The Challenge of Employment in India: An Informal Economy Perspective; Vols. I and II


This report focuses on “the nature and magnitude of the employment problem in India and what needs to be done to address it.”

According to the Commission, ”informality in employment refers to the absence of employment and/or social security and it is overwhelmingly associated with low income, poverty and vulnerability.” The reports and surveys the Commission studied showed that “the informal sector enterprises face higher constraints on growth due to lack of access to credit, technology, marketing, skills, and also incentives.”

The report recommends “the introduction of a National Minimum Wage with statutory backing which shall represent the lowest level of wage for any employment in the country. This wage shall be applicable to all employments presently not covered under the Minimum Wages Act of the state concerned, and would be applicable to both wage workers and homeworkers.”

It also proposed “two legislations covering agricultural and non-agricultural workers, which provide minimum conditions of work to all paid workers including home workers and which, if implemented, should go a long way in establishing minimum conditions of work for paid workers.”

Volume I consists of the main report, while volume II has the annexures.


  1. In the informal or unorganized sector, only about 0.4 per cent of the workers were estimated as being formal workers in 2004-05 who were receiving social security benefits like Provident Fund.

  2. The agriculture sector consists almost entirely of informal workers who are mainly the self-employed (65 per cent) and the casual workers (35 per cent).

  3. The non-agriculture sector is also predominantly informal and the share of the informal sector has increased to nearly 72 per cent in 2004-05, an increase of 4 percentage points from 68 per cent in 1999-2000.

  4. The estimated the number of formal and informal workers were 33.7 million and 28.9 million respectively in 2004-05.

  5. To measure the non-utilisation of the labour time, workers were classified into (a) Severely unemployed, (b) Part-time workers, (c) Underemployed, and (d) Not Gainfully Employed. Severely employed are those who worked 3.5 days and were unemployed in the remaining 3.5 days.

  6. About 80 per cent of the casual workers and 31 per cent of the regular salaried/wage workers are under-employed in the sense that they do not receive the minimum daily wage of Rs. 66.

  7. Casual workers in rural areas, not receiving the minimum daily wage of Rs. 66 stood at 84.4 per cent as against 57.2 per cent in the urban areas in 2004-05.

  8. Females receiving less than the required minimum was 95.0 per cent as against 74.0 per cent in the case of males.

  9. Education levels indicated quality of labour force. The proportion of illiterate labour force declined from 57.1 percent in 1983 to 37.9 percent in 2004-05.

  10. Uttar Pradesh and West Bengal had the highest and second highest number of persons in the labour force with level of education primary or below. Kerala has the highest share of those with middle level of education (32.0%) followed by Maharashtra (22.1%) and Assam (21.3%).


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
16th and 19th Floor, Jawahar Vyapar Bhavan
1, Tolstoy Marg, New Delhi 100 001


Apr, 2009