Breaking down the question
This is a two-part causal question. The first part asks for the linkage points — the specific mechanisms by which globalisation drives the growth of the informal sector. The second asks for consequences — how this informalisation has reshaped the nature and functioning of the working class. Both parts must be developed; a good answer identifies concrete connecting mechanisms rather than asserting a vague association.
The key terms are globalisation, the informal sector and the working class. Globalisation here means the integration of markets, the mobility of capital, competitive pressure and the reorganisation of production into global value chains. The informal sector means economic activity outside the reach of state regulation, without secure contracts, social security or organised protection. The working class means those who live by selling their labour. The examiner wants you to show that globalisation, far from formalising labour as classical industrialisation once did, has in the developing world been accompanied by a swelling of informal, casual and precarious work, and to trace what this does to workers' solidarity, security and bargaining power.
How to approach it
Open by defining globalisation and the informal sector and noting the paradox: modernisation theory expected development to expand secure, organised employment, yet in India and much of the global South globalisation has coincided with the persistence and growth of informality.
Then set out the linkage points as a numbered logic — global competition pushing firms to cut costs; the drive for labour flexibility and the outsourcing and subcontracting of production down long chains that end in unregulated workshops and home-based work; the mobility of capital that weakens the bargaining power of labour and the regulatory capacity of the state; the pressure of liberalisation on small producers and agriculture that pushes surplus labour into informal urban work; and technological change enabling dispersed, contingent production. Draw on Manuel Castells and Alejandro Portes on the informal economy as integral to, not separate from, global capitalism.
Then analyse effects on the working class — casualisation, loss of security and benefits, fragmentation and the weakening of trade unions, feminisation, and the emergence of what Guy Standing calls the precariat. Ground the Indian picture in Jan Breman's studies of footloose labour. Conclude with a balanced assessment. (No note link for this topic — keep references as plain text.)
Model answer
Classical theories of industrialisation assumed that economic development would steadily convert insecure, traditional work into stable, regulated wage employment. The experience of globalisation in the developing world, and conspicuously in India, has confounded that expectation. Instead of shrinking, the informal sector — economic activity beyond the protection of labour law, without secure contracts, social security or collective organisation — has grown, and remains where the overwhelming majority of Indian workers earn their living. Understanding why requires identifying the precise linkage points between global integration and informalisation.
The first linkage is competitive cost pressure. Globalisation exposes firms to intense international competition, and the readiest way to cut costs is to reduce the price of labour — by hiring workers without permanent contracts, benefits or job security. Formal, protected employment becomes a liability that firms seek to minimise.
The second, and most important, is the demand for labour flexibility, realised through subcontracting and outsourcing. Global production is organised into long value chains: a branded firm at the top parcels out work to contractors, who parcel it further down to small workshops and home-based workers at the bottom. Each step sheds regulatory obligation, so that production which is ultimately for a global market is performed under wholly informal conditions. Manuel Castells and Alejandro Portes argued precisely that the informal economy is not a backward residue awaiting modernisation but an integral part of contemporary global capitalism, actively produced by the search for flexibility.
The third linkage is the enhanced mobility of capital relative to labour. Capital can relocate across borders in search of cheaper, more compliant workforces, while workers cannot follow. This asymmetry weakens the bargaining power of labour and pressures states to deregulate — to dilute labour protections in order to remain attractive to investment. The state's capacity and willingness to enforce formal standards accordingly declines.
The fourth linkage operates through the countryside and small producers. Liberalisation exposes agriculture and small-scale industry to global competition, squeezing incomes and displacing labour. The surplus population thus released migrates to towns and cities, where it is absorbed not into secure factory jobs but into the vast reservoir of informal urban work — construction, petty trade, transport, domestic service and casual manufacture.
These mechanisms have transformed the nature and functioning of the working class in several ways. The most basic is casualisation: permanent jobs give way to contract, temporary and piece-rate work, so that insecurity becomes the normal condition of labour. With it goes the loss of the social wage — provident fund, medical cover, paid leave, pensions — and the erosion of any clear line between employment and unemployment. Jan Breman's studies of what he calls footloose labour in India portray a workforce that circulates between countryside and city, between tasks and employers, never settling into stable industrial employment and permanently vulnerable.
The second effect is fragmentation and the weakening of collective power. The classical working class was concentrated in large workplaces, where common conditions bred solidarity and trade unions could organise. Informalisation disperses workers across countless small units, home-sites and shifting contracts, and interposes layers of contractors between them and the ultimate employer, making unionisation and collective bargaining enormously difficult. The organised working class becomes a shrinking minority; the unorganised majority is atomised and largely defenceless.
The third effect is feminisation and the intensification of vulnerability. Informal chains draw heavily on women's labour, especially in home-based and low-paid work, and on migrants and the socially marginalised, so that the burdens of informalisation fall unequally. Out of these conditions Guy Standing has described the emergence of a precariat — a class-in-the-making defined by chronic insecurity, the absence of an occupational identity and the lack of the rights that organised labour had won.
The overall picture is therefore one of a working class that has grown in numbers but weakened in security and collective capacity. Globalisation has not proletarianised labour in the classical sense of gathering it into protected industrial employment; it has informalised it, dispersing workers into flexible, insecure and unorganised work integral to global production. This is not to deny that globalisation has created opportunities and raised some incomes, but its dominant effect on the mass of Indian workers has been to make their working lives more precarious and their collective voice fainter. The central task of labour policy — extending social security and organisation to the informal majority — follows directly from this diagnosis.
Examiner's perspective
The question is explicitly two-part and causal, and the examiner marks accordingly. A frequent weakness is to describe globalisation and the informal sector separately without specifying the linkage points that connect them; another is to answer the first half and neglect the consequences for the working class. Both halves, and the causal bridge between them, must be present.
High-scoring answers set out the mechanisms concretely — cost competition, subcontracting and flexible production, capital mobility and deregulation, and the displacement of rural and small producers — and cite the insight of Castells and Portes that informality is produced by, not opposed to, global capitalism. On effects, the discriminators are casualisation and the loss of the social wage, the fragmentation of solidarity and decline of unions, feminisation, and Standing's precariat, anchored empirically in Breman's account of footloose labour in India. A measured conclusion that acknowledges gains while identifying informalisation as the dominant outcome, and points to the policy implication, secures the top band.