The Difference Between Organised and Unorganised Sector
In every economy, there are two types of sectors- the organised and unorganised sector. Understanding the difference between these two sectors can help us with a better understanding of the economy.
What is Organised Sector?
The organised sector refers to the sector that is well organised, and all the employees working in this sector receive several benefits from their employers. Here, employers maintain proper records of their employees, follow labour laws strictly, and the working conditions are favourable. The organised sector involves large industry setups like manufacturing units, service industries, and large corporate companies.
The workers in the organised sector are salaried, and they receive a regular income from their employers. As the sector is well organised the employees tend to receive incentives and promotions based on their performance. The employees in the organised sector are entitled to several benefits like provident fund, gratuity, medical benefits, and other welfare measures.
What is Unorganised Sector?
On the other hand, the unorganised sector comprises small and medium-sized units, and it is not well organised. The workers in this sector do not have job security, and the employers in this sector do not follow any labour laws. It comprises sectors like small-scale industries, small units producing handmade goods, street vendors, and labourers who work in small establishments.
The employees in the unorganised sector do not have a fixed salary, and they get paid on a daily basis. Unlike the organised sector, the employees in the unorganised sector do not receive any incentives, bonuses or promotions based on their performance. The workers in the unorganised sector do not enjoy any benefits like provident fund, medical benefits or any other welfare measures.
Key Differences Between Organised and Unorganised Sector
The main difference between these two sectors lies in the organisation, size of units and the benefits received by employees. Here are some key differences between the two:
• Organisation: In the organised sector, the employers maintain proper records of their employees, and the sector is organised. The unorganised sector is not organised and employers do not maintain proper records of their employees.
• Size of Units: The organised sector comprises large industries and corporate companies, while the unorganised sector comprises small-scale industries and small units.
• Job security: The workers in the organised sector enjoy job security, while the workers in the unorganised sector do not have job security.
• Benefits to Employees: The workers in the organised sector receive regular salaries along with several benefits like provident fund, gratuity, medical benefits, and other welfare measures. In contrast, the workers in the unorganised sector receive wages on a daily basis and do not enjoy any benefits.
Conclusion
For an economy to grow and flourish, both the organised and unorganised sectors are important. However, the organised sector plays a more significant role in generating wealth and raising the standard of living for the employees. Moreover, the unorganised sector needs radical changes to provide job security, benefits and favourable working conditions to the workers. Therefore, organisations and policymakers should formulate and implement measures to bring reforms to the unorganised sector to make it more organised and efficient.
Table difference between organised and unorganised sector
| Organised Sector | Unorganised Sector |
|---|---|
| The organised sector refers to those industries and businesses that are registered with the government and operate within a legal framework. | The unorganised sector refers to those industries and businesses that operate outside the legal framework and are not registered with the government. |
| The organised sector provides good working conditions, job security, and benefits such as healthcare and pension. | The unorganised sector provides poor working conditions, job insecurity, and no benefits. |
| The organised sector employs skilled and trained workers. | The unorganised sector employs mainly unskilled and semi-skilled workers. |
| The organised sector contributes significantly to the national economy through taxes, exports, and foreign investments. | The unorganised sector contributes less to the national economy due to the absence of formal regulations and documentation. |