September 28, 2021

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State of women in the informal sector

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This article is written by Pratyusha Ganesh, a student of Symbiosis Law School, Hyderabad. This article presents a crucial and vital evidence on the growth of an important sector, the informal sector.

Table of Contents

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The India Economy has been analyzed to present the reader with a broader and in-depth understanding of the sectors. Even though these unrecognized sectors constitute the greater half of the urban employment, the working conditions and environment have failed the women of the country.

The situation of India is critically evaluated and conclusions are drawn based on the existing and available data and information derived from pre-conducted case studies. India’s foreseen and predicted future is also discussed with special emphasis on the governance of work done by the women of the studied sector. 

How important it is for us to recognize and celebrate our heroes and she-roes!”

– Maya Angelou

Gender equality is still a struggle in large parts of our country. Women are the scapegoats and go through it, every day of their lives. The plight of women working in the informal sector is even worse as they are at the disadvantage when it comes employment, wage payment, job security, working hours and also their working conditions. Therefore, steps should be taken to promote their employment and provide mechanisms for adjudicating discrimination cases, in order to improve their opportunities and outcomes.

The “Informal Sector” concept was first familiarized in 1972 by the International Labor Organization (ILO) in its Kenya Mission Report. That report defined informality as a “way of doing things characterized by (a) ease of entry; (b) reliance on indigenous resources; (c) family ownership; (d) small scale operations; (e) labor intensive and adaptive technology; (e) skills acquired outside of the formal sector; (g) unregulated and competitive markets”.

According to a Times of India report, about 60% of the employed population of the world are employed in the informal sector. Therefore, it is evident that the informal working population is present in all the countries irrespective of the socio-economic status.

“Unorganized” and “unregulated”, are the words commonly used to describe the informal sector. This term was first coined in the mid 1970’s and has been used to define the informal sector such as the enterprise characteristics, workers characteristics, size of establishment, and statistical measurement since then. It consists of workers, who lack social security, as well as health insurance. Public health service provision – whether preventive, promotive, or curative – is not focused on while evaluating the workers’ needs.

In a 2008 report, the Indian Ministry of Labor classified the unorganized labor in India into four groups. According to this classification, the Unorganized labor force was categorized according to, and as under:

  • The nature of occupation.
  • The nature of employment.
  • The specially distressed.
  • Service sector.

Each of these categories have a workforce under them, for instance, the unorganized labor categorized under the nature of occupation included small scale farmers, the landless agricultural laborers, sharecroppers, fishermen to name a few. Similarly, the ones categorized by the nature of employment included migrant workers, agricultural and bonded laborers, contract and casual laborers etc. The third category includes scavengers, toddy tappers, drivers of animal driven vehicles, carriers of head loads, loaders and unloaders. The last category consisted of midwives, barbers, domestic workers, fruits/vegetable/newspaper/pavement vendors, hand cart operators, and the unorganized retail.

A detailed analysis of the women each of these sectors along with their current status and scope for their improvement shall be made in the further chapters.

According to a study conducted by the ILO in 1972, the informal sector consists of a number of enterprises and revealed to possess the following characteristics:

  • No obstruction by any other sector.
  • Ease of entry into the economic market.
  • Maximum usage of local and available resources.
  • Family members a part of the labor force.
  • Small scale procedures.
  • Usage of suitable technology with high labor intensity.
  • Dependence on the training provided before joining the particular labor irrespective of the formal education received and.
  • Operation in unregulated and competitive markets. 

Unfortunately, the women in the informal sector do not get to avail the maximum of these characteristics leave alone any additional rights to be enforced. 

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  1. Strategies derived from rigorous Resource: Several scholars have researched and continue to do so on the subject matter of women in the informal economy and it has also been the agenda of major international development institutions such as the World Bank and the International Labor Organization (ILO). Several policies have to be amended. The particular policies are descriptively discussed in the next chapter. 
  2. Allotting work according to Human Capabilities: If the workers are given work, they are actually good at, their productive human capability and capacity could be turned into their actual work and function. This in turn, enables ease of work, improves their economic security and well-being.
  3. Recognition and respect: The workers, especially emphasizing on the women workers of the informal economy, deserve to be recognized and respected for their work inputs. 
  4. Self Employed Women’s Association (SEWA): SEWA is a trade union for women employed in the informal/ unorganized sector of the Indian economy and is the largest union, established in Gujarat with over 2,50,000 women members. This entity organizes women working in the said economy for the betterment of their economic and social security.

The members of SEWA share their lack of protection of formal employment contracts and labor legislations. These members/workers are classified as ‘self-employed’ as a means to collect the variety of employment relationships from dependent contractors to own account workers.

Describing members as ‘self-employed’ is politically significant in that it challenges the perception of informal sector workers as ‘residual’ and ‘marginal’ and confers an identity that demands attention by officials and policymakers. All the SEWA Members also share the common experience of being poor working women.

SEWA’s aim is to organize poor ‘self-employed’ women workers towards ‘full-employment’ and ‘self-reliance’. By this, the organization refers to employment that delivers workers economic security, food security, and social security – at least healthcare, childcare, and shelter. This goal of self-reliance is based on the need for members to be independent, self-sufficient and to be able to make decisions autonomously and with confidence in and around their family, community and workplace

The informal sector can prove to be a catalyst of opportunities to ignite the Indian Economy. The plan of action must be to find the necessary supports and to restore the bureaucratic model of development that was earlier discussed by various legal institutions. 

Proposed Policy changes

  • Building of basic social and economic infrastructure in the rural areas.
  • Creation of enough employment opportunities.
  • The laborers in the informal sector must be provided with Tax exemptions in order to promote industrial development and act as an encouragement to the sector. The workers must be able to re-invest their earnings in order to earn profits. Another alternative could be to raise the income tax limit in order for the sector to achieve growth.
  • Better education and training: The Government must fulfill its prime responsibility of providing primary level education to all children under 14 years of age. Communication mediums such as TV and radio can be used to effectively create awareness about the importance of education among the masses. The laborers entering the informal sector freshly must be provided with proper training to reduce the risk to life and risk of losses.  
  • Access to credit systems: The laborers in the informal sector hardly have access to the credit flow systems due to their lack of credit worthiness. In order to overcome this issue, it is suggested that more loans should be advanced on initial fixed investments and on future assets based on feasibility studies. Institutions granting credit such as Small Business Finance Corporation must be established in order to provide short- and long-term credit to the informal sector on easy and understandable terms. The credit operations of the commercial banks should also be decentralized by giving more authority to the bank manager for granting loans on personal securities.
  • The women of the informal workforce must be given social security and paid leave benefits. It seems very far-fetched, a thought, to be including maternity leave under this purview. It is often seen that only salaried workers and wage earners get the benefit of social security and paid leave. The organizations are silent when it comes to the rights of casual workers and laborers. 
  • It is very important that women leaders of the country must be consulted and included while formulating the laws that concern them. About only 3% of the government officials are women. This is a triggering figure.
  • The health and safety needs of women at a workplace must be taken care of. They must be protected against sexual harassment. The Occupational Safety, Health and Working Conditions Labour Bill was tabled in the Lok Sabha in July 2019, according to which, the working hours for women are to be between 6 a.m. and 7 p.m. The responsibility of safety including transportation to and from work is on the employer for any time spent over and above the mentioned timings. 

Most women in the informal sector aren’t offered a choice of employment. They succumb to it due to their lifestyle, economic position and dire need of money. Most informal laborers come from a background which is socially, economically and traditionally backward and least privileged. Additionally, the jobs offered to them are underpaid, low status, jobs with no growth or advancement and it all comes with exploitation by the employer. Hence, there is a lack of opportunities available to women of or country. These evils need to be eliminated from the society, by the society. 

The economic development of a country depends upon a number of factors and the most essential one is the nature of human resource. In a country like India, which has been a consistent showcase of Patriarchal society and where the population is increasing by the day and so is gender discrimination, especially when it comes to the informal sector.

Over the years, more and more women have accepted and admitted that any form of aid from the government could lead them to live a better life. The emergence of Self-help groups in the recent years shows that more people are talking about this and there is a scope for further development. 

The government, along with the people has to work starting from the grass-root level in order to see a considerable and noticeable change. The first step would be to ensure equal pay for equal work. It must be noted that by ignoring these women workers, we are ignoring important contributors to national income of the country.


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