Informal Employment

Informal employment is work in which the worker lacks secure employment conditions and effective access to employment-related social protection. It includes workers in informal enterprises as well as workers employed informally within formal enterprises, making it broader than the informal sector.

Core characteristics

Informality concerns the worker's employment relationship rather than merely the legal status of the enterprise. Its indicators vary with the nature of work, especially because self-employed workers do not have an employer.

• Wage workers commonly lack a written employment contract, assured continuity of work or protection against arbitrary termination.
• They generally lack employer-linked social security benefits, such as provident fund, pension or gratuity.
• They may not receive employment benefits such as paid leave, medical benefits or maternity benefits.
• Earnings are often low or irregular, while workers usually have limited bargaining power and greater exposure to economic shocks.

Major forms in India

Informal employment cuts across agriculture and non-agriculture, rural and urban areas, and different occupational categories.

• It includes own-account workers, employers in small household enterprises and unpaid helpers in family enterprises.
• It includes casual wage labourers, who are engaged according to daily or periodic work availability.
• Even a regular wage or salaried worker may be informally employed if the job lacks employment and social security benefits.
• Home-based workers and workers engaged through contractors are also commonly found within informal employment arrangements.

Informal employment and informal sector

The two concepts must not be treated as identical. The informal sector broadly comprises unincorporated household enterprises, while informal employment classifies jobs according to the protection available to workers.

• Most employment in informal enterprises is informal, particularly self-employment and casual work.
• A worker in a formal-sector enterprise may still hold an informal job when employed without employment or social security benefits.
• Therefore, enterprise-based estimates of the informal sector can differ from worker-based estimates of informal employment.

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