Labour in India - Labor Structure in India

Labor Structure in India

Over 94 percent of India's working population is part of the unorganized sector. In local terms, organized sector or formal sector in India refers to licensed organizations, that is, those who are registered and pay sales tax, income tax, etc. These include the publicly traded companies, incorporated or formally registered entities, corporations, factories, shopping malls, hotels, and large businesses. Unorganised sector, also known as informal sector or own account enterprises, refers to all unlicensed, self-employed or unregistered economic activity such as owner manned general stores, handicrafts and handloom workers, rural traders, farmers, etc.

India's Ministry of Labor, in its 2008 report, classified the unorganized labor in India into four groups. This classification categorized India's unorganized labour force by occupation, nature of employment, specially distressed categories and service categories. The unorganized occupational groups include small and marginal farmers, landless agricultural labourers, share croppers, fishermen, those engaged in animal husbandry, beedi rolling, labeling and packing, building and construction workers, leather workers, weavers, artisans, salt workers, workers in brick kilns and stone quarries, workers in saw mills, and workers in oil mills. A separate category based on nature of employment includes attached agricultural labourers, bonded labourers, migrant workers, contract and casual laborers. Another separate category dedicated to distressed unorganized sector includes toddy tappers, scavengers, carriers of head loads, drivers of animal driven vehicles, loaders and unloaders. The last unorganized labor category includes service workers such as midwives, domestic workers, barbers, vegetable and fruit vendors, newspaper vendors, pavement vendors, hand cart operators, and the unorganized retail.

The unorganized sector has low productivity and offers lower wages. Even though it accounted for over 94 percent of workers, India's unorganized sector created just 57 percent of India's national domestic product in 2006, or about 9 fold less per worker than the organized sector. According to Bhalla, the productivity gap sharply worsens when rural unorganized sector is compared to urban unorganized sector, with gross value added productivity gap spiking an additional 2 to 4 fold depending on occupation. Some of lowest income jobs are in the rural unorganized sectors. Poverty rates are reported to be significantly higher in families where all working age members have only worked the unorganized sector throughout their lives.

Agriculture, dairy, horticulture and related occupations alone employ 52 percent of labor in India.

About 30 million workers are migrant workers, most in agriculture, and local stable employment is unavailable for them.

India's National Sample Survey Office in its 67th report found that unorganized manufacturing, unorganized trading/retail and unorganized services employed about 10 percent each of all workers nationwide, as of 2010. It also reported that India had about 58 million unincorporated non-Agriculture enterprises in 2010.

In the organized privately owned sector with more than 10 employees per company, the biggest employers in 2008 were manufacturing at 5 million; social services at 2.2 million, which includes private schools and hospitals; finance at 1.1 million which includes bank, insurance and real estate; and agriculture at 1 million. India had more central and state government employees in 2008, than employees in all private sector companies combined. If state-owned companies and municipal government employees were included, India had a 1.8:1 ratio between public sector employees and private sector employees. In terms of gender equality in employment, male to female ratio was 5:1 in government and government owned enterprises; private sector fared better at 3:1 ratio. Combined, counting only companies with more than 10 employees per company, the organized public and private sector employed 5.5 million women and 22 million men.

Given its natural rate of population growth and aging characteristics, India is adding about 13 million new workers every year to its labor pool. India's economy has been adding about 8 million new jobs every year predominantly in low paying, unorganized sector. The remaining 5 million youth joining the ranks of poorly paid partial employment, casual labor pool for temporary infrastructure and real estate construction jobs, or in many cases, being unemployed.