From Shadows to Spotlight - Reforming India's Unorganised Sector, a road that leads us to Superpower Status
India, with its vast population of 1.4 billion and rapidly growing economy, is often seen as a potential global superpower. While India's GDP of over $3.5 trillion places it among the top economies globally, the reality on the ground presents significant challenges that set it apart from developed nations.
India faces deep-rooted issues in areas like agriculture, education, healthcare, and infrastructure, which hinder its ability to fully compete with the world's most advanced nations. Moreover, to truly establish itself as a global superpower.
India must make significant advancements on two fronts:
a) Uplifting the unorganized sector and people living below the poverty line, ensuring inclusive growth. b) Advancing high-tech industries such as aerospace and space research, prioritizing missions beyond Earth, including ambitious goals like Mars exploration.
Unorganized labor in India constitutes a large portion of the workforce, involving individuals who work in sectors like agriculture, construction, small-scale industries, and personal services. These workers typically lack formal employment contracts, social security benefits, or regulatory protection, which results in precarious working conditions and low wages. The unorganized sector includes small-scale farmers, vegetable, fruit, and flower vendors, plumbers, electricians, mechanics, carpenters, roadside food stall owners, scrap vendors, construction workers, security guards, maids, office boys, tea vendors, and more. In some rural parts of India, even teachers, especially in unrecognized schools, fall under this category. Many of these workers earn less than ₹7,000 per month, placing them in a vulnerable economic position.
Key Statistics on Unorganized Labor in India
Size of the Unorganized Workforce: As per the Periodic Labour Force Survey (PLFS) 2017-2018, around 92% of the total workforce in India is employed in the unorganized sector. This amounts to about 450 million workers.
Sectoral Distribution:
Agriculture: Small-scale farmers make up a significant portion of this group, with nearly 42% of the total workforce engaged in agriculture. These workers often have fragmented landholdings and lack access to modern technology and financial services.
Construction and Other Trades: Construction workers, plumbers, electricians, and carpenters comprise about 10% of the workforce. They are often employed on a daily wage basis without contracts or social security.
Vendors and Service Providers: Small vendors such as vegetable, fruit, flower sellers, and roadside food stall owners make up a significant proportion of urban informal workers.
Domestic Workers: There are an estimated 4.75 million domestic workers, the majority of whom are women. They typically work without any formal contracts or employment benefits.
Income Levels: Workers in the unorganized sector earn between ₹5,000 and ₹7,000 a month on average, which is far below the minimum wage in many states. In certain sectors like agriculture, their earnings might be even lower, contributing to chronic poverty.
Social Security Coverage: Most unorganized sector workers lack access to social security schemes like health insurance, provident funds, or pensions. A study by the International Labour Organization (ILO) found that only about 10% of informal workers have any form of social protection.
Challenges Faced by Unorganized Workers
Lack of Formal Contracts: A majority of these workers do not have formal employment contracts, making them vulnerable to exploitation, uncertain working conditions, and job insecurity.
No Social Security Benefits: With no access to health insurance, pension schemes, or provident funds, unorganized workers face financial instability, especially during times of illness or old age.
Low Wages: The average income in the unorganized sector is meager, and wage disparities persist across regions and sectors. Many workers earn far below the living wage, making it difficult to sustain basic living standards.
Lack of Skill Development: These workers often lack access to training programs that could improve their skills and productivity. As a result, they remain trapped in low-income jobs without any prospects for upward mobility.
Poor Working Conditions: Many unorganized workers face hazardous working environments, particularly in construction and roadside services, where safety protocols are rarely enforced. They lack access to basic amenities like clean drinking water, sanitation, and adequate shelter during work.
Financial Exclusion: A large proportion of unorganized workers lack access to formal banking systems, making it difficult for them to save, invest, or avail themselves of credit. As a result, they often rely on informal moneylenders, which leads to debt traps.
Key Differences Between Developed and Developing Nations
Size of the Informal Sector:
Developed countries generally have smaller informal sectors (5-20% of total employment), whereas in developing nations like India, this figure can exceed 80-90%.
Social Protections:
In developed countries, even informal workers often have access to healthcare, pensions, and unemployment benefits through universal or contributory welfare systems.
In developing countries, unorganized sector workers often lack any form of social protection, leading to greater vulnerability.
Employment Regulations:
Developed nations have stronger labor laws, which cover both formal and informal workers to some extent. This includes minimum wages, health and safety standards, and some form of social security.
In developing nations, labor regulations are weaker, and enforcement is often inadequate, leaving informal workers without protections.
Income Levels:
Informal workers in developed countries earn higher wages compared to their counterparts in developing countries, even though they may still be lower than formal sector wages.
In developing countries, informal workers often earn less than the minimum wage, leading to persistent poverty.
Workforce Composition and Economic Structure
In India, nearly 42% of the total workforce is employed in agriculture, yet this sector only contributes about 18% of the GDP. This mismatch highlights a significant issue in economic productivity. In contrast, in developed nations like the United States, only 1.3% of the workforce is engaged in agriculture, but with advanced technology, mechanization, and efficient practices, they meet both domestic needs and export demands.
India's workforce also features a large informal sector, with 93% of workers operating without formal contracts, social security, or minimum wage guarantees. Comparatively, in developed countries like Germany, the informal workforce is less than 10%, ensuring that the majority of employees have access to job security, health insurance, pensions, and fair wages.
One of the most evident gaps between India and developed nations is infrastructure. India has a rapidly urbanizing population, with 35% of its people living in cities, yet basic infrastructure like housing, roads, and sanitation lags behind. 24% of urban households in India live in slums, and nearly 15% of households lack access to clean drinking water.
Developed nations have managed to provide basic amenities to their urban and rural populations with far greater efficiency. For example, in countries like Japan, access to potable water, sanitation, and electricity is nearly universal. The average American has access to 15,000 miles of high-quality paved roads per 1,000 square miles, whereas India struggles with fewer than 4,000 miles.
Education and Skill Development
Key Statistics on Higher Education in India
Number of Institutions:
Universities: As of 2023, India has over 1,000 universities, including central, state, deemed-to-be, and private universities.
Colleges: There are around 42,000 colleges across the country offering undergraduate and postgraduate programs.
Graduates and Postgraduates:
Undergraduate Degrees: Approximately 3.6 million students graduated with a bachelor's degree in the academic year 2020-2021.
Postgraduate Degrees: Around 1.2 million students completed postgraduate programs in the same period.
Doctorates: The number of Ph.D. graduates is significantly lower, with around 30,000 awarded annually.
Quality and Employability:
Employability: A report by the National Association of Software and Service Companies (NASSCOM) and the National Skill Development Corporation (NSDC) found that only about 20% of engineering graduates are employable, and the situation is similar across other disciplines. The employability rate for graduates in general has been reported to be around 50-60%.
Accreditation and Rankings: Many Indian universities and colleges are not ranked globally. Institutions like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) perform well in global rankings, but the majority of other institutions do not achieve notable international recognition.
Curriculum Relevance: There is concern that many institutions continue to offer outdated curricula that do not align with current industry needs. This has led to criticism that graduates lack practical skills and real-world preparedness.
Practical Skills Training: They provide hands-on training that aligns with industry needs, preparing individuals for specific careers and improving their employability.
Affordability: Skill development programs are often more cost-effective than traditional higher education, making them accessible to a wider audience, including those from lower-income backgrounds.
Industry Collaboration: Many skill development centers partner with industries to offer courses that reflect current job market demands, ensuring that the training is relevant and up-to-date.
Shorter Duration: These programs typically have shorter durations compared to traditional degrees, allowing individuals to enter the workforce more quickly.
Entrepreneurship Support: They often include training in entrepreneurship and business skills, helping individuals start their own ventures.
Flexibility: Many centers offer flexible learning options, including online courses and part-time programs, making it easier for working individuals to upskill.
To enhance this approach, the government and private sector can work together to:
Expand and Fund Skill Development Centers: Increase the number of centers and provide financial support to make them more widely accessible.
Align Training with Market Needs: Collaborate with industries to ensure that training programs match current and future job market requirements.
Promote Industry Certifications: Offer certifications that are recognized by employers and add value to job seekers' resumes.
Support for Trainers: Invest in training for instructors to ensure high-quality education and relevant skills.
Incorporate Soft Skills Training: Include modules on communication, problem-solving, and other soft skills that are crucial for workplace success.
Challenges and Recommendations
Upgrading the Courses: While the number of graduates is high, the focus should shift to improving the quality of education. This includes updating curricula, enhancing faculty training, and aligning programs with industry needs.
Industry Collaboration: Strengthening partnerships between educational institutions and industries can help ensure that graduates acquire skills relevant to the job market.
Investment in Infrastructure: Increased investment in educational infrastructure and resources can help improve the overall quality of education.
Emphasis on Research and Innovation: Supporting research and innovation at universities can enhance their global standing and contribute to national development.
By addressing these issues, India can work towards enhancing the quality of its higher education system, ensuring that graduates are better equipped for the demands of the modern economy.
Question A) How can we reform our approach to ensure that higher education not only expands access but also effectively prepares students for the real world? Let’s explore solutions and strategies for aligning education with industry needs and improving overall quality.
Question B) How can we address the challenges faced by these workers while also integrating them into more formal economic structures? Let’s explore practical solutions that can uplift this significant segment of our workforce.
Share this post
Empowering India's Unorganised Sector"
Share this post
From Shadows to Spotlight - Reforming India's Unorganised Sector, a road that leads us to Superpower Status
India, with its vast population of 1.4 billion and rapidly growing economy, is often seen as a potential global superpower. While India's GDP of over $3.5 trillion places it among the top economies globally, the reality on the ground presents significant challenges that set it apart from developed nations.
India faces deep-rooted issues in areas like agriculture, education, healthcare, and infrastructure, which hinder its ability to fully compete with the world's most advanced nations. Moreover, to truly establish itself as a global superpower.
India must make significant advancements on two fronts:
a) Uplifting the unorganized sector and people living below the poverty line, ensuring inclusive growth.
b) Advancing high-tech industries such as aerospace and space research, prioritizing missions beyond Earth, including ambitious goals like Mars exploration.
Unorganized labor in India constitutes a large portion of the workforce, involving individuals who work in sectors like agriculture, construction, small-scale industries, and personal services. These workers typically lack formal employment contracts, social security benefits, or regulatory protection, which results in precarious working conditions and low wages. The unorganized sector includes small-scale farmers, vegetable, fruit, and flower vendors, plumbers, electricians, mechanics, carpenters, roadside food stall owners, scrap vendors, construction workers, security guards, maids, office boys, tea vendors, and more. In some rural parts of India, even teachers, especially in unrecognized schools, fall under this category. Many of these workers earn less than ₹7,000 per month, placing them in a vulnerable economic position.
Key Statistics on Unorganized Labor in India
Size of the Unorganized Workforce: As per the Periodic Labour Force Survey (PLFS) 2017-2018, around 92% of the total workforce in India is employed in the unorganized sector. This amounts to about 450 million workers.
Sectoral Distribution:
Agriculture: Small-scale farmers make up a significant portion of this group, with nearly 42% of the total workforce engaged in agriculture. These workers often have fragmented landholdings and lack access to modern technology and financial services.
Construction and Other Trades: Construction workers, plumbers, electricians, and carpenters comprise about 10% of the workforce. They are often employed on a daily wage basis without contracts or social security.
Vendors and Service Providers: Small vendors such as vegetable, fruit, flower sellers, and roadside food stall owners make up a significant proportion of urban informal workers.
Domestic Workers: There are an estimated 4.75 million domestic workers, the majority of whom are women. They typically work without any formal contracts or employment benefits.
Income Levels: Workers in the unorganized sector earn between ₹5,000 and ₹7,000 a month on average, which is far below the minimum wage in many states. In certain sectors like agriculture, their earnings might be even lower, contributing to chronic poverty.
Social Security Coverage: Most unorganized sector workers lack access to social security schemes like health insurance, provident funds, or pensions. A study by the International Labour Organization (ILO) found that only about 10% of informal workers have any form of social protection.
Challenges Faced by Unorganized Workers
Lack of Formal Contracts: A majority of these workers do not have formal employment contracts, making them vulnerable to exploitation, uncertain working conditions, and job insecurity.
No Social Security Benefits: With no access to health insurance, pension schemes, or provident funds, unorganized workers face financial instability, especially during times of illness or old age.
Low Wages: The average income in the unorganized sector is meager, and wage disparities persist across regions and sectors. Many workers earn far below the living wage, making it difficult to sustain basic living standards.
Lack of Skill Development: These workers often lack access to training programs that could improve their skills and productivity. As a result, they remain trapped in low-income jobs without any prospects for upward mobility.
Poor Working Conditions: Many unorganized workers face hazardous working environments, particularly in construction and roadside services, where safety protocols are rarely enforced. They lack access to basic amenities like clean drinking water, sanitation, and adequate shelter during work.
Financial Exclusion: A large proportion of unorganized workers lack access to formal banking systems, making it difficult for them to save, invest, or avail themselves of credit. As a result, they often rely on informal moneylenders, which leads to debt traps.
Key Differences Between Developed and Developing Nations
Size of the Informal Sector:
Developed countries generally have smaller informal sectors (5-20% of total employment), whereas in developing nations like India, this figure can exceed 80-90%.
Social Protections:
In developed countries, even informal workers often have access to healthcare, pensions, and unemployment benefits through universal or contributory welfare systems.
In developing countries, unorganized sector workers often lack any form of social protection, leading to greater vulnerability.
Employment Regulations:
Developed nations have stronger labor laws, which cover both formal and informal workers to some extent. This includes minimum wages, health and safety standards, and some form of social security.
In developing nations, labor regulations are weaker, and enforcement is often inadequate, leaving informal workers without protections.
Income Levels:
Informal workers in developed countries earn higher wages compared to their counterparts in developing countries, even though they may still be lower than formal sector wages.
In developing countries, informal workers often earn less than the minimum wage, leading to persistent poverty.
Workforce Composition and Economic Structure
In India, nearly 42% of the total workforce is employed in agriculture, yet this sector only contributes about 18% of the GDP. This mismatch highlights a significant issue in economic productivity. In contrast, in developed nations like the United States, only 1.3% of the workforce is engaged in agriculture, but with advanced technology, mechanization, and efficient practices, they meet both domestic needs and export demands.
India's workforce also features a large informal sector, with 93% of workers operating without formal contracts, social security, or minimum wage guarantees. Comparatively, in developed countries like Germany, the informal workforce is less than 10%, ensuring that the majority of employees have access to job security, health insurance, pensions, and fair wages.
One of the most evident gaps between India and developed nations is infrastructure. India has a rapidly urbanizing population, with 35% of its people living in cities, yet basic infrastructure like housing, roads, and sanitation lags behind. 24% of urban households in India live in slums, and nearly 15% of households lack access to clean drinking water.
Developed nations have managed to provide basic amenities to their urban and rural populations with far greater efficiency. For example, in countries like Japan, access to potable water, sanitation, and electricity is nearly universal. The average American has access to 15,000 miles of high-quality paved roads per 1,000 square miles, whereas India struggles with fewer than 4,000 miles.
Education and Skill Development
Key Statistics on Higher Education in India
Number of Institutions:
Universities: As of 2023, India has over 1,000 universities, including central, state, deemed-to-be, and private universities.
Colleges: There are around 42,000 colleges across the country offering undergraduate and postgraduate programs.
Graduates and Postgraduates:
Undergraduate Degrees: Approximately 3.6 million students graduated with a bachelor's degree in the academic year 2020-2021.
Postgraduate Degrees: Around 1.2 million students completed postgraduate programs in the same period.
Doctorates: The number of Ph.D. graduates is significantly lower, with around 30,000 awarded annually.
Quality and Employability:
Employability: A report by the National Association of Software and Service Companies (NASSCOM) and the National Skill Development Corporation (NSDC) found that only about 20% of engineering graduates are employable, and the situation is similar across other disciplines. The employability rate for graduates in general has been reported to be around 50-60%.
Accreditation and Rankings: Many Indian universities and colleges are not ranked globally. Institutions like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) perform well in global rankings, but the majority of other institutions do not achieve notable international recognition.
Curriculum Relevance: There is concern that many institutions continue to offer outdated curricula that do not align with current industry needs. This has led to criticism that graduates lack practical skills and real-world preparedness.
Practical Skills Training: They provide hands-on training that aligns with industry needs, preparing individuals for specific careers and improving their employability.
Affordability: Skill development programs are often more cost-effective than traditional higher education, making them accessible to a wider audience, including those from lower-income backgrounds.
Industry Collaboration: Many skill development centers partner with industries to offer courses that reflect current job market demands, ensuring that the training is relevant and up-to-date.
Shorter Duration: These programs typically have shorter durations compared to traditional degrees, allowing individuals to enter the workforce more quickly.
Entrepreneurship Support: They often include training in entrepreneurship and business skills, helping individuals start their own ventures.
Flexibility: Many centers offer flexible learning options, including online courses and part-time programs, making it easier for working individuals to upskill.
To enhance this approach, the government and private sector can work together to:
Expand and Fund Skill Development Centers: Increase the number of centers and provide financial support to make them more widely accessible.
Align Training with Market Needs: Collaborate with industries to ensure that training programs match current and future job market requirements.
Promote Industry Certifications: Offer certifications that are recognized by employers and add value to job seekers' resumes.
Support for Trainers: Invest in training for instructors to ensure high-quality education and relevant skills.
Incorporate Soft Skills Training: Include modules on communication, problem-solving, and other soft skills that are crucial for workplace success.
Challenges and Recommendations
Upgrading the Courses: While the number of graduates is high, the focus should shift to improving the quality of education. This includes updating curricula, enhancing faculty training, and aligning programs with industry needs.
Industry Collaboration: Strengthening partnerships between educational institutions and industries can help ensure that graduates acquire skills relevant to the job market.
Investment in Infrastructure: Increased investment in educational infrastructure and resources can help improve the overall quality of education.
Emphasis on Research and Innovation: Supporting research and innovation at universities can enhance their global standing and contribute to national development.
By addressing these issues, India can work towards enhancing the quality of its higher education system, ensuring that graduates are better equipped for the demands of the modern economy.
Question A) How can we reform our approach to ensure that higher education not only expands access but also effectively prepares students for the real world? Let’s explore solutions and strategies for aligning education with industry needs and improving overall quality.
Question B) How can we address the challenges faced by these workers while also integrating them into more formal economic structures? Let’s explore practical solutions that can uplift this significant segment of our workforce.