Organized versus Unorganized

In India, the term “organized enterprise” was originally used to refer to the enterprises registered under the Factories Act, 1948. Industrial enterprises with 20 or more workers if not using power and 10 or more workers if using power are required to register under this Act. But in some contexts, the term has been widened to include all enterprises with 10 or more workers in both industry and services. By implications, enterprises with less than 10 workers are called unorganized enterprises.

1.1. Nature of Employment in India

The nature of employment in India is multifaceted. Some get employment throughout the year while some others get employed for only a few months in a year. Therefore the economic planning in India aims to utilise the available resources in a manner which would maximise the rate of growth with optimal employment generation. Following are the key features of employment in India:

♤ Ruralization: During 2011-12, India had about 473 million strong workforce. About 3/4th of them are rural workers. About 70 per cent of the workers are men and the rest are women.

♤ Informalisation: According to the International Labour Organization, 81% of the labour is working in the informal sector, with only 6.5% in the formal sector and 0.8% in the household sector.

♤ Casualization: The phenomena of shift from regular salaried employment and self employment to casual wage work is called ‘casualization of the workforce’. Statistics show that there has been a gradual increase in the casual workforce over the last few decades.

♤ Masculinization: India’s female Labour Force Participation Rate (LFPR) has fallen to a historic low of 23.3% in 2017-18. It means that over three out of four women in India are neither working nor seeking work. This would imply that they are most likely engaged in the household chores. This leads to under-valuation of women’s contribution to the economy as a whole.

These issues arise mainly because India's economy is highly informalized. There is need to a formal economy.

1.2. Formalization of Indian Economy

Formalization means creation and expansion of formal jobs, essentially, that come with social security, financial inclusion and legal empowerment of the workforce.