Unorganised sector has large hidden potential for job creation

• Unorganised sector's large hidden potential for job creation is the best hope for India.
• Every politician and economist talks about 'development' and 'job creation' all the times but nothing much has happened during past 5 years.
• Unemployment rate is stable mainly due to falling labour participation rates among children and women. Also because of hidden unemployment due to unemployed getting engaged as casual workers or absorption in family enterprises and underemployment of many workers.
• Despite youth bulge in population there is no youth bulge in workforce and hence there is no demographic dividend.
• We have large number of poorly educated workers.
• Employment conditions will improve with an increase in the share of organised sector.
• Earnings per worker improved by 2.3% in organised sector and 4.2% in unorganised sector between 1999-2000 and 2011-12 but gender equality in the work declined.
• Recent trends show unemployment increase from 3.8% (2011-12) to 5% (2015-16) due 5 million 'employment loss'.

How large is the job gap? How soon can India reach a point where there is no hidden unemployment and all who want work can find it at a fair wage and decent work conditions?

• Current surplus labour at 117 million (52 million who can be withdrawn without loss of production, anther 52 million who are not at present in labour force but are able and willing to work and 13 million who are reported unemployed)
• Annual additions would be about 6-8 million.  
• Can we absorb about 16 million a year in decent work and reach full employment by 2030?
• China's model of export driven job creation looks less attractive due to global slow down, growing protectionism and growth of robotics and automation.
• Growth in manufacturing with matching skill development, infrastructure construction, urban development, housing, information technology, investment in energy will produce many jobs but far less than availability.
• The organised sector can't deliver jobs on the scale required. Job creation requires skill development for productivity enhancement.
• Powerful trade unions are able to take care of very limited proportion of workers.
• Labour reforms are required to ensure fair wages, competition and decent work conditions.
• Wages of production workers declined from 15.4% of GVA (2000-01) to 8.5% (2011-12) in unorganised sector.
• Vast majority of workers in unorganised sector lack security and suffer wage differentiation by caste, community, gender, geography for identical tasks.
• Some reforms for protection and wage determination of workers in unorganised sector are necessary. Labour policy must address inequity and exploitation issues. 
• For India to meet its job creation obligations, unorganised sector, with growth, reform and modernisation, is big hope with tremendous hidden potential. 

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Unorganised sector, as its name suggests, doesn't follow many rules & processes and are outside income tax department lens. But its ability to provide vast number jobs fuels economic growth and contributes a lot in the form of indirect taxes. The recent demonetisation & GST proclaims formalisation of informal sector but in reality it has destroyed unorganised sector and that is evident from loss of 5 million livelihoods and GDP growth drooping from 9.1% to 5.7% and government(s) going penniless. But as they grow over time they themselves will migrate into formal sector with increased revenues, profits and benefits of formal sector. It makes sense for government(s) to allow this sector to function without fear or reverence, who will eventually become good tax payers too.

Agriculture sector with land reforms, land aggregation & cooperative farming, farm mechanisation, efficient & assured irrigation, rain water harvesting & ground water table increasing, remunerative pricing, crop insurance, efficient markets, quality inputs, warehousing & cold storages, food processing units etc will enhance rural development and reduce rural urban migration etc.