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A concept note By NIDAN:  Informal worker and their Issues

Informal workers are people who work with no official contract arrangement. Working outside the workplace of their employers, they enjoy neither regular wages nor remuneration. They can be freelancers, or temporary labour. Thus, informal workers are neither protected by the existing labour protection laws nor the social security laws. They have no security in life and work and there is no guarantee for their fair wages, occupational health and welfares when they become more advanced in age.

Common types of informal workers are home-based workers, industrial outworkers, irregular workers, temporary workers and part-time workers. Many are employed in sweatshops; others are own account workers working at homes or unregistered and uninspected workplaces. This also includes independent workers who live from hand to mouth such as street vendors, shoe shiners, scavengers, and domestic workers.

Workers in the informal economy are continuously exposed to various types of risks and frequently face crisis situations. It is not difficult to see why the poor are among the most vulnerable in any society. They are poor, illiterate and vulnerable. They barely have any assets or working capital. But they are extremely economically active, contributing very significantly to the economy and society with their labour. In fact, 64% of GDP is accounted for by self-employed of our country.  

The Informal Sector workers constitute 93% of the workforce in India. In the absence of any tangible organized sector, Bihar’s figure is whopping 94.7%.In urban centers, everywhere in the country the informal sector is growing at a great pace due to migration and also the retrenchment from the formal sector which seems to further increase due to economic downturn.

More than 50% of this workforce is constituted by women. They are largely migrant workers, who left their respective places due to various reasons. They are afraid of the harassment they faced from different quarters, such as the males, the employers, the police and the municipal authorities. This increases their hardship.  In fact overwhelming number of women workers state that lack of protection is the main problem they face in their work. Lack of basic facilities such as toilets and crèches for their children is another major problem Lack of institutional credit is also a problem as they have to borrow from moneylenders at high rates of interest.

The informal sector also constitutes the largest pool of child labour. Because of the unregulated conditions, child labor ‘thrive’ in the informal sector leading to the exploitation in numerous ways. The informal workers to become the source of supply of child labor sending or taking their children for work. Be it the domestic maid servants or the street vendors or the waste pickers and so on and so forth, the parents belonging to the informal sectors do encourage their children. Needless to say, once in labour market, these children are devoid of education and exposed to intense exploitation.

   Informal workers can be divided into three major groups;

1.A. Informal workers in production sector: Producing or working from home, the workers constitute one of the biggest labour groups. They can be found anywhere in the small alleys, urban slums, and rural area where they hardly find enough to make ends meet just from agriculture. Thus, these farmers have to become informal workers and work at home, too.

1.B. Home-based workers (Subcontracted Workers) exist as the employers want to cut production costs to better compete in the free market. they can choose to employ the workers just for parts of the process, all processes including assembling work, packaging, etc. They work outside factories and earn very meager remuneration. Home-based workers are engaged in various kinds of work including sewing, leather ware, shoe making, plastic flower, gem cutting, etc.

 1.C. Self-employed workers are freelancers who rely on their skills and wisdom to produce goods and sell them. The best known case is the OTOP (One Tambon One Product) or community enterprises. In other instances, the workers take orders from the selling business or larger business. Self-employed workers can be found as either individual or group workers.

 It is often found that home-based workers can change to self-employed workers back and forth in the same work field. When there are no orders from factories, they have to produce and sell by themselves and thus become self-employed workers.

  1. Informal workers in service sector includes employees and restaurant waiters/waitresses, vendors and street hawkers, garbage scavengers, recyclers, traditional masseurs, motorcycle taxi drivers, taxi drivers, domestic workers, etc.
  2. Informal workers in agricultural sector include employees in agricultural sector and contract farmers. 

 Issues of informal workers

Invisibility: Since information about informal workers does not exist, they become invisible labour forces and are subject to unfair employment terms, a lack of stable income, and a lack of labour protection and social security. Having the least leverage to deal with the risks, they are more vulnerable to them compared to their counterpart in the formal sector.

 No benefits from labour protection laws: Since all major instruments including the Labour Proteciton Act Workers’ Compensation Act ,Social Security Act ,Occupational Safety and Health in Workplaces Act, etc., provide for sole benefits of formal workers, informal workers are simply left out.

 Unfair wages and instable income: Even though they are engaged in the production of goods of the same quality and characteristics as in factories, most informal workers are not paid minimum wages and do not have stable income.

 Inconsistent and interrupted orders: Depending on the selling and marketing of each particular product, the informal workers do not have stable job orders and thus cannot plan ahead for production and work.  

lack of access to social security: Since the current Social Security Act does not cover informal workers, they have no security contingency to address their major needs such as during their sickness, disability, death, child delivery, child rearing, aging, and unemployment.

Lack of access to resources and state support: Thus, they have no chance to develop their skills, to benefit from revolving funds, and appropriate health services.

Lack of organization, representation and bargaining power: Informal workers are based in different places; it is difficult for them to get organized. Even though they can get organized, they can become just small groups and are not aware of their rights as workers. Thus, they have no power to bargain with the employers and relevant state agencies.

Suffering from occupational health and unsafe working environment: Their lack of occupational safety and health knowledge and vulnerable working condition makes most of informal workers subject to health problems and work-related accidences.

Issues and Challenges: Informal Workers in Different Sectors


Sector /group


Priority issues


Organising challenges

·       Street, vendors and hawkers

·       Right and space to vend

·       Facilities- storage, shelter, toilets, water

·       Protection against police harassment

·       Safety and security

·       Competition –protection against bad effects

·       Access to credit

·       Not regarded as workers by selves and others

·       Controlled by politicians, “mafia”

·       Fear of harassment by authorities, police

·       Competition amongst selves and formal sector

·       Time spent on organizing means loss of income

·       No forums for bargaining

·       Home-based workers

·       Equal income, benefits as factory workers

·       Identifying employer

·       End to exploitation by middlemen

·       Access to regular work

·       Access to markets (own account)

·       Access to credit (own account)

·       Isolated in homes, invisible

·       Time-double burden of work and home care

·       Fear of losing work

·       Restrictions imposed by religion, culture

·       Children working

·       Unprotected by labour law or disguised status

·       Garment workers

·       Living wage

·       Right to Organise

·       Excessive overtime

·       Security of employment

·       Women workers are seen as ‘seasonal’, ‘supplementary’ wage earners

·       Harassment of trade unions

·       Often small workshops

·       Waste pickers and recyclers

·       Access/right to recyclable waste

·       Integration into municipal systems

·       Work higher up the recycling chain

·       Fair prices for recyclables

·       Recognition and improved status

·       Health and safety

·       End to exploitation by middlemen

·       Low status and self esteem

·       Fear of losing work

·       Fear/dependency on middlemen

·       Competition amongst selves

·       Time to meet means loss of income

·       Child labour

·       Not protected by labour law

·       Agricultural, forestry and fish workers

·       Right to land and land use

·       Right to natural resources

·       Regular work

·       Access to resources and equipment

·       Access to credit and markets

·       Scattered locations

·       Isolated and far distances

·       Child labour

·       Not protected by labour law

·       Seasonal or intermittent work

·       Domestic workers

·       Recognition as workers

·       Protection against dismissal, abuse

·       Freedom of movement

·       Freedom to change jobs (migrant)

·       Less hours, more rest

·       Better living conditions

·       Isolated and invisible in homes

·       Fear of employers and losing jobs

·       Dependency on employer for housing etc

·       Not protected by labour law

·       Lack of time: long hours

·       Fear of authorities (migrant)

·       Transport workers (urban passenger)

·       Access to routes and passengers

·       Protection against harassment

·       Health & safety/ accident protection

·       Parking and facilities

·       Petrol and spares prices and fares

·       Competition-protection against bad effects

·       Mobility

·       Competition between selves and formal sector

·       Control by politicians, “mafia”

·       Threats by employers

·       Fear of harassment by police/authorities

·       Time for organizing means loss of income

·       Women workers all sectors

·       Safe and affordable child care

·       Income protection during/after childbirth

·       Physical security

·       Sexual harassment protection

·       Equal income for equal value work

·       Access to higher income earning work

·       Fear and lack of confidence

·       Cultural and religious barriers

·       Often in scattered locations

·       Dominated by men in sector

·       Lack of time

·       Child care and home care

On based of above – The informal workers can be divided into three categories:-

  1. Hawkers, vendors and small business men/women like vegetables, fruit, fish, egg and other vendors of food items, household goods and clothes vendors
  2. Home-based workers like weavers, potters, bidi and agarbatti workers papad rollers, readymade garment workers, artisans and workers engaged in processing of agricultural products.
  3. Manual laborers and service providers like agricultural laborers, construction workers, contract laborers, handicraft pullers, head loaders, domestic workers and laundry workers.

Nidan believes that the informal sector organising should be dynamic and respond to the variety of needs ranging from creating descent work conditions to meeting financial services needs of informal workers. Nidan began organising the informal workers since 1996 and has successfully organised them into member based organisation shaping them into various forms.

Nidan has been organizing the informal workers giving them a voice, trying to secure their livelihood through protecting and promoting and also through access to financial services. However the urban India has changed fast opening up newer and newer opportunities. Though the workers themselves seize such opportunities but are unable to enhance the income considerably.