In the process of classifying economic sectors, economists have divided economic sectors based on the type of work performed and the goods and services produced. These are even further categorised as an organised and unorganised sector of job conditions.
The organised sector comprises formally registered businesses, having employees and employee unions, adhering to labour laws, and offering job security, and social benefits. The job is regular and has fixed working hours. If people work more, they get paid for the overtime by the employer. Workers enjoy the security of employment. Employees in the organized sector get medical facilities and other benefits. They have a set monthly income, work schedule, and salary increases at regular periods.
The unorganised sector is one in which labour arrangements do not have definite and consistent employment conditions. Small businesses and services with low-skilled and inefficient workers are included in this category. This sector is with little to no government regulations, often lacking job security, benefits, and legal protections.
The major difference between organized and unorganized sector;
| Job conditions | Organized sector | Unorganized sector |
| Represent | Formal sector of economy | Formal sector of the economy |
| Regulations | Follows government rules and regulations | This sector is with little to no government regulations. |
| Size of the enterprises | Large and well established enterprises | Mostly small and micro-sized enterprises |
| Labour arrangement | Under formal labour contract complied with Labour laws | Informal and flexible labour arrangement. May not comply with labour laws. |
| Job security | Higher job security | The informal sector of economy |
| Wage/Remuneration | Workers/personnel in the organised sector are paid monthly. | Workers in the unorganised sector, however, get paid on a regular or even daily basis. |
| Benefits | Employment is not secure and does not with legal security. People can be asked to leave without any reason. | The benefits available to organized sector workers are not available to workers in the unorganized sector. |
| Unionisation | Employees are entitled for social security. Those in the organised sector receive additional advantages such as medical care, pensions, vacation travel reimbursement, and so on. | Low union activities. Weaker collective bargaining |
| Taxation | Comply tax rules and pay tax liabilities | May Lack tax compliance on informal transactions. |
| Operation structure | Run on formal operation structure with clear business practice | Mostly uninionised workforce |
| Economy Linkage | Linked to formal economy | Mostly informal operations with a flexible structure |
| Innovation and research | Normally invests in innovation and research | Limited scope for innovation and research |
| Career growth and mobility | Opportunity for career growth and mobility | Limited opportunity for advancement in career |
Employees part of organized sector:
Government employees, employees of public sector enterprises, Bank employees, corporate employees and registered workers in industries are also part of the organised sector.
Examples of workers in the unorganized sector:
Agriculture laborers are an example of an unorganized sector. They do not have predetermined working hours or regular monthly salary. Construction workers are another example of an unorganized sector. They do not come under Government regulations and labour laws. Hotel workers also fall into this category as they are working on the timings set by the hotel’s management.
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