Skill Formation and Employment Assurance in the Unroganised Sector


National Commission for Enterprises in the Unorganised Sector

The Commission had the following members: Dr. Arjun K. Sengupta, Dr. K.P. Kannan, Dr. R.S. Srivastava, V.K. Malhotra, Dr. T.S. Papola and B.N. Yugandhar.


National Commission for Enterprises in the Unorganised Sector


29 Apr, 2009



The National Commission for Enterprises in the Unorganised Sector (NCEUS) was set up in 2004 by the United Progressive Alliance (UPA) government as an advisory body and a watchdog for the informal sector. It examined the status of the unorganised sector, analysed the constraints on its growth, and made necessary recommendations. This report focuses on the formal training of workers employed in the unorganised sector or likely to join it as self-employed or wage workers.


  1. Informal employment increased in India between 1999-2000 and 2004-05, both in the organised and the unorganised sectors. The Commission estimated that unorganised sector workers constituted 86 per cent of the total workforce in 2004-05.

  2. The Commission also noted that more than three-fifths of the unorganised sector workforce (of over 300 million) was self-employed. Of the remaining regular or casual-wage workers, only half were employed in the organised sector. Given these trends, the Commission said that the skill requirements of the unorganised sector would have to be planned differently from those of the organised sector.

  3. The NCEUS recommended that the National Skill Development Coordination Board (NSDCB), set up in 2008 to coordinate skill development projects across the 17 central ministries and state governments, launch a National Mission for Development of Skills in the Unorganised Sector. It also said that the mission should be able to provide financial support to NGOs and non-profit organisations training informal sector workers.

  4. The Commission  suggested that the National Skill Development Corporation (NSDC), which supports private sector skill development, should focus only on financial support to NGOs and non-profit organisations training informal sector workers.  initiatives. And that formulating courses and certification, accreditating training institutes, and creating of sector skills councils should be left to the National Council for Vocational Training (NCVT).

  5. The NCEUS said that training should be decentralised and operate at the state and district levels. The State Councils for Vocational Training (SCVTs) should evolve a framework for developing curricula that meets local needs, and develop a certification framework too.

  6. Public expenditure on vocational education needed to be increased significantly, and such education must be more responsive to market demand. Industrial associations could help formulate and revise course curricula. The Commission prescribed that links be established between the vocational education stream and school/college education.

  7. A massive Programme for Employment Assurance and Skill Formation for unorganised sector workers is necessary. It would provide employment to poor and less educated youth for about six months and teach them  marketable skills to enable them to qualify for regular employment or self-employment at higher wages (utilising their new skills).

  8. The programme would require an allocation of Rs. 10,000 per worker (the same as that for MGNREGA) and Rs. 10,000 crores in total to ensure the training and employment of one crore workers over a five-year period.

  9. Rs. 5,000 crores should be allocated to the NSDCB for the National Mission for Skill Development in the Unorganised Sector. This allocation would support the cost of setting up and operating the institutional infrastructure needed to expand training initiatives at the district level. It also said that the allocation for existing training schemes under the Skill Development Initiative and Ministry of Micro, Small and Medium Enterprises (Rs. 1,000 crores) needed to be doubled.

  10. The NCEUS said that the resources needed for these skill development programmes could be raised through a levy on the turnover of companies. Tax concessions, as a result of contributions to these schemes, could be sanctioned at the discretion of the government.

  11. A Labour Market Information System at the national, state and district levels must be set up. The states could consider remodelling their existing employment exchanges and using the system to track trainees, list formal and informal training providers, and provide placement information to trainees and employers. Over a period of time, the information system could sell its services and become financially viable.

  12. The training programmes for women should integrate components of literacy, numeracy, business skills and confidence-building measures. They must also address the constraints that women face, such as the absence of mobility, the need for child care, and gender segregation in training.

  13. The NCEUS emphasised that training women only in gender-stereotyped activities would not only perpetuate gender segmentation, but oversaturate trained women in low-paid work. Women must also be able to train in ‘hard’ technical skills as well in areas such as agriculture, where their role as producers is significant.

    Factoids and Focus compiled by Ananya Singh.