Understand the quality of employment in India, including wages, formality, and job security for UPSC Economics

Quality of Employment in India: Organised vs Unorganised Sector

• Criteria for Judging Quality of Employment

  • Broadly, quality of employment can be assessed based on:

  •  Proportion of workers engaged in regular and casual labour

  •  Productivity of employment

  •  Proportion of workers in organised and unorganised sectors

• Proportion of Workers in Organised and Unorganised Sectors

  • An increasing share of employment in the unorganised sector indicates deterioration in employment quality as aspects such as earnings, job regularity, work environment, and social security are significantly poorer compared to the organised sector.

  • Workers in the organised sector enjoy better wages, job security, decent working conditions, and protection against risks such as sickness, injury, disability, and old age.

  • In contrast, workers in the unorganised sector face job insecurity, low earnings, lack of risk protection, and often earn below statutory minimum wages.

  • Therefore, a rise in unorganised employment share signifies worsening quality of employment.

• Trends in Employment Composition (1999–2005)

  • The proportion of workers in the organised sector declined from 8.83% in 1999–2000 to 7.46% in 2004–05.

  • The share of unorganised sector workers increased from 91.17% to 92.38% during the same period.

  • The organised sector is also witnessing a shift towards informal employment, reducing the distinction between the two sectors in terms of employment quality.

• Distribution of Workers by Employment Type and Sector (in millions)

  • Data Source: National Commission for Enterprises in the Unorganised Sector (NCEUS), 2008 Report on Conditions of Work and Promotion of Livelihood.

  • 1999–2000

    • Unorganised Sector: 341.28 (Informal), 1.36 (Formal), Total: 342.64

    • Organised Sector: 20.46 (Informal), 33.67 (Formal), Total: 54.12

    • Total Employment: 396.76

  • 2004–05

    • Unorganised Sector: 393.47 (Informal), 1.43 (Formal), Total: 394.00

    • Organised Sector: 29.14 (Informal), 33.42 (Formal), Total: 62.57

    • Total Employment: 457.46

  • Note: Figures in brackets represent percentages. Basis: UPSS.

• Quality of Employment among Non-Farm Workers

  • Landless labourers and marginal farmers engaged in agriculture are the worst affected by informal employment.

  • Non-farm workers are also vulnerable to informalisation, with rising employment in unorganised settings.

• Distribution of Non-Farm Workers by Employment Type and Sector (in millions)

  • Data Source: National Commission for Enterprises in the Unorganised Sector (NCEUS), 2008 Report.

  • 1999–2000

    • Unorganised Sector: 109.37 (Informal), 1.06 (Formal), Total: 110.43

    • Organised Sector: 17.58 (Informal), 31.08 (Formal), Total: 48.66

    • Total Non-Farm Workers: 159.09

  • 2004–05

    • Unorganised Sector: 140.65 (Informal), 1.42 (Formal), Total: 142.07

    • Organised Sector: 25.89 (Informal), 30.58 (Formal), Total: 56.47

    • Total Non-Farm Workers: 198.54

  • Note: Figures in brackets represent percentages.