Formal & Informal Organization of Work | Sociology UPSC Notes

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Formal and Informal Organization of Work

Organisation of Work in a Formal Way:

Formal organisation of work is one that is planned and created with care and is approved by the right people. It is how the work is set up, like on an organisation plan or in manuals and rules. Formal organisation of work is a method in which the actions or forces of two or more people are planned and coordinated. People agree to work for an organisation because they are willing to give their time and skills and get something in return. As an example, you can look at how the mail service works. Mail delivery rests on a number of interconnected tasks, such as sorting the letters, giving the mail to the right postmen, and delivering the mail to the door step of the right people. Formal organisation is a system of clearly defined jobs, each with a certain amount of power, responsibility, and accountability. The whole thing is made so that the people in the business can work together to get their goals done as efficiently as possible.

Formal organisation of work is the structure that directs organised effort towards goals. It has a few things that make it stand out. These are:

• Legal Status

• Work is split up

• Structure comes first

• Permanence

• The rules and laws

1. Legal Status: One thing that makes formal organisation work stand out is that it is backed by the law. Any organisation where work is organised in a formal way needs to be approved by parliament or lawmakers. The union parliament passed laws that led to the creation of public sector groups like the Life Insurance Corporation, the Food Corporation, and so on. The law that makes it possible for the organisation to exist also gives it power. The people who work in the different offices are backed by the law when they do their official jobs.

2. Formal organisation makes it possible to divide up the work, which is the very foundation of formal arrangement of work. Formal organisation that shows the different levels of management, who the officers are, and where they work makes it easy to divide up the job.

3. Structure Comes First: When work is organised in a formal way, style and structure are given the most attention. “Lack of structure is illogical, cruel, wasteful, and inefficient,” says Urwick. The structure is clear, and the jobs of the people who work for the organisation are also clear. The organisation also shows how people talk to each other and how they work together.

4. Formal work organisation tends to be more stable than informal work organisation. Even though they change with the surroundings, their structure, and even their goals, they are usually made to last a long time. Work like this not only lasts a long time, but it also gets better over time.

5. Rules and regulations: Another important thing about a proper organisation is that it follows clear rules and regulations. Officials in formal work organisations can’t just do whatever they want. Instead, they have to follow the rules and laws that have been set up.

6. In formal work organisation, it’s important to set clear goals and targets. Without them, it would be hard to use the skills of both men and women to reach the goals. These goals and aims describe what different people in the organisation do and how much they do of it. In formal work structure, each higher-level functionary is in charge of coordinating the work of the officers right below him.

Informal Organisation of Work:

In general, the following things define informal organisation of work:

1. Low levels of skills: Workers in Informal Organisation of Work have low levels of schooling, so they also have low levels of skills. This is why they work at jobs that don’t use a lot of technology. People who work in the formal field have skills and are better off in the job market.

2. Easy to get into: It is easier to find work in the informal sector than in the legal sector. A day worker can be anyone who is able to work, no matter what skills they have. The same person can become a street seller and sell goods in the market with little money. People don’t need money to put money into a shop. In this way, the informal sector can hire more people who wouldn’t have jobs because they aren’t trained or don’t have enough money to start their own business.

3. Low-paying jobs: Because you don’t need a lot of skills and it’s easy to get into the private sector, the jobs there don’t pay much. Workers are not paid a lot of money for their work. In fact, the biggest complaint about this area is that the pay is a lot less than what it takes to live. Many times, low wages push other family members to work outside the home because the main wage isn’t enough to keep a family going. In this way, children may also be urged to go to work.

4. Immigrant labour: Most of the people who work in the informal sector are immigrants. Most people who work in the city come from the countryside to find work. So, being a migrant is a feature of the private sector.

Informal work organisation is made up of human contacts and interactions, as well as the grouping of people that comes with them. Formal organisation of work focuses on structure, while casual organisation of work focuses on people’s personalities and feelings. Major officers’ relationships with their subordinates may be affected by the personality of the person in charge or by the strong links of the subordinates. In an informal way of organising work, people are given roles without any official rank.

So, informal work groups are not well-defined and hard to figure out. They don’t know what they want to achieve. So, the relationships between workers are not clear. Relationships that aren’t formal or planned lead to good feelings, which in turn lead to more interactions and stronger ties of identity. official systems of control don’t work in informal organisations because they aren’t official, don’t have goals, and don’t have structured relationships.

India’s unorganised sector

Note on the Formal and Informal Sectors:

In the middle of the 1950s, W. Arthur Lewis made a model of economic development based on the idea that most developing countries had an unlimited supply of labour and that the modern industrial sectors of these countries would absorb this huge pool of extra labour as they grew. So, it was thought that the traditional sector, which was made up of small traders, small producers, and a variety of temporary jobs, would finally be taken over by the formal economy and go away.

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Since the 1970s, when case studies on the informal sector in different parts of the world began to show that men, women, and children were very busy at the bottom of the urban economy in Third World countries, this argument has become less persuasive. So many studies have shown that a huge number of people in the Third World work hard to make a living off of their work outside of the official economy.

1. The formal/informal dichotomy is a new way of looking at the old dualism ideas. During the time of colonialism, a difference was made between an encroaching western capitalist sector and a non-capitalist eastern people’s economy. In post-colonial development theory, the difference between traditional and modern was seen as a duality. This way of thinking said that the rural agricultural order was still mostly pre-capitalist, while the urban industrial economy was called capitalism. In the most recent phase of the dualism theory, capitalism is only used to describe the formal sector, which is the most developed part of urban life. The private sector is a name for the ways of making money in the lower parts of the economy, which are often called “non-capitalist.”

2. When putting these different kinds of dualism into practise, the differences are more important than the specific traits of each section. For example, it’s a common way to describe the informal sector by listing what it doesn’t have that the official sector does. Without a more detailed description, the landscape of the informal sector becomes a kaleidoscope of unregulated, badly skilled, and low-paid workers. In 1971, Keith Hart came up with the term “informal economy” to describe all of this.

3. People use terms like “informal sector,” “informal economy,” and “informal labour” interchangeably to talk about the unorganised sector. These terms often focus on the part of the sector that is the most affected, which is the labour. “Informal work is work that is not regulated by state laws or by agreements between workers and employers.”

4. Informal work has been seen in different ways: as small-scale work in cities, as self-employment, as work done in “traditional activities,” as work done by people with no skills, and as work that doesn’t have to follow any rules or values. But none of this is based on facts or ideas that make sense. Informality has nothing to do with how or where work is done. Informal work can be self-employment, occasional wage work, or regular wage work, and it can be done in both cities and rural places. There isn’t much reason to think that “traditional” and “modern” jobs are the only ones that people can do informally.

5. We don’t have to think that informal work is done by people who aren’t skilled; we just have to realise that its skills are learned outside of formal education. And even more so in the context of the neoliberal economic policies of “hire and fire,” where the organised sector itself is becoming less formal through contractualization, actualization, and outsourcing of labour, there are workers who are just as educated or even more educated and skilled, who work better and longer in many of the organised sectors, but who don’t have any labour rights, job or social security protection, and who make very low wages. Work and living situations for casual and contract workers are the same as they were in Europe in the 1800s.

6. Since the idea of the private sector was first brought up, people have had different ideas about how it affects society and the economy. Since the middle of the 20th century, some writers say that people in the Third World have moved quickly from farming and villages to cities and towns as a way to make a living. But even if the huge numbers of migrants coming into cities were able to get a foothold, most of them would not be able to work in the formal sector. It was still too small to handle the steady flow of new people.

7. Researchers with a more critical outlook, who have seen that the formal sector is still closed to new urbanites for reasons other than the poor quality of their work and other flaws, disagree with this hopeful view. In this alternative view, the main reason why newcomers can’t find stable, well-paid, and respectable work is because of a development strategy that, in the face of an oversupply of labour, tries to keep the price of labour as low as possible, doesn’t allow for collective action to make these people less vulnerable, and doesn’t give this mobile workforce a voice in the public sphere. In short, the lack of registration, organisation, and protection does not come from the free play of social forces. Instead, it is the result of deliberate actions by economic interests that benefit from the informality that keeps a wide range of activities in all areas of the economy going by avoiding labour laws and taxes.

8. In fact, the informal sector is not a closed loop of work and wages. There is contact between the formal and informal sectors, and the informal sector depends on and is even subordinate to the formal sector. As a result of neo-liberal economic policies, the official sector is becoming more and more like the informal sector. This is happening through layoffs, making jobs temporary, and making contracts. In short, the capitalist parasites get richer by sucking the blood out of the working class.

In India, the informal sector is:

A lot of casual or unorganised work is done in the Indian economy, which is one of its main features. The Indian government’s Ministry of Labour has put the informal or unorganised work force into four groups based on occupation, type of work, people who are especially poor, and service categories.

1. In terms of occupation, this group includes small and marginal farmers, landless agricultural labourers, share croppers, fishermen, people who raise animals, roll, label, and pack beedi, people who work in building and construction, leather workers, weavers, artisans, salt workers, people who work in brick kilns and stone quarries, people who work in saw mills, oil mills, etc.

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2. In terms of the type of work they do, this includes attached farm workers, bonded workers, migrant workers, and contract and casual workers.

3. In terms of Specially Distressed categories, this includes toddy tappers, scavengers, people who carry heavy loads on their heads, people who drive cars pulled by animals, and people who load and unload.

4. In terms of service categories, this group includes midwives, housekeepers, fishermen and women, barbers, people who sell fruit and vegetables, people who sell newspapers, etc.

In addition to these four groups, there is a large informal or unorganised labour force made up of cobblers, Hamals, handicraft artisans, handloom weavers, lady tailors, physically disabled self-employed people, rickshaw pullers, auto drivers, sericulture workers, carpenters, tannery workers, power loom workers, and urban poor.

Even though there are a lot of differences in how much and how accurately statistics are available, there are a lot of unorganised workers in agriculture, building, and other projects, and at home. According to the Economic Survey, 52% of all workers are in the unorganised sector, and agricultural workers make up the biggest part of that group.

According to the National Sample Survey Organisation (NSSO), 30 million workers in India are always on the move (migrant labour), and since the year 2000, 25.94 million more women have joined the workforce. Even more, 13,000 Indians turn 60 every day, and they are expected to live for another 17 years on average. Only 10% of Indians save for their old age, which is a shame. The sadness is that only 8% of India’s 459 million workers are covered by the current social security laws.

Comparing the number of casual workers in India between 2004-05 and 2009-10 to the number of casual workers between 1999-2000 and 2004-05, the new report from the NSSO shows very clearly that the number of casual workers is going up while the number of regular workers is going down.

This study shows that there was a big change in the structure of the work force between 1999-2000 and 2009-2010. The work force can be roughly divided into self-employed, regular, and casual workers. Casual workers are those who don’t have the same perks and job security as permanent employees. This includes all daily wage workers and some types of contract workers.

All of these NSSO reports are clear proof that the Indian labour market has been going through a lot of changes. For example, the informal sector has been growing, the quality of jobs has been getting worse (in terms of job security and working conditions), worker organisations and collective bargaining institutions have been getting weaker, and social security has been getting worse. More than likely, these changes are linked to the ongoing process of globalisation and the efforts that employers make as a result to keep production costs as low as possible. It is also clear that most of these results are closely linked and help each other. A closer look shows that most of these changes have been caused by the growing informalization of the job market. This, among other things, shows how important it is to understand the growth of the unorganised sector in India and what it means.

Many people thought that India’s growth couldn’t go wrong, so they took the government’s explanations and accounts of events at face value. Now, none of these things can be taken for granted anymore. Growth is slow, inflation is built in, and there aren’t enough jobs for the growing number of people who want to work.

Growing prominence of Informal (unorganized) sector in India:

One of the most important things about the Indian job market is that informal jobs are more common than regular ones. At the national level, informal workers make up about 90% of the workforce. This is also true for most of the most important states in the country. About 65% of the people who work in the unorganised sector do so in the agricultural sector, which shows how important the rural section is in the informal economy.

1. The growth of official jobs in the country has always been less than the growth of all jobs, which shows that jobs in the informal sector are growing faster. According to the data we have, the number of informal or unorganised workers in the official sector is also on the rise. For example, by comparing the NSSO Employment Data for the 55th and 61st Rounds (for 1999-2000 and 2004-2005, respectively), the NCEUS (2007) says that the country is currently in a state of “informalization of the formal sector,” where all of the increase in employment in the organised sector over this time period has been informal.

2. Most people agree that, compared to the formal sector, the informal sector in India has a problem with low output. Low real wages and bad working and living conditions are two of the most important things about this field.

3. The sector also has a lot of seasonal jobs (especially in the farm sector), a lot of temporary and contract jobs, odd production organisations and work relationships, a lack of social security and welfare laws, a lack of social standards and worker rights, a lack of minimum wages, and so on. Workers in the unorganised sector are more vulnerable and have less bargaining power because they don’t have a strong human capital base (in terms of education, skills, and training) and because they are less likely to be mobilised for work. So, the sector has become a competitive and low-cost way to use labour that can’t be used anywhere else. Any effort to regulate it and put it in a better legal and institutional framework is seen as hurting the sector’s ability to use labour.

Globalisation and the rise of the informal sector:

1. The rise of globalisation and the reorganisation of production chains that came with it have led to production systems that are less typical and more non-standard. These systems use a flexible workforce that works temporary and part-time jobs. This is mostly seen as a way for employers to save money on labour costs in the face of tough competition. It’s clear that this means that these flexible workers in the new informal economy are very vulnerable in terms of job security and social safety, since they don’t get any of the social protections that are written into the current labour laws. Modern workers in the informal sector are becoming more insecure and vulnerable because there is less worker mobilisation and organised group bargaining in these areas. There are many reasons for this. In recent years, the alarming growth of the informal sector has hurt the majority of the workforce’s job and income security. It has also led to a big cut in the size of social aid and security programmes.

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2. In our “global” towns, like Bangalore, which are being shown as the new faces of a rich and thriving India, lakhs of people make their living by doing manual work. The housekeepers, security guards, building workers, garment workers, cobblers, beedi workers, and agarbati

3. The stories of workers, drivers, and many other people are very different. Their incomes haven’t grown at the same crazy rate as their bosses’. In fact, when inflation is taken into account, their incomes have often gone down over the last 25 years, making them even poorer.

The most important things about unorganised or informal workers are:

1. There are so many unorganised workers that they are everywhere in India.

2. Since most jobs in the unorganised sector are only available during certain times of the year, most unorganised workers don’t have steady, long-term jobs. Even people who look like they have jobs but don’t aren’t really working, which shows that there is “hidden unemployment.”

3. The workplace is disorganised and hard to get around.

4. There is no formal link between the employer and the worker.

5. In rural places, there are a lot of different types of unorganised workers based on caste and community. Even though these things don’t matter as much in cities, you can’t say they don’t matter at all because most of the unorganised workers in cities are migrant workers from the countryside.

6. Most people who work in the unorganised sector get into debt and become slaves because their low wages can’t cover their basic needs.

7. The rest of society takes advantage of workers who don’t have unions in a big way. They have bad working conditions and are paid much less than people in the official sector, even for jobs that are very similar and have the same amount of work to be done. The work isn’t as good as it could be, and the pay and working conditions aren’t as good as they could be.

8. The unorganised sector is full of primitive ways of making things and feudal ways of making things. This doesn’t allow or support the workers to learn and use more advanced ways of making things and better ways of making things. A lot of people don’t know how to read or write, and they don’t get much contact to the rest of the world.

9. Trade groups don’t pay enough attention to workers who aren’t in a union.

10. Labour rules and standards for the unorganised sector that aren’t enough or work well enough.

Social security measures:

It is true that when the constitution of independent India was written, social security was given a special place in List III to Schedule VII, and it was made the duty of both the central government and each state government.

The Indian law includes a number of rules about how the government should run that have to do with social security. Acts like the Workmen’s Compensation Act (1923), the Industrial Disputes Act (1947), the Employees State Insurance Act (1948), the Minimum Wages Act (1948), the Coal Mines Provident Funds and Miscellaneous Provisions Act (1948), The Employees Provident Fund and Miscellaneous Provisions Act (1952), the Maternity Benefit Act (1961), the Seamen’s Provident Fund Act (1966), the Contract Labour Act (1970), the Payment of Gratuity

The Unorganised Sectors’ Social Security Act of 2008 shows how much attention is paid to helping workers in the informal sector get different types of social security and support benefits. Even though it has been said that the above Acts apply directly and indirectly to workers in the unorganised sector as well, their effect on the unorganised workers is very small.

Critics’ thoughts:

1. Both the central government and the state governments have made specific plans to help unorganised workers. However, these plans don’t meet the real needs and wants of the unorganised sector’s workers. This is clear even though the Mahatma Gandhi National Rural Employment Guarantee Act of 2005 (NREGA), which is hailed as a big step forward, doesn’t have a standard wage across states and only guarantees 100 days of work for those who sign up to work under the Act. What about the other 364 days of the year? This Act says that the work promise only applies in rural areas. What about the poor who live in cities?

2. If you look at the new Unorganised Sectors’ Social Security Act (2008), you might wonder if it has anything for unorganised workers besides some guidelines about the social security programmes in the country. How can it be called a “Act” if it doesn’t give people the right to work and other legal protections?

3. Here, the Act doesn’t say anything about what kind of social security is right for the vast majority of unorganised workers and their families, if any eligibility criteria should be set, how much workers and their families are entitled to get and under what conditions, how the costs of social security will be paid for, etc. Aren’t the unorganised workers in this country entitled to the bare standards of social security and labour rights set out in an ILO convention from more than 50 years ago? So, this law, which doesn’t deal with unemployment, how it’s regulated, pay, working conditions, and so on, is not just incomplete; it’s also broken if it only deals with social security on its own.

4. The Minimum Wages Act of 1948 is so unclear and pointless that different states in India have set wages that are so low that they are laughable, and these wages vary a lot from one state to the next.

5. In India, a complete Act that meets the security needs of the unorganised sector in areas like food, nutrition, health, housing, employment, income, life and accident, and old age is still a dream. Still, the unorganised sector’s cries aren’t being heard because governments are putting out red carpets for corporations and so-called investors while the working class has to pay for it and make sacrifices.

Even though not much has been done to help rural poor and unorganised workers get social security, the country has made some steps in the right way.