188

CHAPTER 5

UNORGANISED WORKERS IN INDIA: ISSUES AND

CONCERNS

The concept of an informal or unorganised sector began to

receive world-wide attention in the early 1970s, when the
International Labour Organisation initiated series efforts to identify
and study the area through its World Employment Programme
Missions in Kenya, Columbia, Sri Lanka and Philippines primarily
underlined the development strategy based on economic growth in
which employment was considered as the prime objective for
development.1 The British Economist Keith Hart in 1971 coined the
term informal sector.2 He made a detailed study of urban Ghana in
which the study reported the new entrants, particularly rural
migrants, to the labour market in the urban areas were forced to
work in the informal sector partly owing to their lack of skill and
experience needed for the jobs in the urban formal sector.3 Since
then, the informal sector has been the subject of several studies and
seminars covering various aspects like its size, employment
potential, its relationship with the formal sector, technological levels
etc.4

The term often is defined by indicating the absence of

characteristics that belonging to the organised sector. The
unorganised sector is often termed as residual sector but, it has its

1 R.S.Tiwari, Informal Sector Workers: Problems and Prospects, (New Delhi:

Anmol Publishers) 2005 Edition, p.5.
2 Kanak Kanthi Bagchi and Nirupam Gobi, Social Security for Unorganised
Workers in India (Gurgaon: Madhav Books) 2012 Edition p.22.
3 Kishore.C. Samal, Growth of Informal Sector in India, (New Delhi: S.K.Book
Agency) 2013 Edition p.160.
4 Report of Second National Commission on Labour, (2002), pp. 596-597.
 189

own merits as there is consistent growth rate in employment. The

unorganised sector is known by different names such as informal
sector, unregulated sector etc. This implies that informal workers are
beyond any regulation or legislations passed by the Government.
Hence, their working status is rarely covered by the legal status.

Social security arising out of employment status and

provided by employers is largely confined to workforce who are
identified as organised workers. Only 0.4% of the unorganised
workers in unorganised sector were receiving benefits like provident
fund, and this proportion has not changed since 1999-2000.5 The
social security measures such as old age pension, gratuity,
employees’ state insurance and other insurance schemes are non–
accessible to workers of the unorganised sector. A large number of
statutes and schemes addressed to different categories of workers
are found neither feasible nor practicable. This is because labour
relations in the unorganised sector are chaotic and there is no formal
employer-employee relationship. But, even if it exists, it is of casual
nature.

Since the unorganised sector plays pivotal role in the Indian

economy, it needs special attention. Hence, an attempt has been
made in this chapter to examine the issues and challenges faced by
the unorganised workers with a view to overcome the obstacles in the
unorganised sector to provide atleast a basic minimum social
security to the workers.

5 National Commission for Enterprises in the Unorganised Sector, Report on

Condition of Work and Promotion of Livelihoods in the Unorganised
Sector, 2007, p.4.
 190

5.1 DEFINITIONS AND MAGNITUDE OF UNORGANISED

SECTOR

The unorganised sector has grown by leaps and bounds over

the years. In India, the term ‘unorganised sector’ is used commonly
in all official records and analyses. Changes in trade and technology,
accompanied by greater global linkages between nations resulted in
threat to worker’s income and is particularly in the developing
country as there is a rapid expansion of unorganised sector due to
increase in employment of poor quality and India is not exception to
it. The difficulties in the unorganised sector are multifarious in
nature. Covering various aspects many efforts have been taken to
define this vast segment to identify a common criteria for the
identification of unorganised sector enterprises. But the difficulty
starts in defining the sector itself to confine them in a comprehensive
manner.

5.1.1 Definitions of Unorganised Sector

Some of the definitions of unorganised sector are discussed

in detail as follows:

Definition of Kenneth King

“Their unorganisedity derives from their being unrecognised

in government employment statistics and operating in the main act
of the make shift shelters on urban waste lands, roadsides and forest
fringes”.6

6 Meenu Agrawal, Rural Women Workers in India’s Unorganized Sector, (New

Delhi: New Century Publications) 2012 Edition, p.41.
 191

Unorganised sector could be described as that part of the

work force who have not been able to organise in pursuit of a
common objective because of constraints such as

a) casual nature of employment

b) ignorance and illiteracy

c) small size of establishments with low capital investment

per person employed

d) scattered nature of establishments and

e) superior strength of the employer operating singly or in

combination.7

The unorganised sector is in no way an independent and

exclusive sector. It is linked to, or in many cases depended on the
organised sector and the rest of the economy through a variety of
linkages. It depends on the organised sector for few raw materials
and other capital requirements, generation of employment,
marketing facilities, and so on. The sub contracting model is used
by the formal sector for engaging labour in the unorganised sector.8

Definition by 15th International Conference of Labour

Statisticians

According to International Conference of Labour

Statisticians the terms unorganised and informal sectors are often
used interchangeably. The informal sector may be broadly
characterised as consisting of units engaged in the production of

7 Government of India, Report of National Commission on Labour, (1969) p.

417.
8 Supra note 4, at 602.
 192

goods or services with the primary objective of generating

employment and incomes to the persons concerned.9

National Commission for Enterprises in the Unorganised

Sector provides definition of unorganised sector as follows:10

Unorganised Sector: “The unorganised sector consists of all

unincorporated private enterprises owned by individuals or
households engaged in the sale and production of goods and services
operated on a proprietary or partnership basis with less than ten
total workers”.

Unorganised workers: “Unorganised workers consists of those

working in the unorganised enterprises or households, excluding
regular workers with social security benefits, and the workers in the
formal sector without any employment/social security benefits
provided by the employers”.

Definition of Unorganised Sector and Unorganised Workers

under the Unorganised Workers’ Social Security Act, 2008:11

‘Unorganised Sector’ means an enterprise owned by

individuals or self employed workers and engaged in production or
sale of goods or providing service of any kind whatsoever, and where
the enterprise employs workers, the number of such workers is less
than ten.

9 International Conference of Labour Statisticians, Resolution Concerning

Statistics of Employment in the Informal Sector, 15 (Geneva: ILO), 1993.
10 Supra note 5, at 3.
11 Section 2(l) of the Unorganised Workers’ Social Security Act, 2008.
 193

Definition of Unorganised Worker

Unorganised worker means a home-based worker, self-

employed worker or a wage worker in the unorganised sector and
includes a worker in the organised sector who is not covered by any
of the acts mentioned in schedule II of the Act.12

From the analysis of definitions, it is clear that the

unorganised sector is a term that eludes definition as the sector is
too vast and varied to confine within a conceptual definition.

5.1.2 Magnitude of Workforce in the Unorganised Sector

As per the survey carried out by the National Sample Survey

Organisation in the year 2009-2010, the total employment in both
organised and unorganised sector in the country was of the order of
46.5 crore. Out of this, about 2.8 crore were in the organised sector
and the balance 43.7 crore in the unorganised sector. Out of 43.7
crore workers in the unorganised sector, 24.6 crore workers were
employed in agricultural sector, 4.4 crore in construction, and the
remaining were in manufacturing activities, trade and transport,
communication and services. A large number of unorganised workers
are home based workers and are engaged in occupations such as
beedi rolling, agarbatti making, pappad making, tailoring, and
embroidery work.13

More than 90% of workforce and about 50% of the national

product are accounted by the informal economy. A high proportion of

12 Ibid., at Section 2(m).

13 Government of India, Ministry of Labour and Employment, Annual Report
2014-15, p. 65.
 194

socially and economically underprivileged sections of society are

concentrated in the informal economic activities.14

5.2 CHARACTERISTICS OF UNORGANISED LABOUR

The unorganised workers suffer from excessive seasonality

of employment, lack of formal employer-employee relationship and
inadequate social security protection.15 Unorganised sector or
informal economy is replete with diverse concepts and lack
uniformity of definitions. Based on some of the specific
characteristics, the unorganised enterprises could be distinguished
from formal sector like no paid leave, no written job contract, and no
social security to the workers.16

The high level of growth of Indian economy during the past

two decades is accompanied by increasing informalisation. There has
been new dynamism of the informal economy in terms of output,
employment and earnings. Faster and inclusive growth needs special
attention to informal economy.17

The unorganised labour is characterised as follows:18

It is in general a low wage and low earning sector.

Women constitute an important section of the workers in

this sector.

14 Government of India, Report on Employment-Unemployment survey, Vol.I,

Ministry of Labour and Employment, (2013-14) p.5.
15 ILJ, “Special Article: Sixty Seven Years of Independence-A Kaleidoscopic View of
Labour Activities”, Vol.55, 9 (2014) p.930.
16 Supra note 14, at 5.
17 Government of India, Report of the Committee on Unorganised Sector
Statics, National Statistical Commission, (2012) p.1.
18 Supra note 4, at 604-605.
 195

Family labour is engaged in some occupations such as

home-based ones.

Economic activities, which engage child labour, fall

within this sector.

Migrant labour is involved in some sub-sectors.

Piece-rate payment, home-based work and contractual

work are increasing trends in this sector.

Direct recruitment is on the decline. Some employees are

engaged through contractors. An increasing trend to
recruit workers through contractors is visible in areas of
home-based work. There is a sort of convergence of
home-based work and engagement in work through
contractors.

If some kinds of employment are seasonal, some others

are intermittent. As such, under-employment is a serious
problem.

Most jobs are, for the greater part, on a casual basis.

Both employed and self-employed workers can be found

in a number of occupations.

Workers are not often organised into trade unions. The

self-employed are seldom organised into associations.
There is not much recourse to collective bargaining.

There are many co-operatives of self-employed workers.

 196

Very often, others supply raw materials, production by

self-employed workers, therefore, becomes dependent on,
or linked with enterprises or individuals active in other
sectors.

Debt bondage is very common among the employed as

well as the self-employed workers in the unorganised
sector.

The self-employed have less access to capital. Whatever

capital they manage, is mostly from non-banking and
usurious sources, especially from the trader-contractor.

Health hazards exist in a majority of occupations.

5.3 CATEGORIES OF UNORGANISED LABOUR

The National Commission on Labour listed ‘illustrative’

categories of unorganised labour which are as follows:19

contract labour including construction workers;

casual labour;
labour employed in small scale industry;
handloom/power-loom workers;
beedi and cigar workers:
employees in shops and commercial establishments;
sweepers and scavengers;
workers in tanneries;
tribal labour; and
‘other unprotected labour’

19 Supra note 7, at 417.

 197

5.4 IMPORTANCE AND CAUSES OF UNORGANISED LABOUR

The activities in the informal sector account for a

substantial share of total employment in the developing countries -
ranging from the third to two-thirds or more, particularly in urban
areas.20 National level data on employment and income generated in
the informal economy is generally not available. India is one of the
few exceptions where it has recently estimated the informal sector by
National Sample Survey Organisation.

Globalisation measured in terms of trade and capital flows

between countries and technological changes believe to have played
an important role. A faster growth of employment in the unorganised
or informal sector is often referred to as an evidence of the
employer’s unwillingness to expand employment in large sized
factories in which the protective labour laws are applicable. They
instead farm out work to smaller units. Hence, there is no doubt that
employment has growth faster in the informal segment and its share
has sharply increased over the years.21

Further, the intensified competitions among firms have

resulted in driving down the labour-cost. These costs are lower in
informal economy, due to non compliance with labour regulations
such as minimum wage, social security contributions and other
welfare provisions.

Apart from that, improvement in technologies are also have

contributed to such informalisation as we do not posses required
skills and training for the employment in the organised sector. A

20 Supra note 17, at 1.

21 K.Mariappan, Employment Policy and labour Welfare in India (New Delhi:
New Century Publications) 2011 Edition p.78.
 198

further distinction is often made within the informal sector between

those who operated from their residence, and other micro
enterprises. Not all those operating from their residence or whom are
truly independent enterprises, taking risks and making decisions;
many, especially women, are paid for their work by the employer,
sub contractor, agent or middlemen and hence consider as “home
workers” or “disguised wage workers”. The tendency to engage
workers outside the factory premises on a sub contracting basis is
widely seen in the process of informalisation and interpreted as a
means by which employers disown responsibilities for their welfare
envisaged in the labour standards.22

Another factor that has developed the unorganised sector is

nom-availability of modern sector jobs even to those women and men
who live in urban places and have some education and skill. The
employment opportunities in the modern sectors are rare due to
technological development in these sectors. These sectors are capital
intensive rather than labour intensive. Thus, a large number of
unemployed men and women are attracted by the unorganised sector
as entry is easy there and it provides income, though insufficient, to
the family. The meagre income that they get is precious for their own
and for their survival.23

5.5 PROBLEMS OF UNORGANISED WORKERS

Unlike organised sector, this sector have not tasted the

benefits or derived the advantages that can be gained from
organisation. Many of them are victims of invisibility. The difficulty

22 Sudharshan Canagarajha and S.V.Sethuraman, “Social Protection and the

Informal Sectors in Developing Countries: Challenges and Opportunities”,
Discussion paper series No.0130 (Washington: World Bank Publication) 2001,
p.11.
23 Meenu Agarwal, Supra note 6, at 58.
 199

starts from identifying or defining the unorganised sector itself.

There is no a single or primary criterion by which the sector could be
defined. The large segment of the work force has continued to be
neglected even though this sector has a crucial role in economy in
terms of employment. Hence, an attempt has been made to address
the problems faced by the unorganised workers resulting in
vulnerability are as follows:

5.5.1 Insecurity of Job

The informal sector workers often undertake multiple jobs,

pursuing of multiple jobs by a person may be taken as a sign of
insecurity in jobs. A single job or even two may generate income
barely enough for subsistence.24 For instance employment of
agricultural labour is irregular and unassured.25 This is due to
availability of work to them only for about three months and the
remaining nine months, they are mostly unemployed and suffer from
starvation.26 Employment in agriculture is thus available for fewer
days per year.27 In India Mahatma Gandhi National Rural Workers
Employment Guarantee Act, 2005 aims to provide employment
security by guaranteeing at least 100 days of work in the most
backward districts of the country who can perform manually.28 But,
informal workers continue to face the risk of loss of employment as
they are varied by nature and location.

24 Supra note 17, at 25.

25 Supra note 5, at 126.
26 Dr.Suresh Srivastava, “Social security for Agricultural Workers in India”, In:
Debi.S. Saini editor, Labour Law, Work and Development (New Delhi: Westvill
Publishing House 1995 Edition, p.106.
27 National Commission for Women Impact of WTO on Women in Agriculture
2005, p.16.
28 National Commission for Enterprises in the Unorganised Sector, Report on
Social Security for Unorganised Workers, 2006 p. 22.
 200

5.5.2 Irregularities and Inability to Secure Even Minimum

Wages

The Supreme Court of India ruled that employing workers at

wage rates below the statutory minimum wage levels was equivalent
to forced labour and prohibited under Article 23 of the constitution
on India even though economic compulsion might drive one to
volunteer to work below the statutory minimum wage.29

Most of the studies on conditions of employment in the

unorganised sector have examined the wage levels and earnings of
workers are identified that the daily wages are below the minimum
rate of wages. But, the prevailing situation shows the reach and
effectiveness of the Minimum Wages Act is limited.30 In the
unorganised sector casual workers tend to be the least protected and
have the lowest level of earnings. The wages for the huge informal
sector cannot be left to be determined by the interplay of the market
forces.31 There is no uniformity in wage structure across the various
States or Union Territories.32 This is also due to applicability of the
Act only to certain employments which does not include all workers.
Hence, if a state Government fails to include a particular
employment within an industry in the employment schedule, the
Minimum Wages Act does not cover all workers in that industry.

5.5.3 Long Hours of work

The long working hours have a severe repercussion on the

social and family life of labourers in general and women labourers in

29 Peoples’ Union for Democratic Rights v. Union of India AIR 1982 SC 1473.
30 Supra note 5, at 47.
31 Government of India, Report of the Working Group on Social Security for
the Twelfth Five Year Plan, (2012-17), p.14.
32 Government of India, “Report of the Working of The Minimum Wages Act,
(2013), p.1.
 201

particular. They do not find any time to take part in cultural or social
activities. They do not even take proper child care.33

Long hours work in the unorganised sector beyond the

labour and regulatory norms are common in India. In agricultural
sector there is no fixed hours of work as there are no laws to act as
guidelines for the working conditions of agricultural labourers. In
case of non- agricultural sectors such as fireworks, match making,
power looms and so on, workers started their work very early in the
morning at 6.00 a.m. and continue till late evening. In hand loom
sector the work is organised in such a way that wages were based on
a 12-15 hours work per day.34 The Factories Act, 1948, The
Minimum Wages Act, 1948 and the Shops and Establishments Act
stipulates that no adult worker shall be required to work more than
48 hours in a week. But these provisions relating to working hours
have been violated frequently. Thus limitation on hours of work is
almost non-existent.35

5.5.4 Poverty and Indebtedness

Workers in the unorganised sector had a much higher

incidence of poverty than their counterparts in the organised
sector.36 Due to low level of income and uncertain employment in
the unorganised sector make the workers unable to meet their basic
necessities and other social and other cultural responsibilities. In
agricultural sector, it is fact that increased indebtedness is noted as

33 Arjun Patel and Desai Kiran, “Rural Migrant Labour and Labour Laws”, In:
Debi.S. Saini editor, Labour Law, Work and Development (New Delhi: Westvill
Publishing House) 1995 Edition, p.64.
34 Supra note 5, at 36.
35 Kamala Kantha Mohabatra, “Women Workers in Informal Sector in India:
Understanding the Occupational Vulnerability” International Journal of
Humanities and Social Science, Vol.2, 21 (2012) p.198.
36 Kannan K.P., “How Inclusive is Inclusive Growth in India”, Working Paper
WP03/2012, New Delhi: Institute for Human Development (IHD).
 202

a major reason for suicide in various states.37 Since the wage levels
have been very low, they are worst in terms of poverty level and
economic status.

5.5.5 Occupational hazards and Health Issues

The working conditions in the unorganised sector is the

main cause to have an adverse effect on the health conditions of
workers. Low nutritional intake due to low income, constant physical
labour increases health problems to the workers in the unorganised
sector resulting in risks of life of unorganised workers. Lack of
resources to pay for the health care often forces the poor workers
either to forego it or become indebted. With regard to home workers
most of the studies reported health problems mainly related to
respiratory due to inhalation of the tobacco dust and body ach due
to the peculiar posture that has to be maintained at all times of
work.38 In some of the sectors like fish processing units and
tobacco and salt pan industry, the working conditions can be called
as horrible for workers in general and women workers in particular.
In Tobacco- processing units the workers have to do their entire job
such as plucking, winnowing, grading and packaging, while they are
surrounded by heaps of tobacco, which is considered to be
unhygienic to the health. The mist of tiny particles of tobacco is
found to such an extent that the workers can’t even see the faces of
each other. The factory owners do not take proper care of the
workers. They do not provide them facilities like apron, spectacles,
mouth closer, socks etc.39

37 Supra note 5, at 135.

38 Ibid., at 73.
39 Arjun Patel, Supra note 33, at 72.
 203

Similarly, salt pan workers are also found to be suffering

from skin diseases as they have to work constantly in salty water.
They develop severe eye problems due to the reflection of light from
the heap of salt.40 In agricultural sector due to extensive use of
fertilizers, insecticides and pesticides and mechanisation workers
suffer from certain specific health hazards. The pesticide applicators,
mixers, loaders are at the risk of exposure to toxic chemicals. Since
the farming sector is unorganised in character, there is an absence
of statistics on farm related accidents and injuries.41

Thus, workers in unorganised sectors such as fireworks and

match industry, leather tanning industries, construction sectors etc.,
are dangerous and full of hazards. Loss of limbs and amputations
occur often when workers operate unguarded or inadequately
safeguarded machines.42 Occupational illness and diseases have
also been reported among workers in many industries of unorganised
sector.43

5.5.6 Non-Applicability of Social Security Measures

There are many times when a worker cannot economically

active. Due to biological circumstances such as modernity, sickness
or old age; on account of personal calamities such as widowhood, or
an accident; social or natural calamities such as unemployment,
flood, fire drought or high unemployment or closure of an industry.
During these spells of risk the worker needs support, in the form of
some social insurance to survive the crisis and resume work after it.
Social security measures are indispensable for unorganised workers
to protect them from contingencies and deprivation. The existing

40 Ibid.
41 Supra note 5, at 127.
42 Ibid., at 33.
43 Ibid., at 34.
 204

social security legislations are not applicable to most of the

unorganised sectors as discussed in Chapter 4. There are no social
security measures to provide risks coverage and ensure maintenance
of basic living standards at times of crises such as unemployment or
health issues.

5.5.7 Lack of Proper Physical Environment at Place of Work

Lack of sanitation facilities has an impact on health of the

workers. But, sanitary conditions are so precarious in most of the
industries in the unorganised sector due to lack of proper toilet
facilities. The facilities such as washing, urinal and toilet facilities at
work are found to be low standard. It could be said that no such
facilities were provided to workers in the industries.44 Apart from
that, physical conditions such as space, lighting, ventilation etc., are
very poor.

5.5.8 Insecurity Arising out of Illness

Many studies show health risk as the primary risk of

informal sector workers.45 A number of studies show that risks and
crisis situations due to low level of health security are endemic for
informal sector workers. Stress events associated with health,
dominated the outflows comprising 48% of annual household
expenditure, while rituals and marriages account for 30%. The
vulnerability of the poor informal workers increases when they have
to pay fully for their medical care with no subsidy or support.46 A
number of studies observed that the lack of resources to pay for
treatment often leads to the poor foregoing health care or becoming

44 Ibid., at 35.
45 Sudharshan, Supra note 22, at 54.
46 Supra note 28, at 6.
 205

indebted or impoverished trying to pay for it. Poverty was a major

factor for not seeking treatment during illness.47

5.5.9 Loss of Income Arising Out of Accident

An accident either during the course of work or otherwise is

a major crisis for informal workers due to loss of income. It further
implies additional income expenditure of medicines, hospitalisation
etc. If the accident leads to partial or permanent disability the loss is
much greater.48 In the case of death of a breadwinner, it is a
permanent loss of income and the family has to borrow money,
spend savings or sell assets.

5.5.10 Lack of Old Age Security

Most of the provisions relating to provident fund did not

reach the construction workers and contract labourers.49 The old
age is a major concern of the workers in the unorganised sector
workers. Agricultural workers and construction workers are feared of
not being able to work during old age. For the large proportion of old
age persons expected in the future, the insecurities will arise due to
various reasons such as inability of adult workers to support the
needs of old age person in the family, inadequate public health care
facilities and increasing cost of private health care facilities of the
aged etc.50

47 Ibid., at 18.
48 Ibid., at 21.
49 Supra note 5, at 41.
50 Supra note 28, at 21.
 206

5.5.11 Migrant Workers

Migrant workers are the most disadvantaged segment of

workforce facing adverse working and living conditions. For instance,
sugarcane labourers are generally staying in open place in the
absence of proper space. Also, they have to cook their food in open
space, which causes hardship during monsoon season. Since the
labourers are staying in open space, they are continuously worried
about the menace from snakes, scorpions, mosquitoes etc.51 In most
of the cases, the resident sugarcane cutters have no basic facilities
like electricity, water, sanitation etc.52

The Problems faced by migrant workers are as follows:

Vast majority of migrant workers fall in the unorganised

sector.

No working hours are fixed.53

They belong to poorest sections of population and

inadequate access to basic amenities.54

People who migrate from rural to urban areas have

absolutely no rights when they arrive55as they lack
bargaining power and forced to accept work for lesser
wages.

51 Arjun Patel, Supra note 33, at 71.

52 Ibid., at 70.
53 Supra note 4, at 707.
54 Supra note 5, at 96.
55 Gender and Economic Policy Discussion Forum, “Engendering Social Protection
for Informal Economy Workers” (New Delhi: Institution of Social Studies Trust
(ISST) November 2012, p.6.
 207

5.5.12 Lack of Bargaining Power

Lack of organisation or least unionisation among the

unorganised workers is mainly on account of illiteracy and lack of
awareness. Despite the increased recognition of informal sector’s
contribution to employment and gross domestic product among
others the lack of worker’s rights and legal status has tended to
adversely affect worker’s prospects. This is due to lack of
organisation or least organised in the sense that they are not able to
voice their feelings or dissent against the attitude of employers in
order to protect their interests. Due to long working hours, social
isolation of migrant workers, high level of unemployment, illiteracy
and lack of awareness are the major hurdles in organising
themselves.56

5.5.13 Lack of Employer-Employee Relationship

The enterprises in the unorganised sector are mainly

unregistered units. Apart from that, there is a problem of invisibility
of such enterprises as there is no designated workplace due to
workers operate work at their homes. Even the entire basis of
establishing a master-servant relationship becomes the first hurdle
to apply labour laws to this sector. The employee prefers to work for
several employers in case he is not given any work on a particular
day or sometimes for days together. The other difficulty is the fact
that number of home based workers work through contractors.57
Particularly for women, it is easy to undertake these activities at
home itself. Hence, there is lack of visibility of employer-employee

56 Supra note 5, at 133.

57 Rani Advani and Debi.S. Saini, “The Constitutional Vision of Development,
Unorganised Labour and Accessibility to Justice System” In: Debi.S. Saini
editor, Labour Law, Work and Development (New Delhi: Westvill Publishing
house) 1995 Edition, pp.195-196.
 208

relationship. Moreover, workers engaged in these enterprises often

tend to change employers frequently and therefore it is easy for the
employer not to recognise the workers which results in denial of
benefits arising out of Minimum Wages Act and Social security
benefits.

5.5.14 Insecurity Arising Out of Natural disasters

There are many natural disasters like floods, drought,

famine, earth quake etc., which also have a devastating impact on
the informal sectors. Natural disasters do not only wipe out the
productive base of the informal sector, but can also affect the limited
household assets of the own.58

5.5.15 Vulnerable Labour Groups

The study group on construction of the First National

Commission on Labour as well as Second National Commission
(2002) observed that in quarries, brick-kilns as well as in big
construction sites a system of bondage exists and gets extended from
one generation to the next through child labour.59

Apart from migrant labourers, bonded labourers and child

workers constitute as a major vulnerable groups who are the most
deprived and exploited.

The bonded labour involves a debtor-creditor relationship. In

this system, the creditor advances loan to the labourers and puts
him in bondage till the loan is returned. The repayment of debt is so
arranged that the servant cannot repay it during his life time by

58 Sudharshan, Supra note 22, at 74.

59 National Commission For Women, Report on The Status Of Women Workers
in the Construction Industry, (2005), pp 2-3.
 209

ensuring lifelong service for the master. It is this feature, which

differentiates bonded labour from unpaid forced labour.60 In bonded
relationship not only the debt perpetuated but also the terms and
conditions of the debt are arbitrarily decided and interpreted by the
creditor master. This is a case of exploitation and not allowing
contract labourers to move is illegal detention.

These are a number of worrying trends as for as the child

workers are concerned with liberalisation and opening up of the
economy with a growing new demand for child workers in
agriculture. Further, there are instance of forced or bonded labour
among children. Often, children of indebted labourers are offered to
work in return of debt of the debtor to the creditor. Such child
labourers are subject to long working hours and involved in the
hazardous sectors such as carpet weaving, cloth printing, explosives
and fireworks, cigarette making, printing and soldering process in
electronic industries.61

Working and living conditions are inseparable for most

informal sector workers. Poor infrastructure and lack of basic
services result in poor working conditions. Improvements in working
conditions can be achieved through better infrastructure and better
basic services to the informal workers. Organisation among informal
workers will help to address problems concerning their working
conditions, since they are able to take self-help initiatives, and link

60 Vidyut Joshi, “Bonded Labour: Social Context and The Law”, In: Debi.S. Saini
editor, Labour Law, Work and Development (New Delhi: Westvill Publishing
House) 1995 Edition, p.96.
61 Ramadhar Giri, Industrial Relations (New Delhi: Adhyayan Publishers and
Distributers) 2007 Edition p.22.
 210

between the workers and the institutional structure that provides

services.62

With regard to improvement of the chances for the

application of labour legislations in the informal sector, steps should
be taken to improve understanding of the temporary nature of
employment relations as well as to make the necessary revision of
labour legislations in the line with conditions of the informal sector.

5.6 CHALLENGES AND OPPORTUNITIES FOR EXTENDING

SOCIAL WELFARE SCHEMES FOR UNORGANISED
SECTOR WORKERS

The limitations faced in seeking to extend formal social

security systems to workers and their families outside the formal
sector are well documented. Informal sector workers cannot join
formal national social security systems on a voluntary basis. Most
are in categories of work that excluded from formal systems. Many
systems also exclude enterprises below a certain size, or exclude
workers with earnings below a certain level.63 From the detailed
analysis of the problems faced by workers in unorganised sector, it is
realised that social security is mandatory for the unorganised sector
workers to decrease their vulnerability. Though some efforts are
taken by the Government by passing the Unorganised Workers’
Social Security Act, 2008 to provide a minimum level of social
security to the poor unorganised workers but proved to be
inadequate.

62 ILO, Employment and Social Protection in the Informal Sector, (Geneva:

ILO) (2000) p.16.
63 Ibid.
 211

The growth of informal employment resulted in shrinkage of

formal employment consequent upon their quality of life. Therefore,
to overcome such adverse consequences, it is necessary to build a
strong base for at least a minimum level of social security with a view
to climb up vertical occupation ladder resulting in strengthening
their financial status. Instead of analysing what sort of social
security measures are required to fulfil the multi facet needs of the
unorganised sector workers, the need of the hour is how social
security programmes have to be effectively implemented for the
informal workers who are the target groups.

Hence, with the objective of providing social security to the

most vulnerable sector of the society, the Government of India has
been actively involved in sponsoring a range of large social welfare
schemes under the unorganised workers’ Social Security Act, 2008
such as Aam Aadmi Bima Yojana (Life Insurance), Rashtriya
Swasthya Bima Yojana (Health Insurance) etc., includind both
national and state government initiatives.64 Since, these schemes
have been discussed elaborately under chapter 6, this chapter
focuses about the deficit in delivery mechanism of social security
programmes.

5.6.1 Target Beneficiaries

The definition under the Unorganised Workers Social

security Act, 2008 provides a broad sense of an ‘unorganised worker’
and hence, the true challenge is on the ground will revolve around
the identification of these unorganised sector workers. The state
Governments acting through a representative on the State Social
Security Administration (SSSA) should be given the authority to

64 The Institute for Financial Management Research, “Report of Comprehensive

Social Security for the Indian Unorganised Sector” (2013) p.12.
 212

determine targeted beneficiaries and the eligibility criteria for the

scheme. While the scheme will be open to all unorganised sector
workers, State Governments should decide the target groups in their
particular state in order to avoid overlap between the national
scheme and state provided schemes.65

5.6.2 Lack of Awareness

The another important challenge is regarding lack of

awareness and knowledge which is a significant barrier to most
currently sponsored government social security schemes. Awareness
and the level of understanding ensure the beneficiaries to know
about the existence of the schemes and the benefits which they are
entitled. In this regard, states should take responsibility of creating
awareness about the schemes and the delivery system with a view to
facilitate proper implementation of programmes.

5.6.3 To Design Simple and Easily Accessible Schemes

The purpose of the plans or schemes is to provide immediate

and automatic delivery of benefits to the targeted groups. There has
been a lot of complaints with regard to accessibility to social security
schemes such as the old age pension schemes, schemes for the
widows, or social assistance in case of death of the breadwinner of
the family.66 The presence of large number of schemes for the same
cause creates lots of confusion at the level of beneficiaries as what
exactly they are entitled to.67 Hence, the challenge has been to
design simple and easily accessible social security schemes for the

65 Ibid., at 28.
66 Gender and Economic Policy Discussion Forum, “Engendering Social Protection
for Informal Economy Workers” (2012) p.4.
67 Government of India, Report of the Working Group on Social Security for
the Twelfth Five Year Plan, (2012-17), p.11.
 213

target groups under one umbrella. Further, With regard to extended

opportunities of employment in addition to Mahatma Gandhi Rural
Employment Programme, the challenge is also to extend employment
opportunities by generating employments as the informal sector
workers are exposed to additional threats such as seasonal nature of
work to exit poverty and vulnerability with regard to fiscal stress.
Instead of survival benefit scheme or minimum pension,
appropriate programmes also needed for groups like young widows
by linking them to training or employment programmes to fulfil the
economic needs of bereaved family.68

5.6.4 Convergence of Social Security Schemes

There is multiplicity of social welfare schemes run by

different Government units at central and state level which is bound
to be some amount of confusion and involves the problem of
duplication of efforts, record keeping and there is also a possibility of
double or multiple benefits reaching the same person under different
schemes by way of manipulation. Administration of each scheme
involves huge administrative cost.69

5.6.5 Need for Centralised Data base

The demand by the Government offices to submit

documents to fulfil the eligibility criteria will be difficult for the poor
unorganised worker as it cause a struggle of foregoing a day’s wage
in order to stand in long queues in the Government offices. There
should be one centralised data base for all social security schemes

68 Government of India, Tamil Nadu Development Report, (New Delhi: Academic

Foundation) (2005) p.251.
69 Supra note 67, at 11.
 214

and access to social security benefits should be made available

against one single identity number.

5.6.6 Lack of Proper Follow-up Action

Due to lack of proper follow-up action on informal sector

surveys, there is reduction in response rates in future service.
Therefore, whenever possible, survey results should be utilised as a
basis for the design and implementation of support action
programmes and technical co-operation.

From the analysis, it is concluded from the available

evidence on various social security programmes including the
evaluation studies on the programmes by the planning commission
of India, almost unanimously pointed out the delivery deficit in most
of social security programmes. Such deficit includes:70

Lack of delivery infrastructure at the level of state

governments;

Lack of organisational capabilities on the part of delivery

agencies;

Misidentification of the programme beneficiaries;

Incidence of corrupt practices, rent seeking by the

administration and delivery agencies, and elite capture
of the schemes;

Lack of awareness on the part of people regarding details

of schemes as well as their own entitlements.

70 Ibid., at 21.
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5.7 ROLE OF JUDICIARY IN THE PROTECTION OF RIGHTS

OF UNORGANISED WORKERS

The judiciary has played a significant role in the evolution of

industrial jurisprudence and made a distinct contribution towards
innovative methods and devise strategies to ensure social justice to
weaker sections of the society which could be evidenced from a
number of decisions. Therefore, Indian judiciary has always been
quite proactive in the matter of extending the coverage of social
security to eliminate the vulnerability of unorganised workers.
Despite various legislations such as Employees’ Compensation Act,
Employees’ state Insurance Act, Employees’ Provident Funds and
Miscellaneous Provisions Act, etc., it is fact that the unorganised
sector workers are remaining outside the purview of social security
nets. Owing to the failure of legislations, judiciary has come forward
to protect the workers in order to fulfil the gap created by legislative
machinery.

5.7.1 Judiciary in the Protection of Workers

The judiciary has special responsibility towards the weaker

sections of the society and hence it has zealously protected not only
the human rights of individual but also particularly unorganised
workers who are due to poverty, ignorance and illiteracy find it
difficult to access the court of justice.

The Supreme Court in number of cases has pointed out that

the right to livelihood is inherent in the right to life. Particularly, in
the case of Rural Litigation and Entitlement Kendra, Dehradun v. Uttar
 216

Pradesh,71 the court has held that the right to livelihood is inherent
in right to life under Article 21.

In peoples’ Union for Democratic Rights v. Union of India,72 it

was held that taking of labour or service of any person for payment
less than the prescribed minimum wages is violation of the
fundamental right to such labourer while excising the scope and
ambit of Article 23 of the Constitution of India. The court further
held that begar is a form of forced labour, in whatever form it may
manifest itself because it is violative of human dignity and contrary
to basic human rights.

In Sanjit Roy V. State of Rajasthan,73 it was held that

payment of wages lower than the minimum wages to the persons
employed on famine relief work is violation of Article 23 of the
Constitution of India. Whenever, any labour or service is taken by
the state from any person who is affected by drought and scarcity
condition, the state cannot pay him less wages than the minimum
wages on the ground that it is given to them to meet famine
situation. Further, the court held that state cannot take advantage of
their helplessness.

In Deena V. Union of India,74 the Supreme Court held that

labour taken from prisoners without paying proper remuneration
was forced labour and violation of Article 23 of the Constitution. The
prisoners are entitled to payment of reasonable wages for the work
taken from them. And the court is under duty to enforce their claim.

71 AIR 1985 SC 652.

72 AIR 1982 SC 1473
73 AIR 1983 SC 328
74 AIR 1983 SC 1155
 217

Similarly the Supreme Court in Bandhua Mukti Morcha v.

Union of India,75 held that when an action is initiated in the court
through public interest litigation alleging the existence of bonded
labour, it may give the Government opportunity to examine whether
bonded labour system exists and as well as to take appropriate steps
to eradicate that system. This is the constitutional obligation of the
state to ensure that there is no violation of the fundamental right of
any person, particularly when he belongs to the weaker sections of
the community and is unable to wage a battle against a strong and
powerful opponent who is exploiting him.

The court also held that both the Central Government and
State Governments are, therefore bound to ensure observance of
social welfare and labour laws enacted by parliament for the purpose
of securing to the workmen a life of basic human dignity in
compliance with the Directive Principles of State policy.

Further, Justice P.N. Bhagwati observed the conditions of

bonded labourers as follows:

“bonded labourers as the “non-beings” are living a life worse

than that of animals are atleast free from to roam about as they want
and they can plunder or grab food whenever they are hungry. The
freedom of bonded labourers are snatched by their employers and
they are consigned to an existence where they have to live in hovels or
under the open sky and be satisfied with whatever little unwholesome
food they can manage to get, inadequate to fill their hungry stomachs.
Not having any choice, they are driven by poverty and hunger into a
cite of bondage, a dark bottomless pit from which in a cruel
exploitative society, they cannot hope to be rescued.”

75 AIR 1984 SC 802.

 218

Thus, the Supreme Court has stretched its hands to reflect

its socio-economic approach in tackling legal and constitutional
issues relating to all the aspects of bonded labour regarding its
identification, release and rehabilitation.

In Neeraja Chaudhary V. State of Madya Pradesh,76the court

observed that any failure of action on the part of the State
Government in Implementing the provisions of the Minimum wages
Act was violative of Article 21 as also 23 of the Constitution.

5.7.2 Judicial Interpretation With regard to Extension in

Coverage of Social Security Legislations to Unorganised
Workers

The trend of judiciary in protecting the interest of labourers

could be evidenced by its interpretation in a number of cases. In
Kotchu Velu V. Joseph,77 the question of whether a coconut climber
employed periodically can be said to be a casual employee. In this
case the employer has engaged the worker to plough coconuts from
his trees periodically. While at work, the worker fell down and
became permanently disabled. He claimed compensation, but his
claim was dismissed by the commissioner as he was employed
casually. It was held by the court that when a person is being
regularly employed periodically it cannot be said that he is employed
casually and hence, the employment will not be of casual nature for
there is regularity in employment.

Similarly, in Daily Rated Casual Labour V. Union of India,78 it

was held that classification of employees into regular employees and

76 AIR 1984 SC 1099.

77 1987 II LLJ 174 (Kerala).
78 (1988) 1 SCC 122.
 219

casual employees for the purpose of payment of less than minimum

pay is violation of articles 14 and 16 of the constitution and it is also
opposed to the spirit of Article 7 of the International Covenant of
Economic, social and Cultural Rights, 1966. Denial of minimum pay
amounts to exploitation of labour. The court further held that the
Government cannot take advantage of its dominant position and
should be a model employer.

Judiciary has also played a major role in protecting the

interest of contract labour. The court has discouraged the system of
contract labour and even directed its abolition in certain
circumstances to prevent exploitation.79 At the same time, if it
cannot be possible to abolish, according to the objectives of the Act,
fair conditions of service and security of tenure should be ensured to
them.80 The Court also emphasised the need of workmen and
interest of industry by extending the coverage of the employees by
widely interpreting the definition of employee. For instance, in Royal
Talkies, Hyderabad v. Employees State Insurance Corporation81, the
Supreme Court has held that the employees of cycle stand and
canteen run in a cinema theatre by contractors were to be covered by
the definition of employee under the Employees State Insurance Act
and also in Siddheswar, Hubli v. Employees State Insurance
Corporation,82 the Court, while interpreting the term ‘employee’ under
the Employees State Insurance Act held that the definition appears
to be of wider connotation and applies to those persons even whose
services are lent to the principle employer. Further, the Court also in
Employees’ State Insurance Corporation, Regional Director v. Suvarna

79 National Iron and Steel Company v. State of West Bengal, (1967) 2 LLJ 23 (SC).
80 Standard Vaccum Refining Company Ltd. v. Their Workmen (1960) 2 LLJ 233
(SC)
81 (1978) 4 SCC 204.
82 (1998) Lab I C 214 (Orissa).
 220

Saw Mills83 has extended the provision to include even a casual

employee for a day wages. The Court held that the definition of the
word ‘employees’ contained in section 2 (9) of the Employees State
Insurance Act does not make any difference between a casual or
temporary or permanent employee.

In the case of maternity benefit, the Supreme Court has held

that even female workers engaged on casual basis or on muster roll
on daily wages are also entitled to benefit under the Maternity
Benefit Act, 1961 as nothing in the Act confers the benefit only on
regular women employees.84 The Supreme Court held that right to
claim maternity benefit is recognised as the child bearing role of
women as a social function incorporated under Article 5(b) of
Convention on Elimination of all forms of Discrimination Against
Women. Similarly, in B.Shah v. Presiding Officer, Labour
Commissioner85, it was rightly pointed out that “performance of the
biological role of childbearing necessarily involves withdrawal of a
woman from the workforce for some period. During this period she
not only cannot work for her living but needs extra income for her
medical expenses. In order to enable the women worker to subsist
during this period and to preserve her health, the law makes
provision for maternity benefit so that the women can play both her
productive and reproductive roles effectively”. Further, the court held
that maternity benefit is to be made for the entire period of actual
absence including Sundays.

While dealing with the issue of child labour in MC Mehta v.

State of Tamil Nadu,86 the Supreme Court has given direction to the

83 (1980) 57 FJR 154.

84 Municipal Corporation of Delhi v. Female Workers (Muster Roll) 2000 (2) SC
Almanac 269.
85 (1977) 4 SCC 384.
86 (1996) 6 SCC 756.
 221

Government to monitor and prevent child labour in the Sivakasi

cracker manufacturing establishment. While implementing the
Minimum Wages Act, the Supreme Court observed that minimum
wages to the workers employed by sub-contractors must be paid
directly and the provisions of Section 21 of Contract Labour
(Regulation and Abolition) Act, 1970 should be observed.87

With regard to the coverage of home workers under the

Employees’ Provident Funds and Miscellaneous Provisions Act, 1952,
in P.M.Patel v. Union of India and others,88 the question arose for
consideration was whether the workers employed at their homes in
the manufacture of beedis are entitled to the benefit of Employees’
Provident Funds and Miscellaneous Provisions Act, 1952. The term
of definition of employee under section 2(f) of the Act are wide
enough to include persons employed directly by the employer and
also through a contractor and they also include persons employed in
the factory and persons employed in connection with the work of the
factory. The fact that the home workers deliver the beedis to the
manufacturer who has a right of rejecting those that do not confirm
to the standards clearly shows the degree of control and supervision
for establishing the relationship of master and servant between the
home workers and manufacturers. Hence, home workers are
employees.89

Therefore, when a person is allowed to work at his own place

or at hours of his choice or for someone else the master- servant
relationship still exists and for purpose of the application of the Act,
such person is an employee.

87 Salel Hydro Project v. State of Jammu & Kashmir, 1983 LLJ 494.
88 (1986) 1 LLJ 88 (SC).
89 M/s Sathish Plastics V. Regional Provident Fund Commissioner, (1981) II LLJ
277.
 222

The concern of Judiciary for protection of labour rights and

to enforce the socio-economic justice is well expressed in different
cases relating to unorganised sector. From the above it is clear that
the judiciary exists for the people and not vice versa.90 Hence,
judiciary cannot sit in silence, but has come forward to make good
the deficiencies in law and its implementations in providing relief
whenever and wherever required. This could be understood as
follows:

“Neither law-makers nor those entrusted with the duty of

implementing laws enacted for welfare of unorganised workers have
put in place appropriate mechanism for the protection of persons
employed by or through contractors to whom services meant to
benefit public at large are outsourced by State and/or its
Agencies/Instrumentalities for doing workers, which are inherently
hazardous and dangerous to life nor have they made provision for
payment or reasonable, compensation in the event of death”.91

From the in-depth study made in this chapter, it is

concluded that the unorganised workers lack social security and
hence they are exploited in many ways. This is due to their seasonal
intermittent nature of work, low level irregular patters of earning and
employment, absence of employer-employee relationship and weak
administrative structure. The Indian judiciary for the attainment of
social justice has been focussing attention to give effect to the rights
of workers with the aim of protecting the unorganised labour and
thereby reducing the huge gap in coverage of the unorganised sector
by establishing social security and dignity of the workers.

90 N Krishna Devi v. Vishnu Mitra AIR 1982 Raj 281.

91 Delhi Jal Board v. National Campaign for Dignity and Rights of Sewerage and
Allied Workers (2011) 8 SCC 568.