top of page



The International Labour Organization introduced the concept of the informal or unorganised sector which began to attract attention worldwide. The unorganised sector faces a lot of serious problems such as job uncertainty and dangerous working conditions of the employees. Workers of the unorganised sector in India make up almost 93% of the country’s total workforce, totally dominating the Indian market. This particular sector plays a huge role in the Indian economy. As India is a developing country it is difficult for a worker to income in this changing world where technology and trade are increasing links across the world and is a threat to Indian unorganised sector workers. First, we need to understand the definition of ‘Unorganised Sector’. The unorganised sector includes individuals or private companies owned by individuals and household engaged in production and sale with less than 10 employees. This labour force is combining of employers without employers or any social security services excluding ordinary workers who benefits through the social protection scheme.

As the whole world was forced to go into lockdown in order to crube the Corona virus, countries were hell bound to take necessary precautions because it was spreading rapidly within no time. On the economic front India is in critical condition and each individual is stressed for their survival in this low phase. Now in the wake of the Covid-19 outbreak, the whole world went through lockdown, unlike the formal sector who are the least affected as they have job tenure, high salaries and social security and are in comfortable positions, get to have the privilege of working from home. Whereas the informal sector adversely affected as it depended on the industries and the remuneration received to sustain themselves during these tough times. The daily wage workers and the less educated workers were the most affected ones and were left to face the worst of the pandemic with everything getting shut down so as to curb the disease. With the lockdown in effect the workers were jobless and there was no source of income which led them to poverty. The ILO had predicted that about 400 million workers would go into poverty and this pandemic forced them to go back to their villages.

All the 188 countries have been badly affected and the global economies have slowed down. Due to the Pandemic, the ILO estimated that globally more than 25 millions jobs are at high risk. It is the worst of worst situation after World War II. Even the developed countries like United States, United Kingdom, Canda and most of Europe and Asian countries are facing a rise in unemployment. The outbreak has affected the economies of the countries so badly that the world is going through the worst economic crisis since the Great Depression in the 1930s. It is estimated by the ILO that the global workforce of 3.3 billion has been cureently affected by the lockdowns in different countries of the world. People or workers working in the informal or unorganised sector struggles to strive amid the current crisis.

The aim of this paper is to talk about the effect of lockdown on the unorganised sector and what could have been done or should be done to avoid this kind of situation if it occurs in the future.


The condition of every sector is deteriorating but particularly unorganised sector is the worst affected sector. The effect of the lockdown has been the most troubling and vulnerable situation for the low-income households, households which are not capable to cope up with the loss of earnings during a recession like this or even have a saving of their own or any provided social security. Most of the workers in the unorganised sector include of daily wage workers who have no other means of protecting their sole job of incoming money. Millions of workers in this sector have faced umemployment due to the complete lockdown and the contract based workers are highly the ones to be affected by recession. The measures of the Covid-19 such as social distancing and lockdowns are the main reason of drying up of jobs and incomes. The virus has brought fear in the mind of people and to avoid from being taken up by the virus they choose to sit in the house or return to their villages in hope that once the lockdown is lifted they can go back to their workplace. It is feared that if this situation remains just like the way it is then the country has to go under recession affecting the jobs of unorganised sector.The informal sector was already reeling with GST and demonetistion which resulted in millions of job-loss between 2012-2018 and with the present situation it only makes it more worse for this particular sector but this pandemic also was an eye-opener through which the living of the workers in unorganised sector and how they are forced to live under unsecured conditions came in to the knowledge of the public. Last year 40 million people lost their job due to the pandemic mostly in the unorganised sector. This problem of rising of unemployment may increase the poverty in India.

The ban on people for going out during this time has also affected both on the supply side (decline in production of goods) and the demand side (reduced demand of the consumer). We cannot expect things to return to conditions before the epidemic but we should be prepared for conditions like this in the near future and must make measures such as social security or offer tax relief and more meaningful and efficient measure taken by the government so as to strengthen the country’s workers and its economic stability.

The Centre for Monitoring of Indian Economy (CMIE) in March of 2020 stated that the participation rate of labour face has fallen to an all time low and the unemployment rate has risen sharply. A steep fall on the rate of employment of 9 million from 443 million in January 2020 to 434 million in March of 2020. And this decline is a result of a fall of 15 million in the number of the employed (from 411 million to 396 million) and a 6 million rise in the number of the unemployed (from 32 million to 38 million) in March of 2020. The CMIE data reports that unemployment has surged to 8.7%, the highest ever in the last 43 months.As per the reports of the Business Standard only 30.8 million jobs were provided during 15-19 April of 2020 under the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act.But this act of MGNREGA has been stalled considering the transmission of the virus in the country which counts a huge loss to the rural labouring poor.

Another of Uttar Pradesh state government suspending at least 14 labour laws such as Minimum Wages Act and Industrial Disputes Act for next 3 years so as to attract the capital in the state in the name of economic crisis or slowdown and in the same manner Madhya Pradesh and Gujarat has followed this same initiative. This is an additional striking reason in the weaking of the condition of poor workers.

It is clear that the informal sector has received the greater proportion based on the fragility of the informal sector in terms of low capital base, and no employment protection given to workers, of the current economic crisis. It is going to jeopardise the survival of the families if they suffer a loss of livelihood of an informal worker who is their bread winner of the whole family. After effects of an epidemic will continue even after the we get rid of the virus. Just like when it took time to get back on track when Spanish Flu which demonstrated that children born from infected mothers are likely to have low learning ability and wages of workers were lower and productivity of people affected by the disease should get lower as well. The informal sector workers are dependent for their access to education, health, good health, sanitation, household,


To overcome this crisis situation, government of India decided to target cash transfers, tax benefits, suspending the loan liablity for some time period and an economic package was introduced called as ‘Atma Nirbhar Bharat’ which was particluarly for Micro Small and Medium Enterprises sector but did not focus on the unorganised sector workers. It was said that it will also look after the unorganised sector workers but it is impossible as their was no data relating to the informal economy. But according to the existing scheme as MNREGA (Mahatma Gandhi National Rural Employment Guarantee Programme) which has scope and relevance but needs to improve and increase the budgetary allocations.However Local solutions must be invented in order to combat the battle against Corona and which should be finacially supported by the central government.

One of the major hurdles for the unorganised sector is the lack of statistics of the workers who belongs to unorganised sector and also to the large mass of the daily wages workers who do not have the access to the white ration cards and are not able to use its benefits as they are migrant labourers as well.

One of the Measures which the government should apply that in each state there should be a multi special taskforce or a board including members of representative of trade unions, NGO’s, and relevant department like Labour, Women and Welfare etc and have detail stock of migrant workers stranded and allocate them to centric relief centres and take care of their basic needs like food, shelter, clothing and also provide psychological counselling to address their mental and emotional concerns. Establishing help through social media or any FM or other radio in locating the stranded migrant workers. The government should also start issuing temporary ration card for 2-3 months or more which will help the families of these workers to avail ration.

Various State governments implemented some relief for the labour workers:

New Delhi: State government announced salaries that will be provided to contract workers, daily wage workers and doubling of pensions for the elderly and extra rations for everyone enrolled in ration card schemes.

Kerela: State government announced 2 months welfare pensions for 2000 crore for an employment guarantee program. Free foodgrain up to 10kg through ration shops has been sanctioned for everyone.The pricing of the meals were reduced from Rs.25 to 20 which came in action from the month of May.

Punjab: A safety net for construction workers which provides them with 3000 to demand compensation for wage loss due to corona virus outbreak.

Uttar Pradesh: A safety net for daily wage workers which will enable them to demand compensation for wage loss due to outbreak of corona.

The Private Health Insurance companies like SBI General Insurance and Edelweiss General had also announced that they will cover the expenses for the treatment of the insurer as well as the cost incured during the period of quarantine to the sum insured.


The future for the Informal sector or the unorganised sector workers remains unknown.The situation of a global pandemic doesnot justify the deliberate neglect of the labour force and the govermment should take important steps in order to protect the interests of labourers.In times like this Covid, the government should give positive support to the employees and employers in the time of crisis. The government should prepare strategies in order to save the lives of the poor people and improve the economic indicators. As the future is unknown the government should carefully make poilicies in view of workers welfare centric and also to strengthen the different sectors and sections of the society which mainly contain of daily wage workers or low paid workers, migrant workers who are the most affected due to the pandemic. Unorganised sector is the one of the worst affected sector which needs immediate help and long term support in both the field of economic and scocial security measures.Even though the government has taken immediate measures to overcome the crisis but it is neither satisfactory nor sufficient for the labour workers of India. Also that the vaccine is not widely available and knowing that things will take atleast multiple months or probably years the government should implement policiesof labour workers and much needed fundamental changes to the economic system. To prevent the collapse of our country’s economy, the government should take charge in securing business and jobs throught out the country.

We have faced crisis before but if we want to come out of this unscathed in this long run, we should plan for unprecedented impact and collaboration in the short run.

Article Submitted by:

Arpita Mohanty

5 views0 comments

Recent Posts

See All

I. BACKGROUND The advancement of internet trend has caused a shift in the business sector. Many business organisations have migrated to the internet realm of marketing and commerce, inc

Introduction Black’s law dictionary defines Double Jeopardy as: – A second prosecution after a first trial for the same offense. In India, protection against double jeopardy could be an elementary rig

bottom of page