1. PROVIDING SOCIAL WELFARE TO
INFORMAL SECTOR WORKERS
Animesh Lahiri
Anurag Savarnya
Apoorv Jain
Bollam Vinay Kumar
Sumit Karnani
IIT KHARAGPUR

2. 3%
97%
Distribution of Workforce
Organized
Workforce
Unorganized
Workforce
PROBLEM STATEMENT
• From the central point: Significant chunk
of the economy invisible:
 No tax collection
 No institutional support
 No benchmark
• From the unorganized sector:
 Poor living and working conditions.
 No social security.
 Inadequate employment, low
earnings, low health and
educational status.
 Lack of basic services such as first
aid, shortage of clean drinking
water and proper sanitation
facilities.
 Labourers in the unorganized
sector are often trapped in a
vicious cycle, starting work as
children and continuing well into
their old age.
What needs to be done:
• Identifying the unorganized workforce.
• Providing a safety and social security to them.
• Make them a part of central economy.
• Increase India’s labour productivity.
• Provide schemes and programs for their benefit.

3. PROPOSED SOLUTION
Approach :
 Conducted a survey at IIT Kharagpur for the proposed solution.
 Conclusion drawn :
 Even at IIT kharagpur which is considered to be the most organized institute has every 5
out of 7 workers in the unorganized sector.

4. PARAMETERS OF SURVEY AT IIT KHARAGPUR
Variables
Category
Reasons for a particular
profession
Terms and conditions of job Wages Discrimination on basis of
gender
Domestic
Workers
 Only job available near
their residence
 Economic compulsion
 No other skill
 No defined rules
 Increment in
wages/fringe
benefits only when
working for long period
 Negotiable
 Wages not enough to
satisfy bare minimum
needs
 No discrimination
 Women are more
preferred against men
for household jobs
Construction
Workers
 No land
 No other skills
 No other options
 Depend upon local
contractors for work
 No regularity or security of
job
 Disparity in wages and
in nature of work
 Ill-treatment and
harassment at hands
of contractors
Garment Workers  Low middle class who
want white collar jobs
 Can work from home
 No significant
information
 Work based,(commission)
 Negotiable /Arbitrary
 No incidence reported
Petty Traders
/Vendors
 Find pride in being self-
employed
 Self-employed  Uncertain  No incidence reported
Sales Persons  Economic compulsion
 More dignified
 Very tedious and also
involves risks of personal
 Mostly work
based,(commission)
 No incidence reported

5. PROPOSED MODEL FOR IIT
KHARAGPUR
 The unorganized workforce of IIT Kharagpur is divided into 5 Unions namely:
 Union of Domestic workers
 Union of Construction workers
 Union of Garment workers
 Union of Vendors
 Union of Sales person
• The workforce will have to register to the corresponding union and a proper registration ID(each
union will have a different ID) will be given to them.
• The different Unions will be responsible for deciding the work hour and availability of the
workforce.
• The money collected as the pension fund in the different unions will be send to the “the Area level
body” that is the IIT Kharagpur level body which will be under the Medinipur West district level
body.
• The Medinipur West district body will be under Kolkata state level body which is connected to the
Central level body.

6. Unorganized
workforce
In terms of
occupation
In terms of
specially
distressed
categories
Others
In terms of
Service
categories
In terms of
Nature of
employment
Small and marginal farmers, landless
agricultural labourers, share croppers,
fishermen, those engaged in animal
husbandry, labelling and packing,
building and construction workers,
leather workers, weavers, artisans,
salt workers, workers in brick kilns
and stone quarries, workers in saw
mills, oil mills etc.
Toddy tappers,
Scavengers, Carriers of
head loads, Drivers of
animal driven vehicles,
Loaders and unloaders
etc.
There exists a large section of
unorganized labour force
such as cobblers, Hamals,
Handicraft artisans,
Handloom weavers, Lady
tailors, Physically
handicapped self employed
persons, Rickshaw pullers,
Auto drivers, Sericulture
workers, Carpenters, Tannery
workers, Power loom
workers and Urban poor etc.
Attached
agricultural
labourers, bonded
labourers, migrant
workers, contract
and casual
labourers.
Midwives, Domestic workers,
Fishermen and women, Barbers,
Vegetable and fruit vendors, News
paper vendors etc.

8. IMPACTOF THE SOLUTION
 The pension funds will lead to increase in national income.
 Social security to the unorganized workforce.
 Incentives like pension, exposure to the different government schemes will be
provided that will ensure the financial stability to the workforce even when
they are not be able to work physically.
 The people at the grass root level will be able to enjoy the benefits of various
government schemes because of this decentralization.
 Proper infrastructure like supply of electricity and water will be provided by the
government at their work stations.
 Comprehensive social security coverage coverage entailing Life Insurance,
Health Insurance and Old Age Pension for Unorganized Sector Workers.
 Encouraging private sector participation in providing social security, including
old age pension
 Legislation under consideration to enable private sector companies to sell
insurance and pension products in the form of deferred annuity, annuity with
return of purchase price and the like.

9. METHODOLOGY USED TO COME
TO PROPOSED SOLUTION
 Studied the Unorganized Sector using Data Development Analysis to
compute technical scores using Linear Programming Model.
 “The technical efficiency of a firm is a comparative measure of how well it
actually processes inputs to achieve its outputs, as compared to its
maximum potential for doing so, as represented by its production
possibility frontier” (Barros and Mascarenhas, 2005).
 Data Development Analysis was done using the following parameters:
 Gross Value added by Unorganized Workforce at IIT Kharagpur
 Capital Generated by Unorganized Workforce at IIT Kharagpur
 Labour by Unorganized Workforce at IIT Kharagpur
 Factor by which the output bundle can be expanded relative to the
frontier constructed with input-output bundle of other best
performing firm.
 The detailed study and paper showinng calculations would be
shown at final round of Manthan at Delhi.

10. CHALLENGES AND
MITIGATION FACTORS
 As the population of unorganized workforce is quite huge, it becomes a
challenge to apply the proposed solution.
 It is observed that though the share of agriculture, forestry & logging and
fishing sector is decreasing over time, still it has highest share in unorganized
sector’s NDP.
 It is observed that principal agent problem exists in informal sector. To solve this
problem and make hired labour more productive, institutional intervention is
required in terms of the implementation of certain rules and regulation
regarding the incentives of the hired labourer.
 Secondly, lack of market is one of the main reasons of the informal firms
inefficiency. Market certainty will make the informal firms more efficient. So
diversification of production (i.e., production of those commodities which have
high demand both in national and international markets) may solve the
problem.
 Thirdly, it is observed that perennial firms are less efficient than casual and
seasonal firms because they are used to produce their product both in the peak
and lean seasons. In the lean season, on the one hand demand for the product
is very less and on the other hand inputs are relatively costly.

11. Appendix:
1. Informal Sector in India: Contribution, Growth and
Efficiency (Indrajit Bairagya, Institute for social and
economic change,Bangalore)
2. Contribution of the Unorganized sector to GDP (Report of
the Sub Committee of a NCEUS Task Force)
3. Measuring the unorganized sector in India by A. C.
Kulshreshtha