Formal (Organised) Sector:
The formal (organized) sector is defined as the sector comprising the labor force in all public as well as private sector enterprises employing 10 or more workers.
Organized units are being supported and protected by the government. They provide better wages, good working conditions and other benefits to the workers even pension facilities. Many have developed and built their career with the organized units. There are manufacturing organizations – public sector service organizations such as commercial banks and insurance private sector service organizations such as banks – transport tourism organizations finance companies or communications such as mobile phone services, television etc.
The formal (organized) sector is standardized. They mostly work on settled lines. The demand for labor in this sector is balanced with the supply through the efforts of employment exchanges, counsellors, advertisements, trade unions, etc. A formal selection process is used for appointment. Workers or employees are regulated by formal laws.
Organization is also formally controlled, there is hierarchy of authority, well organized work, knowledge base adopted as specialization, effective line of communication, high pay scale according to ability and experience. Formal, indirect, contractual, impersonal and temporary relationships are prominent in such organisations.
Organizations in this area train and develop employees through their own efforts. They pay wages/salaries to employees based on their job evaluation and their ability to pay. Trade unions are strong in these organisations. They regulate the HRM practices in these organizations.
According to studies by Braverman and others, skill initiative and control have been steadily removed from work with the development of mechanized and automated production. Furthermore, the labor process in capitalist society has been increasingly rationalized. The functions are finely divided into simple operations and directed and arranged by the management.
is located. This development applies not only to the manufacturing industry but also to work in general.
The net results of these changes are (1) scarcity of labor power (2) loss of its control over the work process and especially cheapening of labor power. The laborers are forced to sell their labor power in order to survive. There has been a process of degradation of their work which involves removal of skills, responsibility and control and dominance of employers and management over the work process. The organized sector is limited to manufacturing, electricity, transport and financial services. Organized sector includes public and private sector. Now due to the policy of the government to reduce employment in the public sector, the share of public sector in organized sector employment has come down. Private sector is profit motivated and does not create employment as public sector.
Concept of Informal [Unorganized] Sector: Introduction, Meaning and Definitions:-
The informal or unorganized sector as defined by the Central Statistics Organization includes all those incorporated enterprises and household industries [other than organized] which are not regulated by any law and which do not maintain annual accounts or balance sheets.
Economists have tried to define this sector in terms of the organization of capital, the technology used [traditional or modern] in terms of the nature of the products [local or common] or the consumers of the products [rich or poor]. Banerjee describes the unorganized sector as low-tech, that it caters to local markets and consumers from the lower strata of society.
A third use of the term informal or unorganized sector is by trade unions and those concerned with labour. According to Nirmala Banerjee, the unorganized sector… usually consists of productive activities with loose-knit groups bound by informal working contracts of various kinds. That’s why it is also called informal sector. This includes a section of self-employed, wage earners, family producers as well as domestic workers.
The importance of this definition is that it brings out the nature of the employment relationship as the main factor that differentiates the organized sector from the unorganized sector. In this definition, three main features of the informal sector are given. The ‘productive activities’ are carried out by ‘loosely formed groups’ bound by ‘informal contracts’.
The constituent organizations in an unorganized sector include small scale industries, small scale industrial units, cottage industries, shops and establishments, hotels, restaurants, mobile business or trading units, taxi operators, agriculture, etc.
The demand and supply of labor in this market is mostly balanced through casual labor and contract labor. These practices are widely prevalent in third world countries. Organizations in this sector do not follow any systematic or scientific method of recruitment or selection. The candidates are mostly employed informally. They also accept low wages. Sometimes their skill is considered.
Organizations in the informal sector do not design jobs, do not plan for manpower. They do not take any measures to train or develop the employees. In informal sector organizations, performance appraisal never takes place through formal means.
Employees are generally paid the minimum wage declared by G.
Government. Some organizations refrain from paying even the minimum wage. Generally, organizations in the informal sector do not provide employee benefits, welfare measures, fringe benefits, etc.
Most of the organizations do not have trade unions. Trade unions are usually weak in these organizations as well, wherever they exist.
Workers’ grievances, industrial conflicts etc. are very rare in this sector as the workers have to accept the wages paid by the employer. Apart from this, they also accept other terms and conditions of the job.
The informal sector mainly comprises people who are self-employed and provide essential services but in an unorganized and unauthorized manner e.g. Street vendors. This sector can cover a wide range of activities such as retail and wholesale trade, repair and servicing, casual labor and manufacturing etc.
By definition – units in the informal sector are those which employ less than 10 workers. But it is difficult to differentiate between the formal and informal sectors.
The informal sector is largely unorganised, unregistered and therefore vulnerable. Migrants usually enter the region for the dire need of survival. The informal sector is also known as the large self-employment sector.
The concept of informal sector has developed in the historical context of urbanization, industrialization and migration. Inevitably the industrialization of the peasant economy gave rise to the process of urbanization and mass migration from rural areas to cities. Both push and pull factors were responsible for the migration towards cities. But due to the low rate of industrialization and its increasingly capitalist i.e. profit-oriented nature, not all migrant labor could be absorbed into the industrial or what is also called the modern sector. After failing to get a job in the industrial sector, this
The father’s surplus labor went for alternative sources of income and in the course of this search, found informal ways to earn it and in the process created a subsistence segment within the formal economic system – a living sector. Also known as the informal sector. There is no formal structure or recognized or official organization for economic management in the informal sector.
activities.
According to the SNA of 1993, the informal sector refers to productive institutional units that have (a) a low level of organization (b) little or no division between labor and capital and (c) are based on casual employment and/or social relations. But there are labor relations. Opposition to formal contracts These units belong to the domestic sector and cannot be associated with other units. In such units the owner is solely responsible for all financial and non-financial obligations incurred for the productive activity. For statistical purposes, the informal sector is considered as a set of production units that form part of the household sector in the form of household enterprises or equivalently – unincorporated enterprises owned by households.
Hart Keith J in Small-Scale Entrepreneurs in Ghana and Development Planning used the concept of the “informal sector” to denote a large self-employed sector. In his field study of Ghana, Hart observed that new entrants to the urban labor force who were unable to enter the formal sector found means of livelihood.
The unorganized informal sector is a segment of the urban economy where production and marketing relations are informal in nature.
Attempts have been made in ILO studies to identify and differentiate the informal sector. Taking cues from the dual nature of urban economies in developing countries, nature of organization (organized and unorganized), technology used (traditional or modern), mode of production (capitalist or subsistence), state recognition of economic activities and products and State regulation of labor markets are taken as the lines that demarcate the formal and informal sectors. Thus sectors like manufacturing, construction, transport, trade and services can be considered as informal sector.
But again to differentiate informal sectors from formal sectors (sectors), some criteria have been developed by ILO groups which are as follows:-
- a) Small size of operation – The production or manufacturing activities are carried out on a small scale.
- b) Family ownership – There is an informal relationship between the employer and the employees. There is no functional division of labor or specialization.
- c) Casual nature of employment – Jobs are highly temporary.
- d) Use of indigenous and non-modern (traditional) technology – which is labor intensive with completely manual operations involved in the production process.
- e) Lack of access to state benefits – such as organized capital market benefits, bank finance, foreign technology, foreign exchange concessions, imported raw materials, protection from foreign competition and many other concessions and incentives that are given to formal sector enterprises b
On the basis of their being recognized by the Govt.
- f) Competitive and insecure markets – mainly arise due to ease of entry, nature of the product being produced and its demand and exploitative marketing arrangements.
- g) Insecure labor market – leading to insecure jobs, underemployment and reduced wages.
- h) Scattered nature of workplace or employment – the place of work is spread. Different types of activities are taking place at different places even in the same line of production.
- i) Contract nature of labor – Most of the workers are employed on contract basis hence they are most likely temporary.
- j) Workers – Semi-Skilled and Illiterate:- Most of the skilled or unskilled workers do not work in the informal sector. The workers are generally migrants and do not have adequate qualifications.
The ILO considers the informal sector to be a job-generating sector because it can absorb people who cannot enter the organized formal economic system because of certain inefficiencies. It is argued that the informal sector provides jobs and supplies goods and services that are needed by the lower and middle classes.
Main features of informal sector
According to ILO UNDP, there are some identifiable characteristics of the informal sector which are as follows –
1) Ease of Access – Since there is no need for any formal selection, the needy workers get jobs easily. There is no interview or specific qualification required. In urban areas, this sector absorbs anyone who wishes to enter. Such a sector attracts skilled, unskilled, semi-skilled, illiterate, temporary or permanent workers.
2) Reliance on indigenous resources – The informal manufacturing sector uses locally, readily and cheaply available materials for production. This brings down the cost.
3) Family Enterprise – Most of the family members work in the enterprise.
4) Small Scale Operation – Production is done on a very small scale. The number of workers is less and the capital invested is also less.
5) Labor intensive and optimized technology – Most of the work is done either by hand
Or done by simple tools and machines.
6) Skills not acquired formally – workers learn skills only by practice. At the time of hiring, many times the employees do not have any required skills
7) Market very uncertain – Since the products are sold door to door or to very poor or middle class people, the market is not stable or protected.
8) The informal sector is not officially recognized – many shop owners have no registration with the government. Without any formal recognition, they lose many tax concessions or reductions in import duties, thus putting them at a loss. They also cannot apply for space or water facilities.
Due to the growth of informal sector
- a) Rapid urbanization – Due to the attraction of the city, a large number of people are migrating from the rural areas to the cities. Since not everyone can find a job in the organized industrial sector, they enter the informal sector and accept any job.
- b) Lower and middle class market – Since the proportion of middle class population is huge, there is no dearth of consumers. The sector can expand very rapidly.
- c) Abundant supply of labor – Due to large scale city ward migration – not all migrant workers could be absorbed in the industrial sector. Not all of them can get a job easily or immediately.
Therefore, workers accept jobs in the middle time or in the informal sector to fill the gap. Therefore, there is no shortage in the supply of labor in this sector. Many people enter into construction work, transport work, home to home delivery or selling, home business of selling apparel, saree or any consumer goods, garage, rag picking, street hawking, jewelery making etc.
- d) Creation of employment opportunities – The informal sector creates more and more employment opportunities. Unskilled, illiterate, inexperienced, skilled trained men, women and children all types of labor can be absorbed in this sector without any reservation. This sector is not required to follow any legal rule or control. There is no government intervention or quality checking system of the products. There is no strict wage payment system. The owners of the workshops maintain an informal relationship. The income may be low, but there is no dearth of jobs.
- e) Low cost of production – Due to cheap labor, which is easily available and involvement of family members, the initial cost of production is very low. In addition, the raw material used for production is not very expensive. This encourages many entrepreneurs to enter the informal sector.
- f) Informal nature of the sector – This sector does not require any formal interview or be specific about the required qualifications among the workers in need. The relationship between employer and employee is very informal, personal and regulated by need norms. the countryside
The system is not regulated by law. There is no problem of labor conflict. Workers do not need to be highly qualified or educated. You can get a job through personal contacts.
Comparison of formal and informal sector
1) The formal sector includes both the public and private sectors. The informal sector includes only the private or individual sector.
2) The formal sector is organized, controlled and regulated by law. The informal sector is not organized, controlled and regulated by law.
3) In the formal sector the products are mainly sold to middle and high income groups. The informal sector mainly sells a variety of goods and services to low income groups.
4) The formal sector is capital intensive and uses imported technology making labor productivity high. The informal sector uses labour-intensive, indigenous technology that leads to low productivity.
5) The formal sector pays higher wages, provides other benefits and retirement plans. The informal sector does not offer high wages.
6) The formal sector follows formal written rules and selects employees through interview procedures, advertisements, etc. The informal sector does not follow written rules, laws or follow formal selection procedures.
7) Earlier the formal sector used to give employment to a large number of people. Today, the informal sector is the largest employer.
8) Formal sector provides more job security, pension scheme, promotion, status, authority etc. The informal sector does not provide all these.
9) Preference is initially given to educated, qualified and experienced people in the formal sector. In the informal sector, there is no need to have skills initially, can be learned through experience, no formal educational qualification is required.
To conclude, the two sectors, the formal and the informal, co-exist side by side. They reveal structural dualism in urban economies in terms of size, mode of production, organization, technology, productivity and labor markets. There are essentially some dualistic tendencies in the urban labor force. On the one hand, those who have to earn their livelihood with the help of low paid, unskilled, intermittent work which is considered to be of low standard due to considerable physical effort
On the other hand, those in permanent employment require formal education or trained skills – jobs with fairly high and often regular pay that ensure security and social responsibility for the worker. However, these profiles are seen most clearly at the extremes of the two poles of the labor force. As the distance between the extremes narrows, equality in recruitment, working conditions and the bargaining process gradually overcomes the differences between different categories of labor in this respect. In other words, the different ranges are marked by gradations rather than watertight divisions. To divide the employment system into two sectors would amount to an approach that is overly rigid and does not do justice to the need for a more holistic categorization. In Jan Bremann’s terminology, the concept of “market” should be applied to the entire labor force. The structure of this market is not binary, but it has a more complex ranking.
Slums
Introduction, meaning and definitions of slums –
Slums have been accepted as a lived reality, an inevitable phenomenon with urban development in all capitalist countries. Slums are present in most cities of the world, whether in developed or developing countries.
The urban malaise of homelessness and man’s efforts to remedy it under the extreme conditions of poverty and illiteracy are seen in their most concrete form in slums, slums, slum-towns and illegal colonies. A slum is nothing but an area of substandard housing. Thus the problem of slums is essentially a problem of shelter for the poor.
According to the UNESCO document, a slum can be defined as “a building, a group of building, or a settlement characterized by overcrowding, deterioration, unhygienic conditions, or the absence of facilities or amenities, which are the result of these conditions or any of them.” Reason is in danger. The health, safety or morals of its residents or community.
According to Berger, “Slums can be described as areas with substandard housing conditions within a city. A slum is always an area. A single, neglected building in poor condition does not constitute a slum.”
Slum is an area of darkness, an area of poverty. Mass migration to cities became a natural consequence as huge factories began to market their goods aided by power-driven transport. The factory—the railroad and the slum—is how Mumford portrays the elements of the new industrial town.
Slums develop because of social norms and practices. Slum is a complex product of many factors. poverty is an o
characteristic of India and other industrialized countries. Two sectors, the formal (organised) and the informal (unorganised) co-exist side by side. They reveal structural dualism in urban economies in terms of size, mode of production, organization, technology, productivity and labor markets.
A slum is nothing but an area of substandard housing. Slums have been accepted as a lived reality, an inevitable phenomenon with urban development in all capitalist countries. Slums are present in most of the cities of the world, whether in developed countries or in developing countries.
We will continue our discussion on the problem of slums in the next unit.
also.
Slums: Profile of an Indian Slum (continued); urban violence
- To acquaint the students with the problems of Dharavi slum dwellers.
- To suggest measures to solve the problems of slums
- Explain the meaning and nature of urban violence
- To examine the recent trends in urban violence and suggest measures to control crime and violence.
Profile of an Indian Slum: Dharavi: Introduction
Dharavi is one of the largest slums in Asia. It is a slum and administrative ward in parts of the Sion, Bandra, Kurla and Kalina suburbs of Mumbai, India. It is sandwiched between Mahim in the west and Sion in the east, and is spread over an area of 175 hectares of 0.67 square miles. Modern Dharavi has a population of 600,000 to over one million. In expensive Mumbai, Dharavi offers a cheap but illegal alternative where rents are much lower. Dharavi exports goods across the world.
Today’s Dharavi is not like the fishing village it once was. A town within a town, it is an endless stretch of narrow filth lanes, open sewers and cramped slums. In a city where house rents are among the highest in the world, Dharavi offers a cheap and affordable option to those who move to Mumbai to earn a living. The rent here can be as low as Rs 185 per month. Since Dharavi is located between two of Mumbai’s main suburban train lines, most people find it convenient for work. Even the tiniest of rooms usually have a gas stove and continuous electricity. Many residents have a small color television with cable connection which ensures they can watch their favorite soaps. Some of them even have video players.
The majority of Dharavi’s residents belong to the Dalit caste, but several other castes and tribes are also present. Minorities include Christians, Muslims and Buddhists.
Traditional pottery in Dharavi
Apart from the pottery and textile industries, there is an increasingly large recycling industry, which processes recyclable waste from other parts of Mumbai. Financial services are important, with an estimated 15,000 single-room factories in the district.
Dharavi has a large number of flourishing small scale industries which produce embroidered garments, export quality leather goods, pottery and plastics. Most of these products are made in manufacturing units spread across slums and sold in domestic and international markets. The annual business turnover here is estimated to exceed $650 million.
An urban redevelopment plan is proposed for the Dharavi area, managed by American-trained architect Mukesh Mehta. The plan includes 40,000,000 square feet of residential and commercial space for sale as well as the construction of 30,000,000 square feet of housing, schools, parks and roads to serve the existing 57,000 families living in the area.
There has been significant local opposition to the plans, mainly because existing residents are only going to receive 225 square feet of land. Furthermore, only those families who lived in the area before the year 2000 are set for resettlement. Concerns have also been expressed by residents, who fear that some of their small businesses in the informal sector may not be relocated under the redevelopment plan. The government has said that it will legalize and relocate only those industries which are not polluting. The state government plans to redevelop Dharavi and turn it into a modern township with proper housing and shopping complexes, hospitals and schools. The project is estimated to cost $2.1 billion.
Dharavi has serious public health problems due to the lack of toilet facilities, which is further exacerbated by flooding during the monsoon season. As of November 2006, Dharavi had only one toilet per 1,440 residents in Mahim Creek, a local river, which is widely used by local residents for urination and defecation, leading to the spread of infectious disease. Lack of supply of drinking water is also a problem in the area.
solution to the problem of slums
The following programs are very important to deal with the problem of slums –
1) Slum Clearance Programme: Slums are mainly of two types – permanent and illegal settlements. In permanent type of slums, new buildings should be constructed with government loans and subsidies as per the specifications laid down by the government. It should have two living rooms with independent san
Eatery Block. The rent charged should be economical. As they are unauthorized and hence demolished. This happens when there is some public construction like road widening. However, these people move to a nearby area and form a new slum.
Slum clearance should not be aimed at driving people away because they are troublemakers. They should be rehabilitated and given proper compensation. If it is important to remove a slum area, then it should be equally important to settle it elsewhere. And this plan will not work unless the new place is also convenient for employment and travel to work.
Therefore, they should not be sent to very distant places but kept at a feasible distance. For the rehabilitation programme, the participation of slum dwellers should be availed.
The slum dwellers should be educated and motivated to change their lives for the better. The slum clearance or slum eradication program is limited to the existing stock of slums and does not consider the influx of migrants who will create new slums.
Replacing dilapidated structures with satisfactory structures is not a sound solution without proper social education as it is well known that people sell their new house and build another slum elsewhere.
Slum-lords, landlords also act as ‘vested interest groups’ using their money and muscle power to drive away the original residents of the new buildings. The new residential area should have facilities and services such as garbage collection, proximity to provision stores, clean eating houses, etc. It should also have a playground and a park and should have adequate transport facilities.
2) Slum Improvement Programme: The program of cleaning slums is very difficult. There is huge cost involved and the time factor is very long. Besides, by the time the new building comes up, new jhuggis are formed. The continuous flow of migrants has aggravated the situation. Hence the focus was on slum improvement schemes, which included providing basic amenities like water, toilets, electricity, drainage, ration shops etc.
3) Voluntary organization should be provided assistance by the government for the construction of such slums. Once the necessary facilities are provided, the people themselves must take care of these facilities and maintain them properly. More emphasis is laid on environmental improvement of these settlements. The benefit of this program is not only in terms of cost and time savings, but it also displaces slum dwellers. They are kept in the same house in better condition. However, the authorities should not increase the fare and see that
Minimum standard of environmental cleanliness and essential services should be maintained.
Welfare Activities: Whether it is slum clearance or slum improvement, the success of many remedial measures depends on the people in the slum and the treatment given to them by the larger society. The slum problem is essentially a human problem and not merely economic and physical and hence its solution should also be from a human perspective.
Free education should be given to the slum dwellers especially the children. This will give them the benefit of scientific knowledge and understanding of their civic duty. After all, the right things attract man. The locality should have a school, a library and a reading room.
The question of health and hygiene should be given utmost importance. There should be non-formal education given to men and women in this field. It will educate the local people to maintain necessary standards of hygiene to prevent disease.
There should be facilities for recreation for children, youth and old people of both sexes. There should be provision for indoor and outdoor games. Television, radio, magazines, newspapers give the slum dwellers the latest information about the world so that they can be with the mainstream population of the country and the world. Therefore, recreational facilities should not only be entertaining and entertaining but also informative and educative.
If a slum area can provide some employment opportunities to the local people especially women then it would be really ideal. There may be small jobs to keep residents busy and earn a little extra income. A better income will definitely lead to a better standard and quality of life. Day care centers should also be arranged for the children of working women.
Lastly, residents should offer voluntary counseling services. Families can seek advice for their difficulties with children’s behavior problems, landlord or neighbor harassment, or any other matter. This will help them come up with scientific, objective solutions and more than that it will prevent disasters like violence. It can solve many personal and social problems.
4) Government Policy: The government policy to deal with the slum problem is far reaching and very effective.
Government should implement Urban Land C
Ill Act. Strictly so that there is an equal distribution of land. Adequate land should be acquired to build low budget small houses for poor people.
Licensing of new industries or its use for expansion of existing industries should be done after obtaining no objection certificate from the local body.
Local labor and locally available materials should be used. The municipality should regularly deal with the servicing and improvement of substandard housing.
The policies of the government for the establishment of housing and industries should be such that decentralization takes place and the population moves out of the main city.
Housing and Urban Development Corporation (HUDCO) is providing planned housing for the urban poor. Even many companies have made colonies for their employees.
If the government provides more employment opportunities in rural areas, then the magnitude of urban migration can also be controlled.