Volume - 5, Issue- 5, May 2017 IC Value : 56.

46 e-ISSN : 2347 - 9671| p- ISSN : 2349 - 0187

EPRA International Journal of Economic and Business Review SJIF Impact Factor(2016) : 6.484
ISI Impact Factor (2013): 1.259 (UAE)

Research Paper

GLOBALISATION AND UNORGANIZED

WORKERS: A QUESTION OF SOCIAL
www.eprawisdom.com
SECURITY

1
Research Scholar, Department of Economics, University of Rajasthan,
Deepakshi Saxena1
Jaipur, Rajasthan, India
2
Research Scholar, Department of Economics, University of Rajasthan,
Natasha Kuldeep2 Jaipur, Rajasthan, India

ABSTRACT

T he right from a manufacturing economy to a science economy from production of goods

to production of ideas, and from the machine age to the information age has been
accompanied by many transformations. Rather than producing ‘goods’, the science firms produce
’Idea’. Organization in the science era, such as software, financial science and biotechnology firms,
depends on ‘Intellectual Capital’. People create ‘Intellectual Capital’ and are therefore the most
valuable asset of the firm. Even the environment within which firm conduct business today is very
different and much more complex and dynamics when compared to the environment fifteen years ago.
As the world becomes one global playing field the environmental changes in countries other than the
home country of a firm affect business decision and the performance of firms/organized & unorganized
sector. As industrial controls and trade restrictions are lifted, this could result in higher output growth
leading to a creation of new employment opportunities and a visible fall in poverty and unemployment.
But results are indifferent. This paper focuses on the effect of change in environment on economy in
of generation employment in unorganized sector and what steps has to be taken to provide social
security to them.
KEYWORDS: Unorganized sector, Environment, Social security

INTRODUCTION and the overall macro-economic performance of a

Acceleration of growth and expansion of country that are linked to the formers. Positive growth
employment opportunities are the goals that are in a sector at times may lead to low employment elasticity.
considered central to economic policy agenda in both This may be the resultant effect of productivity growth
developed and developing countries alike-provision of that arises out of enhanced efficiency of labour. There
productive employment for the rapidly increasing labour might be structural economy changes that are brought
force has become an integral part of the strategy of about through the replacement of capital for labour
‘Inclusive growth’. In a broad sense, there should be leading to sustained decline in labour employment. This
no conflict between growth and employment. Higher type of situation usually occurs when an economy is in
growth tends to ensure enhanced employment at a given its early stage of development. As the economy grows,
level of productivity. Employment elasticity, which the employment may shift from agarion activities to
measures the ‘Employment intensity’ of economic manufacturing and science, leading to improvement in
growth, can thus provide insight to the labour market the situation.
www.eprawisdom.com Vol - 5, Issue- 5, May 2017 96
e-ISSN : 2347 - 9671, p- ISSN : 2349 - 0187 Deepakshi Saxena & Natasha Kuldeep
OBJECTIVES the world or other fast growing Asian economies in their
1. To analyzed the growth of employment in comparable stages of development.
organized and unorganized sector. Indian economy is characterized by the
2. Try to find out the answer-Is the growth is existence of higher of informal or unorganized sector.
jobless? The workers in the organized sector contributed less
3. Attention is lead on steps taken to provide than 20% of the country’s total work force and the rest
social security to them. comprises of subsistence farmers, agricultural workers,
THE SCENARIO IN INDIA fisher folk, dairy workers and those working in traditional
Amongst the fast growing countries of the manufacturing like handloom are grouped under
world, India is at the forefront which has attained the unorganized sector.
growth of GDP above 9% in recent years. While REVIEW OF LITERATURE
providing gainful employment to the growing labour Gupta Meenakshi (2007) in her study “Labour
force remains the long terms goal of the development welfare and Social Security for Unorganized Sect or”
policy of the country, the main concern is about the argued that unorganized sector is a vast and significant
labour market performance in the wake of country’s segment of Indian economy in terms of its worth through
declining employment elasticity of output, despite, the their economic contribution and the growing number of
acceleration of the economy over the last more than the the workers the sector engages. Effective protection and
decade, employment growth has remained almost welfare for unorganized sector is a shade more difficult
stagnant, while it may indicate possible increase in and complicated. The study makes a humble attempt to
labour productivity growth, inadequate spread of understand what unorganized sector means and to study
employment opportunities is becoming a matter of grave categories of unorganized sector. The study discusses
concern as it may have a serious dent on poverty & the attitude of judiciary towards the rights of the workers
depreciation. engaged in unorganized sector. The conclusion of the
Ministry of labour has categorized the study is that apart from constitutional mandate, social
unorganized labour force under four groups in term of security for all considered as a basic human right under
occupation, nature of employment, especially distressed the Universal Declaration of Human Rights. As the
categories and service categories. In addition to the unorganized sector comprises 92 percent in our working
above categories, there exists a large section of age population, both the central and state government
unorganized labour force such as cobblers, hamals, must contribute a proportion of their revenue and also
handicraft artisans, handloom weavers, lady tailors, levy a cess from the employers, for extending the welfare
physically handicapped self-employed persons, and social security benefits to these workers.
rickshaw pullers/auto drivers, sericulture workers, S. Jeyanti and N. Prasanna (2010) in their article
carpenters, leather and tannery workers, power loom entitled “Plight of Urban Unorganized Workers” argued
workers and urban poor. that the unorganized sector in India attracts the bulk of
The extent of unorganized workers is labour force constituted the main bulwark of total national
significantly high among agricultural workers, building labour force. The time is ripe for enacting legislation for
and other construction workers and among home based the welfare of labour in unorganized sector and sooner
workers. Agricultural workers constitute the largest the better. They analyzed the wage structure and
segment of workers in unorganized sector. Construction working hours of urban unorganized workers. They
workers constitute the second largest category of concluded that the unorganized sector workers
workers in unorganized sector. contributes in a large measure towards the growth of
In India, in 2004-05, labourforce committed of economy and it is time that workers in this sector receive
about 430 million growing annually at about 2%. Slightly good compensation for their work through a minimum
has than 60% of it is employed in agriculture producing wage law, full employment policy and social security
little over 20% of the domestic output. Industry employs scheme.
around 18% of the workforce producing about 27% of Dhas R. Albert Cristopher and M. Helan Mary
the domestic output. More than 50% of domestic output Jecqueline in their article “Globalization, Economic
is contributed by service sector but ironically, it absorbs Reforms and Unorganized Labour force in India ”
only 33% of the total workforce. This is contrary to the highlighted the major characteristics of unorganized
situation as prevalent in other advanced countries of labour. The unorganized workers will be in the highly
www.eprawisdom.com Vol - 5, Issue- 5, May 2017 97
EPRA International Journal of Economic and Business Review| SJIF Impact Factor(2016) : 6.484
disadvantages position as there would be a shift in the  The workplace is scattered and fragmented.
technology from labour to capital intensive and use of The workers do the same kind of job in different
unskilled to skilled workers. They concluded that along habitation and may not work and live together
with globalization and restructuring economy, concerted in compact geographical areas.
efforts should be initiated to restructure the unorganized  There is no formal employees- employer
workers towards their benefit so that they would also relationship small and marginal farmers, share
benefit in that process on one hand, and on the other, rappers agricultural workers as they work
contribute towards the success of globalization. together in situation which may be marginally
ORGANIZED v/s UNORGANIZED favorable to one category but may be broadly
The structure of employment may be studied by described as identical.
recognizing the following characteristics-  In rural areas, the unorganized labour force is
I. Distinction between organized and highly stratified on caste and community
unorganized sectors consideration. In urban areas while such
II. The relative share of self-employment, regular consideration are much less, it cannot be said
salaried employment and casual labour. that is altogether absent as the bulk of the
ORGANIZED SECTOR unorganized workers in urban areas are
It refers to the employment in the public sector basically migrant workers from rural areas.
and in private sector establishment employing 10 or more  Workers in the unorganized sector are usually
persons. It is commonly believed that wages in the subject to a lot of fads, taboos and outmoded
organized sector are much higher than in the social customs like child marriage, excessive
unorganized sector. Moreover, the organized sector spending on ceremonial fertilities etc. which
being regulated also provides greater job security and lead to indebtedness and bondage.
other benefits. Within the organized sector, job in the
 The unorganized workers are subject to
public sector receive relatively higher wages and
exploitation significantly by the rest of the
accompanying benefits than there in the private sector
society. The unorganized workers receive poor
for similar skills. Besides this, public sector provides
working conditions especially wages much
offers job security.
below that in the formal sector, even for closely
UNORGANIZED SECTOR
comparable jobs i.e. where labour productivities
The term ‘Unorganized Labour’ has been
are no different. The work status is of inferior
defined as those workers who have not been able to
quality of work and inferior term of employment,
organize themselves to pursuit of their common interest
both remuneration and employment.
due to certain constraints like casual nature of
 Primitive production technologies and feudal
employment, ignorance and illiteracy, small & scattered
production relation are rampant in the
size of establishment etc. in order to understanding the
unorganized sector and they do not permit or
impact of globalization on the people of our country, it
encourage the workmen to imbibe and
is more appropriate to examine its impact on the
unorganized labour, particularly on their employment assimilate higher technologies and better
and living. The major characteristics of unorganized production relations. Large scale ignorance and
workers could be listed below:- illiteracy and limited exposure to the goings on
 The unorganized labour is overwhelming in the outside world are also responsible for such
terms of its number range and therefore, poor absorption.
omnipresent throughout India.  The unorganized workers do not receive
 As the unorganized sector suffer from cycles sufficient attention from the trade union.
of excessive seasonality of employment, In general, unorganized workers are observed
majority of the unorganized workers do not to be large in numbers, suffering from cycles of excessive
have stable and durable avenues of seasonality of employment, scattered and fragmented
employment. Even those who appear to be work place, poor in working conditions and lack of
visibly employed are not gainfully and attention from trade unions.
substantially employed, indicating the
existence of disguised unemployment.
www.eprawisdom.com Vol - 5, Issue- 5, May 2017 98
e-ISSN : 2347 - 9671, p- ISSN : 2349 - 0187 Deepakshi Saxena & Natasha Kuldeep
EFFECTS OF GLOBALISATION ON As a large number of labourforce is pushed
UNORGANIZED SECTOR into the unorganized category of workers, the excess
The impact of globalization and economic labour supply crates disequilibrium or imbalance in the
reforms on employment in general is said to be divergent. labour market that leads to several adjustments in the
In fact, unemployment and disguised unemployment are unorganized labour economy. The surplus or excess
the normal features of Indian economy. There is heavy labour supply into the unorganized category leads to
dependency on unorganized sector by the labor force partial or casual employment at low wages and without
for their employment, income and livelihood. In such a jobs or social security of any kind. The real wage rates
situation, the economic policies towards delinking were low for the unorganized worker compared to that
budgetary support to be public sector enterprises and of the organized labour. Among the unorganized
reducing labour absorption in public sector as part of workers, the wage rates were very much low for the
the globalization strategy leads to adverse effect on agriculture labour compared to that of unorganized non-
employment situation in India. agricultural labour.
The growth rate of organized sector Coupled with the law and fall in the real wages,
employment maintained its declining trends in the reform the widespread uncertainty about work and incomes
period. The organized sector employment grew at 1.2% among the unorganized workers, raising level of poverty
pa during 1983 to 1994, which decelerated to 0.05% and other socio- economic problems due to the effects
during 1994 to 2004. The decline is mainly due to the of globalization.
severe deceleration of public sector employment growth Another significant impact of globalization on
which averaged at -0.65% during 1994 to 2008 as against the unorganized workers is the jobless growth promoted
1.53% during 1983 to 1994. However, the private by the new technological changes and structural shifts
organized sector experienced significant increase in in the global economy in favor of the so called new
employment growth from 0.44% during 1983 to 1994 to economy. Through a country like India needs a labour
1.75% during 1994 to 2008, so that the overall intensive technology at least in the unorganized sector
employment during the post reform period recorded a to process of globalization sets on a shift towards capital
positive growth (through very small). However, the intensive technology. In order to meet competition and
organized sector accounted for only 15% of employment to increase productive efficiency, firms are forced to
in India and remaining 85% engaged in informal sector modernize their operational involving machineries,
(including agriculture). Employment growth in the capital and high technologies. The choice of labour
organized sector, public and private combined, has intensive technology becomes obsolete.
increased by 1.9% in 2010, which is lower than the annual The immediate and direct consequence of the
growth for the previous year. The annual growth rate shift to the industrial technology is the replacement of
for the private sector was much higher than that for the unskilled personnel with skilled people. Under the new
public sector. However in respect of both sectors, annual production environment, the nature of work changes
increase in employment had slowed down in 2010 v/s and that warrants skilled workers. Taking into account
2009. the basic qualification and nature of an Indian
When the labour absorption in the organized unorganized worker, it is difficult to visualize the effort
sector declines during the period of reforms, it would and time needed to shift an unskilled person into a skilled
naturally push the additional labour force to the worker. Till then, the inefficiency would continue even
unorganized sector leading to further swelling of in the new production environment. In the present
unorganized workers. The situation gets worsen if context of globalization the unorganized sector warrants
pruning or retrenchment activities by the public sector greater attention and protection to safeguard themselves
are taken into consideration. Taking into account the from the evils of globalization.
backlog of unemployment and overall magnitude of SOCIAL SECURITY FOR THE
additional employment to be generated, there lies a major UNORGANISED WORKERS: THE
challenge for the country. In the context of declining EXPERIENCE
growth rate in employment generation in organized India has a long tradition of social security and
sector there is no scope for creating additional jobs. social assistance directed particularly towards the more
The additional labourforce has to find work as self- vulnerable sections of society. But after independence,
employment or remain casual workers. the state was concerned more with the problems of
www.eprawisdom.com Vol - 5, Issue- 5, May 2017 99
EPRA International Journal of Economic and Business Review| SJIF Impact Factor(2016) : 6.484
organized workforce and neglected the rural labour force on the committee’s recommendations the government
on social security matters to a greater extent, till recent is in the process of enactment of Legislation (Bill) and
past. formulation of social security schemes.
It is rightly true that when independent India’s Poverty Alleviation Programmes (PAP) and
Constitution was drafted, social security was specially Employment Oriented Programmes initiated in India are
included in List III to schedule VII of the constitution primarily focused and developing rural labour and
and it was made as the concurrent responsibility of the unorganized workers. The involvement of Non-
central and state governments. The initiatives in the Governmental Organizations (NGOs) in the social
form of Acts such as, the Workmen’s Compensation security of unorganized workers could not be ignored.
Act(1923), the Industrial Dispute Act(1947), the It is estimated that NGOs could cover 3 to 4 percent of
Employees State Insurance Act((1948), the Coal Mines the total workforce in the unorganized sector.
Provident Funds and Miscellaneous Provisions SOCIAL PROTECTION
Act(1948), the Employees Provident Fund and PROGRAMMES
Miscellaneous Provision Act(1952), the Assam Tea Due to the importance of the informal sector’s in
Plantations Provident Funds/Scheme Act(1955), the total workforce, the government has been focusing on
Maternity Benefit Act(1961), the Seamen’s Provident expanding the coverage of social security schemes so
Fund Act(1966), the Contract Labour Act(1970), the as to prove a minimum level of social protection to
Payment of Gratuity Act(1972), the Building and workers in the unorganized sector and ensure inclusive
Construction Workers Act(1996) etc reveal the attention development. These include the following:-
given to the organized workers to attain different kinds 1.Aam Admi Bima Yogna (AABY):-
of social security and welfare benefits. Although not Under this scheme launched on 2 October 2007,
much has been done in providing social security cover insurance is provided against natural as well as
to the rural poor and the unorganized labour force, the accidental and partial/permanent disability of the head
country has made some beginning in that direction. of the family of rural landless households in the country.
In order to evolve comprehensive legislations Under the scheme, the head of the family or an earning
for workers in the unorganized sectors, various member is eligible for receiving the benefit of Rs.30000/
commissions and study groups appointed. The First - in case of natural death, Rs.75000/- for accidental death,
National Commission on Labour (1969) defined the Rs.75000/- for total permanent disability and Rs.37500/-
unorganized workers and recommended the Minimum for partial permanent disability. The scheme has provide
Wages Act to cover unorganized workers too. In 1984, insurance coverage to 1.97 crore lives in the country up
the Economic Administration Reforms Commission to 31 January 2012.
constituted a six member working group on social 2.Janashree Bima Yogna (JBY):-
security. The Second National Labour Commission
The JBY was launched on 10 august 2000 to provide
constituted in 1999 submitted its report in 2002, and
life insurance protection to rural and urban person living
recommended in umbrella type legislation and drafted
below and marginally above the poverty line. Persons
an indicative bill also to provide protection to the
between ages 18 and 59 years and who are the members
workers in the unorganized sector. Based on the
of the 45 identified occupational groups are eligible for
commission’s recommendations, the government
participation in this policy. The scheme provides
launched the ‘Unorganized Sector Workers’ Social
coverage of 230,000 in case of natural death, 275,000 in
Security Scheme 2004’ on pilot basis in 50 districts. The
case of death or total permanent disability due to
National Common Minimum Programme (NCMP) of the
accident and Rs.37500 in case of partial permanent
present government highlights the commitment of the
disability. During 2010-11, a total of 2.09 crore lives has
government towards the welfare and wellbeing of all
been covered under the JBY.
workers, particularly in unorganized sector. The
3.Rashtriya Swasthya Bima Yogna
government constituted a National Commission for the
(RSBY):-
enterprises in the Unorganized Sector (NCEUS) under
It was launched on 1 October 2007 to provide smart
chairmanship of Dr. ArjunSen Gupta to examine the
card based cashless health insurance cover of Rs.30000/
problems of the enterprises in the unorganized sector
- per family per annum on a family floater basis to BPL
and make recommendations to provide technical,
families (a unit of five) in the unorganized sector. The
marketing and credit support to these enterprises. Based
scheme became operational from 1 April 2008. The
www.eprawisdom.com Vol - 5, Issue- 5, May 2017 100
e-ISSN : 2347 - 9671, p- ISSN : 2349 - 0187 Deepakshi Saxena & Natasha Kuldeep
premium is shared on 75:25 bases by the center and working population. The unorganized workers will be in
state government. In the case of north eastern states the highly disadvantageous portion as there would be a
and Jammu & Kashmir the premium is shared in a 90:10 shift in the technology from labour to capital intensive
Ratio. The scheme provides for portability of smart cards and use of unskilled to skilled workers. Thus, the benefit
by splitting the card value for migrant workers. As on of globalization on the Indian economy would get
20 December 2011, the scheme is being implemented in shattered and nullified, if the negative impacts on the
23 states/UT’s. More than 2.55crore smart card has been unorganized workers are not settled on neutralized.
issued. Hence, along with globalization and restructuring the
4.The unorganized workers Social economy, concerted efforts should be initiated to
Security Act,2008:- restructure the unorganized workers towards their
The act came into force from 16 may 2009 with the benefits. So that they would also benefit in that process
objectives of providing social security to unorganized on the one hand and on the other, contribute towards
workers. The ‘Unorganized Workers’ social security success of globalization government should
rules, 2009 have also been framed. Continuation of the implemented all the policies full heartedly so the benefits
National Social Security Board in 2009 was another of all the policies reap by all the beneficiaries.
significant step. The Board recommended that social REFERENCES
security scheme , namely RSBY providing health 1. Economic Survey (2011-12), government of India, chapter-
insurance, JBY providing death and disability cover and 13, pp.-307-308.
2. Dhas Chirtopher Albert. R and M. Helen Mary Jacqueline
Indira Gandhi National Old Age Pension Scheme
(2005), “Globalization, Economic Reforms and
(IGNOAPS) providing old age pension be extended to
Unorganized labour force in India”, in V.B. Jugale (ed.)
building and other construction workers, MGNERGA “world trade organization and Indian Economic Reforms”,
workers, ASHA workers, Anganwadi Workers and serial publications, New Delhi, vol.-2, chapter-35, pp.-
helpers, porters/coolies/ gagmen and casual ad n daily 792-812.
Wages. 3. Pattarite Falguni, Navyan. C. Nayale and Trupti Mishra
5. National Social Security Funds:- (2008), “Trends in Employment Intensity of Economic
It is for unorganized sector worker with initial Growth in the post Reform Era across major Indian
allocation of Rs.1000 crore has been set up. Thus fund States”, in R. K. Mishra and Nandita Sethi (ed.) Rethinking
will support schemes for weaves, today tappers, India’s Growth Strategy: Services vs. Manufacturing”,
concept publishing company, New Delhi, vol.-1, chapter-
rickshaw puller, bidi workers etc.
10, pp-120-136.
6.Bilateral Social Security Agreement:-
4. Bhattacharya B.B., S. Sakthivel (2005), “Economic Reforms
It has been signed with Belgium, Switzerland, the
and Jobless Growth in India in the 1990’s in Ajet Kumar
Netherland, Denmark and Norway to protect the interest Sinha” India towards Economic Super Power: A Journey
of expatriate workers and companies on a reciprocal of economic reforms (ed.), Deep and Deep publication
basis. Their agreement helps workers by providing pvt. Ltd., New Delhi, chapter-22, pp-471-501.
exemption from social security contribution in case of 5. Saikia. Dilip (2012), “Introduction: India’s Economy after
porting, tantalization of contribution period and liberalization” in Dilip Saikia “Indian Economy after
exportability of pinion in case of relocation to the home liberalization, Performances and challenges” (ed.) SSDN
country or any third country. publisher and distribution, New Delhi, chapter-1, pp-1-46.
6. Dutt Ruddan (2008), “Employment and Unemployment in
CONCLUSION
India” in Anil Kumar Thakur sand Dalip Kumar “Growth
The impact of globalization on the unorganized
of real sector in Indian Economy (ed.), Deep and Deep
workers in India is more of warming signals. The publication pvt. Ltd., New Delhi, chapter-1, pp-1-31.
unorganized workers would expand further due to 7. Chadda Rani (2011), “Globalization and Indian Economy”,
globalization. Under the present deprived condition of Sumit Enterprises, New Delhi, chapter-5, pp-118-154.
unorganized sector, this would lead to imbalance in the 8. Gupta S.P. (2006), “Globalization, Economic Reforms and
labour market leading to more supply of labour, low Employment Strategy in India Academic Foundation”, New
wages and low level of income. This process of change Delhi.
was getting reflected in the low level of real wages and 9. Dev, Mahendra S. (1998), “Government interventions and
the trends in the relative real wages of organized and Social Security for Rural Labour in Empowering Rural
unorganized workers. This situation would affect the Labour in India” , Radhskrishnaan N Sharma ed. Institute
for Human Development, New Delhi.
social and economic condition of the unorganized
www.eprawisdom.com Vol - 5, Issue- 5, May 2017 101