80% in informal employment have no written contract

Informal jobs mean vulnerability, lower wages, no social security: NSSO

Updated - December 04, 2021 11:27 pm IST

Published - August 28, 2014 03:49 am IST - NEW DELHI

Nearly three out of four people working in the non-agricultural sector in India are in informal jobs, new data from the National Sample Survey Office (NSSO) shows.

Eighty per cent of these informal sector employees have no written contract and 72 per cent get no social security benefits, according to this data.

 The NSSO’s 68th round looked at the ‘Informal Sector and Conditions of Employment in India’ for 2011-12, by conducting a nationally representative household-level sample survey. It looked at both rural and urban areas, but excluded crop-based farming, covering just over half of India’s workforce as a result.

 In 2013, Credit Suisse economists Neelkanth Mishra and Ravi Shankar estimated India’s informal economy at 90 per cent of all employment and half of total GDP. They estimated informal employment in the non-farm sector at 84 per cent, substantially higher than the NSSO’s estimate. Only sub-Saharan Africa had a comparable extent of informalisation.

A major chunk of non-agricultural labour is engaged in the informal sector that consist of jobs without written contract, not monitored by govt.

 Seventy-two per cent of this workforce was in the informal sector, the NSSO found, with the proportion being higher in rural than urban India. Nearly all of the self-employed — the largest component of the workforce — are in informal jobs, while over 40 per cent of those in regular or salaried jobs are also in informal work arrangements.

In real terms, informal jobs mean vulnerability, the numbers indicate. Of those in the informal sector, 42 per cent were in temporarily employment.

Wages were lower in the informal sector; while regular/ salaried employees earned Rs 401 per day, those in the informal sector earned Rs 225 per day. 

Nearly 80 per cent of all informal sector workers had no written contracts, 70 per cent got no paid leave and 72 per cent got no social security benefits. Eighty per cent were not members of any union or association.

 Informalisation — the proportion of informal workers to total workers — has fallen significantly since 2004-5 though the 2009-10 data showed a slight rise, the NSSO says.

Manufacturing, construction, wholesale and retail trade, transportation and storage were the main sectors employing informal workers, the NSSO found.

Most enterprises hiring informal workers are tiny; three-quarters of all informal workers are in enterprises of less than six persons, the data shows.

 Among the States, Punjab, Uttar Pradesh and West Bengal had the highest proportion of informal workers, and the north-eastern States, Himachal Pradesh and Goa the lowest.  

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