What is Informalisation of Workforce?

Informalisation of workforce refers to the situation wherein there is a continuous decline in the percentage of the workforce in the formal sector and a simultaneous rise in the percentage of the workforce in the informal sector.

Workforce can also be divided into individuals working in the informal sector and individuals working in the formal sector.

The informal sector is the unorganised sector of an economy. Besides farming and self-employment ventures, this sector includes all private enterprises that hire less than ten workers.

The formal sector, on the other hand, is the organised sector of an economy. It includes all government departments, public enterprises, and private enterprises that hire ten or more workers.

Informalisation of Workforce Meaning

Informalisation of workforce refers to the situation wherein there is a continuous decline in the percentage of the workforce in the formal sector and a simultaneous rise in the percentage of the workforce in the informal sector.

Informalisation of Workforce in India

In India, informalisation of workforce is a recent phenomenon. Growth and development generally lead to a rise in the number of individuals employed in the formal sector and a fall in the number of individuals employed in the informal sector. However, in India, there has been a reversal of this trend.

Estimates reveal that nearly 93% of the workers in India are engaged in the informal sector, while only 7% are engaged in the formal sector. Some argue that this increase in the extent of informalisation is a result of the reforms of 1991 which transformed India from a “socialist” economy to a “market” economy.

To conclude, we can say that the workforce in India is increasingly becoming casualised and informalised. Appropriate steps must be taken to overcome this situation.


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