Skill Formation and Employment Assurance in the Unroganised Sector


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 between 1999-2000 and 2004-05, in India’s  organised as well as unorganised sectors. The NCEUS estimated that unorganised workers constituted 86 per cent of the total workforce in 2004-05.    

  2. More than three-fifths of the unorganised workforce was self-employed. Of the remaining regular or casual-wage workers, only half were employed in the organised sector. Given these trends, the skill requirements of the unorganised and organised sectors would have to be visualised differently.

  3. The National Skill Development Coordination Board (NSDCB), coordinating projects across the 17 central ministries and the state governments, should launch a National Mission for Development of Skills in the Unorganised Sector. The Mission could provide financial support to NGOs and non-profit organisations training informal sector workers.    

  4. Rs. 5,000 crores should be allocated to the NSDCB for the Mission. This would support the cost of setting up and operating the institutional infrastructure needed to expand training at the district level. The allocation for existing training schemes under the Skill Development Initiative and the Ministry of Micro, Small and Medium Enterprises (Rs. 1,000 crores) needed to be doubled.

  5. The National Skill Development Corporation, which supports private sector skill development, should focus only on financial projects. And formulation of courses and certification, accreditation of training institutes, and the creation of sector skills councils should be left to the National Council for Vocational Training.    

  6. Decentralised training could operate at the state and district levels. The State Councils for Vocational Training should evolve a curriculum that meets local needs, and develop a certification framework too.    

  7. The NCUES recommended significantly increasing public expenditure on vocational education and making it more responsive to ‘market demand’.  Industrial associations could help formulate and revise course curricula, and the vocational education stream and school/college education had to be linked.    

  8. A Programme for Employment Assurance and Skill Formation was necessary. It would cover unorganised sector workers and train poor and less educated youth for six months in formal marketable skills. This would qualify them for regular employment or self-employment at higher wages. The programme would require Rs. 10,000 per worker (the same as that for MGNREGA) and a total of Rs. 10,000 crores to cover the training and employment of 10 million workers over a five-year period..

  9. The resources needed for these skilling programmes could be raised through a levy on the turnover of companies. Tax concessions for these could be sanctioned at the discretion of the government.    

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

  11. Training programmes for women should integrate components of literacy, numeracy, business skills and confidence-building skills. They must also address the special constraints that women face, such as the absence of mobility, the need for childcare, and gender segregation in training.

  12. The NCEUS emphasised that training women only in gender-stereotyped activities would perpetuate ‘gender segmentation’ and oversaturate trained women in low-paid work. It is necessary to train more women in technical skills as well agriculture, where their role as producers is significant.

    Focus and Factoids by Ananya Singh.


National Commission for Enterprises in the Unorganised Sector, New Delhi

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, New Delhi


29 Apr, 2009