Glossary term
Informal Sector: Meaning and Definition
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
The informal sector consists of all enterprises other than public sector establishments and private establishments with ten or more hired workers, and the workers in them, including the self-employed. Its workers generally lack regular income, social security and legal protection, and were about 93 per cent of India’s workforce in 1999-2000.
In more detail
Informal work gives income to millions who cannot find formal jobs, but it carries insecurity: no contract, no pension, and no protection from sudden loss of work. Policy aims to extend social security to informal workers and to help small units grow and register.
Example
A roadside vendor, a rickshaw puller and a worker in a small workshop with five employees are all in the informal sector.
Key points
- Also called the unorganised sector.
- No guaranteed benefits.
- Large majority of workers.
Common mistake
Treating informal workers as unproductive. Many are productive but unprotected.
Related terms
Worker-population ratioDisguised unemployment
Where it is explained
This term is explained in Class 11 Indian Economic Development Chapter 7: Employment: Growth, Informalisation and Other Issues.