Informal labour is employment that falls outside the framework of legal regulation and social protection: no written contract, no enforceable minimum wage, no fixed hours, no provident fund, gratuity or paid leave, and no effective right to organise. The category is defined by the terms of employment rather than by the workplace, which is why it includes both the worker in an unregistered workshop and the contract worker on the floor of a large registered factory.
Where it comes from
Keith Hart introduced the informal sector in 1973 to describe the unenumerated income opportunities of Accra's urban poor, against the assumption that such work was residual and would vanish with industrial growth. Later scholarship shifted the unit of analysis from the enterprise to the employment relationship, distinguishing employment in the informal sector from informal employment wherever it occurs. India's National Commission for Enterprises in the Unorganised Sector adopted this dual definition, which is why informal employment in India is larger than the informal sector itself.
How it works
Informality persists because it is useful to capital. Subcontracting, casual hiring, piece rates and labour contractors shift risk and the cost of statutory obligation onto the worker, so firms can expand and contract without penalty. Recruitment through contractors and kin networks substitutes personal dependence for legal right; wage advances tie workers to employers in relations Breman treats as unfree rather than simply flexible. Circulating migrants are the ideal informal workforce precisely because they belong nowhere and can claim nothing. Sociologically, informality intersects caste and gender: home-based and manual work is concentrated among women and Dalit workers, so the category is not merely economic.
Why it matters
Informal labour is the normal Indian condition, not a transitional stage — formal-sector employment has grown slowly while the workforce has not. Any claim about growth, welfare or class formation in India must be stated in terms of a workforce without security.
For the UPSC answer
Define informal labour by the employment relation, credit Hart for the concept and the enterprise-to-employment shift for its refinement, and stress that informality inside formal firms is the growing form. Close with the argument that it is a structural feature reproduced by employer strategy, not a leftover of underdevelopment.
References & further reading
- Hart, K. (1973). Informal Income Opportunities and Urban Employment in Ghana. Journal of Modern African Studies.
- Breman, J. (1996). Footloose Labour: Working in India's Informal Economy. Cambridge University Press.
- Harriss-White, B. (2003). India Working: Essays on Society and Economy. Cambridge University Press.