The document discusses organized and unorganized sectors in India. It defines the unorganized sector as small, unincorporated private enterprises with less than 10 workers that lack formal legal status and protections. The organized sector follows government rules and regulations. In the 1990s, employment grew over 4% annually in the organized sector but declined slightly in the unorganized sector. By the late 1990s, job losses in the organized sector increased absorption of workers by the unorganized sector. The two sectors now show greater interdependence and convergence than in the past.

1. Organized and Unorganized Sector
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Assignment on
Organized
And
Unorganized Sector
Date of Submission:6August,2015
Submitted by:Sonali
Class:BBA
Roll No: BBA/13/913
Email:snlkkrj000@gmail.com

2. Organized and Unorganized Sector
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Contents
1 Introduction....................................................................................................................................................3
2 Organized sector VS. Unorganized sector .....................................................................................................8
3 Protection of the workers in the unorganized sector......................................................................................9
4 Examples........................................................................................................................................................9
5 Bibliography ................................................................................................................................................10

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1 Introduction
The term unorganized sector when used in the Indian context is defined by
National Commission for Enterprises in the Unorganized Sector, in their
Report on Conditions of Work and Promotion of Livelihoods in the Unorganized
Sector as ....consisting of all unincorporated private enterprises owned by
individuals or households engaged in the sale or production of goods and
services operated on a proprietary or partnership basis and with less than ten total
workers. Amongst the characteristic features of this sector are ease of entry,
smaller scale of operation, local ownership, uncertain legal status, labor-intensive
and operating using lower technology based methods, flexible pricing, less
sophisticated packing, absence of a brand name, unavailability of good storage
facilities and an effective distribution network, inadequate access to government
schemes, finance and government aid, lower entry barriers for employees, a
higher proportion of migrants with a lower rate of compensation. Employees of
enterprises belonging to the unorganized sector have lower job security and
poorer chances of growth, and no leaves and paid holidays, they have lower
protection against employers indulging in unfair or illegal practices.
A sector which act according to government rules with many employers and
have a defined pattern of wages is called organized sector. It has high profits
and i irreparable lose. All developed countries follow this sector.
LIBERALISATION of the economy has had contradictory effects on
employment and labor. Gains in industries that expanded due to low tariffs or
removal of licensing were partly offset by losses made in formerly protected
industries facing competition from new entry.
Gains in the three boom years — 1993-04 to 1995-06 — was partially wiped out
in the recession that followed.

4. Organized and Unorganized Sector
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What was the net overall effect on manufacturing employment?
Until recently, the data to measure net employment effects of the reforms were not available. Whereas
employment in registered factories — the organized sector — is available annually, no up-to-date estimate of
unorganized (unregistered) sector employment was available.
Yet, the unorganized sector played a large role in the story of India's structural adjustment. Recent National
Sample Survey (NSS) studies redress that gap greatly.

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The organized sector: Employment in the organized sector industry grew from 8.3 million in 1991 to 10.2
million in 1996, or at over 4 per cent annually. There is no previous episode of such high growth rates sustained
for five years. It is also clear that the rate of growth of average real wages slowed down greatly in the 1990s,
and the rate of growth of real productivity (value-added per worker) increased.
These trends represent a big contrast to the 1980s, which saw quite opposite trends: Rapid increase in real
wages, moderate increase in productivity, almost no change in employment. These features were named the
syndrome of `jobless growth' and have been, along with the contrast to the early-1990s, matters of debate.
Why did jobless growth turn into job-friendly growth in the early-1990s? One answer is that industrial
composition changed in favor of labor-intensive sectors, and many exportable sectors are intensive in labor,
skilled or semi-skilled. This answer lays more stress on the demand effects of the reform.
A second answer focuses on the dynamics of the labor market, and suggests that the employment growth
resulted from a coincidence of reforms with changes in industrial relations. Incidence of labor militancy came
down in the 1990s, and may have encouraged more recruitment while slowing down wage growth. There has
indeed been a great deal of adjustments in employment and terms of contract. The corporate sector has pushed a
lot of jobs, formerly integrated, to the service sector. On an average, the private sector employee seems to work
harder for less at 2002 than at 1992.
New firms in the 1990s started without any overhead of surplus workforce and the option to introduce more
flexible work regime. By contrast, employment was sluggish in the 1980s because of labor militancy, often
state-backed, and a great lack of flexibility. One point missed out in the `jobless growth' debate is that
employment growth is a sum of new jobs created and old ones lost. The debate, by contrast, has been
preoccupied only with the rate of job creation. It is possible to estimate gain and loss separately for the
organized sector.
In 1980-90, jobs were lost on an unusually large scale, almost a quarter of the employment level in 1980.
Jobless growth, in other words, was influenced by mass closures, the most famous examples of which occurred
in textiles and engineering. In 1991-96, such mass closures were rare, closures occurred more at the firm level,
and total job loss was small, about 2 per cent of 1991 employment.
The main difference between the 1980s and the early-1990s was not one of `more' or `less' militancy, but of
change in bargaining institutions. Industry-wide unions were in decline all through the 1980s, making way for
firm-specific bargaining. Closures, to the extent they can be attributed to labor factors such as militancy or
wage-rigidity, also ceased to be industry-wide in the 1990s.

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In contrast with the early-1990s, the late-1990s were devastating. In only two years of recession, 1997 and 1998,
job loss was quite significant. Between 1994 and 1999, the organized sector employment fell from 9.4 to 8.4
million. The real magnitude is somewhat smaller, for these two figures correspond to two industrial
classification systems. Adjusted for that, the extent of the fall may have been about half a million.
The unorganized sector: There are interesting similarities and contrasts between the patterns of growth in the
organized and unorganized sectors over the 1990s. The major point of similarity is that both experienced growth
in productivity and stagnation in real wages in much of this decade, perhaps suggesting a kind of convergence in
labor market institutions.
On the other hand, there is a significant contrast in employment growth. In 1989-95, while employment in the
organized sector grew from 8.3 million to 9.4 million, in the unorganized sector, it declined from 35 million to
33.4 million.
This decline was an average over rapid growth in sectors such as garments and leather products, and fall in
traditional consumer goods such as handlooms and earthenware.
What about the second half of the 1990s when organized sector employment fell? In the unorganized sector,
which is not normally statistically well-served, for 1999, there are three estimates of employment. According to
an NSS employment survey, employment in the unorganized sector rose from 33 to 35 million.
An NSS informal sector survey indicates that employment fell from 33 million to 29 million. And the most
recent NSS unorganized manufacturing survey shows that employment rose from 33 million to nearly 38
million. It is better to settle for the scenario of an increase.
Not only because that is the majority view, but also because the enterprise or industry surveys are likely to use a
definition of employment less restrictive than the employment surveys and more consistent with the figures for
previous years used.
What may have happened is that, in the first half of the 1990s, there was no net loss of employment in the
organized sector. Job loss was minimal, and possibly compensated within the sector. The organized sector may
even have drawn some workers from the unorganized. In the latter part of the decade, the impact of the
recession seems to have pushed large number of new entrants and incumbents into the unorganized sector. This
is not pure overcrowding of under-employed labor, for productivity growth did not suffer in the late-1990s.
Changes in labor market institutions, post-reform and post-recession, show up in general statistical trends in two
ways. First, estimates of job loss show that the dynamics of closure has changed, from industry- to firm-level.
Second, the unorganized sector absorbs an increasing extent of new entry as well as jobs shed in the organized
sector.

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What can be concluded from the fact that trends in the two sectors apparently move in opposite directions? The
obvious answer is, there is possibly far greater symbiosis between them now than before. The previous situation
was probably one where the two sectors were largely independent, engaged in traditional consumables and the
other in capital-intensive consumer goods and capital goods.
That may be changing for increasing co-dependence and convergence in type of activity, labor market character,
and labor mobility.

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2 Organized sector VS. Unorganized sector
S
No.
Organized Sector Unorganized Sector
1 The enterprises or place of work where the
terms of employment are regular and therefore,
people have assured work. They are registered
by the government and have to follow its rules
and regulations which are given in various laws
such as the factories act, Minimum wages act,
payment of gratuity act, shops and
establishments act, etc.
The enterprises or places of work are not registered by
the government and does not follow any rules and
regulations. There are no terms of employment.
2 Workers enjoy security of employment. Workers don’t enjoy the security of employment.
3 They work only fixed number of hours. If they
work more they get more.
There is no fixed number of hours.
4 Workers enjoy benefits like paid leave,
provident fund and medical benefits.
Workers don’t enjoy any benefits.

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3 Protection of the workers in the unorganized sector
The unorganized sector mainly comprises of workers in the small scale industries, casual workers in the
construction trade and transport sectors and those who work as street vendors, head load workers, garment
maker and rag picker. Protection and support for the unorganized sector workers is very necessary for both
economic and social development. The government law protecting these workers should be strictly implemented
and those who exploit these workers should be punished severely.
4 Examples
A majority of labour in India is
employed by unorganised sector
(unincorporated). These include family
owned shops and street vendors. Above
is a self-employed child labourer in the
unorganised retail sector of India.
Labour at an unorganised handicraft
manufacturing enterprise
Flooring work at a Portico in
Hyderabad, India

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5 Bibliography
 http://gradestack.com/CBSE-Class-10th-Course/Sectors-of-the-Indian/Organized-and-
Unorganized/15078-3004-4121-study-wtw
 https://en.wikipedia.org/wiki/Unorganized_sector_(India)
 http://www.thehindubusinessline.com/2003/07/02/stories/2003070200050800.htm
 http://www.answers.com/Q/Definition_of_organised_sector
 https://en.wikipedia.org/wiki/Labour_in_India#Unorganised_labour_issues