of capital for this sector </li></ul></ul><ul><ul><li>Introduction of Health insurance Scheme – “SWASTHYA BIMA YOJANA” </li></ul></ul>
    19. 19. Annexures
    20. 20. “ SWASTHYA BIMA YOJANA” <ul><li>SALIENT FEATURES OF THE SCHEME Funding Pattern </li></ul><ul><li>Contribution by Government of India: 75% of the estimated annual premium of Rs.750, subject to a maximum of Rs. 565 per family per annum. The cost of smart card will be borne by the Central Government. </li></ul><ul><li>Contribution by respective State Governments: 25% of the annual premium, as well as any additional premium. </li></ul><ul><li>The beneficiary would pay Rs. 30 per annum as registration/renewal fee. </li></ul><ul><li>The administrative and other related cost of administering the scheme would be borne by the respective State Governments </li></ul>