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Difference between the organised sector and the unorganised sector of employment?

·2-min read
Mumbai, India - January 12, 2015: Indian workers sew in clothing factory in Dharavi slum. Post-processed with grain, texture and colour effect.
Mumbai, India - January 12, 2015: Indian workers sew in clothing factory in Dharavi slum. Post-processed with grain, texture and colour effect.

Employment is divided into the organised and unorganised sector based on the nature of employment. According to India’s Economic Survey, nearly 93% of the total workforce is employed in the unorganised sector. Thus, close to 42 crores, people are employed in this sector.

Difference between Organised and Unorganised sector

The organised sector comprises employees who work under fixed terms and timings. If you are working for a factory or employed in a government job, you will fall under the organised sector.

The unorganised sector comprises employees working in minor business concerns and units, often without any assurance of regularity. You can be said to be working in the unorganised sector if you are a farmhand, a domestic help, a salesman at a grocery shop etc.

Compliances –

Employers in the organised sectors follow the government rules and Acts applicable to them. They have assured jobs with job security. The Factory Act, PF Act, and Minimum Wages Act provisions would apply to them. They have to report to the authorities confirming their adherence to the applicable laws of the land.

Employers in the unorganised sector do not fall under the radar of government laws and statutes.

Benefits –

Employers in the organised sector have set procedures that are followed to relieve employees of their duties. Employees are eligible for benefits like overtime, provident fund, medical benefits and other perquisites provided by their employer.

Employers in the unorganised sector can lay off their employees easily. They are not bound to pay any benefits that are available to the organised sector. The benefits of minimum wages, provident fund and over time, is not available to them.

Increments –

Employers define the salary hike criteria in the organised sector, like duration, performance appraisal, seniority, etc. These are generally defined in the employment documents like offer letter and appointment letter.

There is no defined structure around the increase in pay in the unorganised sector. It is dependent on the discretion of the employer.


In the organised sector, employees are eligible for salary as agreed in the employment document. It is a fixed income, generally at the end of each month.

Employees in the unorganised sector receive wages based on the work done. It is generally paid on a “earn as you work” basis instead of a fixed sum.


It is apparent that from the employee’s point of view, a job in the organised sector is better. It will benefit the nation’s workforce if more and more employees are absorbed into the organised sector.

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