Addressing the Critical Problems of Urban Unorganised Labour

Walk through any Indian city early in the morning and you will see the people who keep it running: the mason waiting at a labour chowk for a contractor to pick him for the day, the domestic worker hurrying between three apartments, the street vendor setting up a cart, the delivery rider checking the next order. These workers power urban economies, yet most of them have no appointment letter, no fixed salary, and no safety net if work dries up tomorrow. They belong to the urban unorganised sector, and understanding the problems they face is essential to understanding how Indian cities actually function.

Who are urban unorganised workers?
Insecure employment and the absence of job security
No written contracts
Poor working conditions and inadequate wages
Migrant workers: the backbone that stays excluded
Discrimination and exploitation
Housing and the portability of entitlements
Domestic workers and the missing employer-employee relationship
Why the law struggles to reach them
Lack of education and skills
Unemployment and underemployment
Policy responses and their gaps

Who are urban unorganised workers?

The unorganised or informal sector covers workers who are not protected by labour laws, lack formal contracts, and receive little or no social security. The scale is staggering. Nearly 90% of India’s workforce is informal, and in urban areas regular salaried jobs remain limited, as Periodic Labour Force Survey data repeatedly shows. These workers are concentrated in construction, manufacturing, retail trade, transport, domestic work, and street vending.

Government bodies have long studied this group. The National Commission for Enterprises in the Unorganised Sector (NCEUS), set up in 2004, defined unorganised workers as those working in unorganised enterprises or households, excluded from the protections that formal employees enjoy. The term “informal sector” itself was coined by anthropologist Keith Hart, who described it through four features: low skill levels, easy entry, low pay, and a workforce largely made up of migrants. Those four features still describe urban unorganised labour today.

Insecure employment and the absence of job security

The single biggest problem is insecurity. Most urban informal jobs are casual or daily-wage. A worker may earn well one week and find no work the next. There is no notice period, no severance, and no protection against sudden dismissal. When economic shocks hit, these workers are the first to lose their livelihoods, as the COVID-19 lockdown made painfully clear.

No written contracts

The absence of a written contract is at the heart of this insecurity. Studies estimate that 80 to 90% of migrant work involves no written contract, which leaves workers exposed to wage theft and underpayment. Without documentation, a worker cannot prove employment, cannot claim dues, and cannot access most welfare schemes that require evidence of work. The relationship between worker and employer rests entirely on verbal understanding, which almost always favours the employer.

Poor working conditions and inadequate wages

Urban informal workers routinely work long hours for wages that fall below what a dignified life requires. Many have no fixed working time, no weekly rest, and no protection from hazardous conditions. Construction workers face accidents on unsafe sites. Sanitation and waste workers handle dangerous material without adequate gear. Street vendors work in heat, rain, and pollution with no shelter.

Low pay is compounded by the high cost of urban life. Research on India’s urban informal workforce shows that around 40% of the urban poor live in slums and informal settlements, often spending up to half their income on rent. Financial exclusion pushes many toward informal moneylenders, trapping them in cycles of debt. Workers also have very weak bargaining power, particularly in urban labour markets where the supply of labour far exceeds demand, so employers can keep wages low without consequence.

Migrant workers: the backbone that stays excluded

Migrants form the core of the urban unorganised workforce. The 2011 Census recorded over 45 crore internal migrants, and post-pandemic estimates suggest the real figure is even higher once circular and seasonal movement is counted. Metropolitan cities like Mumbai and Delhi draw unskilled workers from across the country. These workers build the city’s infrastructure and staff its services, yet they remain locked out of the rewards.

Discrimination and exploitation

Migrants frequently face region-based and caste-based discrimination. Analysis of migrant exclusion argues that older caste hierarchies have been reshaped within urban industrial economies to normalise the exploitation of migrant labour. Women migrants bear a disproportionate burden, and the poverty often passes down to their children, who lose access to schooling and childcare in the destination city. The 2020 reverse migration during the lockdown, when thousands walked hundreds of kilometres home, exposed how little protection these workers actually had.

Housing and the portability of entitlements

A major problem is that welfare entitlements rarely travel with the worker. A migrant who holds a ration card issued in the home state may be unable to use it in the city, and may also be excluded from housing schemes meant for the urban poor. Research on internal migrants notes that urban policy regimes push migrants into informal makeshift settlements while denying them the documents needed for formal housing. The result is a worker who is essential to the city yet treated as a permanent outsider within it.

Domestic workers and the missing employer-employee relationship

Domestic workers show how complicated the unorganised sector can get. They cook, clean, and provide care inside private homes, and urban domestic work is the second-largest source of female employment in Indian cities. Estimates of their numbers vary widely, from a few million to over 50 million, precisely because the work is so informal and undercounted.

Why the law struggles to reach them

The core difficulty is the nature of the workplace. Because domestic work happens inside a private household rather than a public establishment, and because the employer is an individual family rather than a registered firm, domestic workers are routinely excluded from existing labour laws. There is no clear employer-employee relationship in the legal sense, no fixed wage standard, and no defined working hours. This legal grey zone leaves workers exposed to wage violations, long hours, and harassment with little recourse.

India still has no dedicated central law for domestic workers, and a draft bill has been pending for more than a decade. India has also not ratified the International Labour Organization’s Convention 189 on decent work for domestic workers. Existing social security codes are built around formal employer-employee arrangements, a framework that, as critics point out, simply does not fit the way domestic work is organised. The Supreme Court itself flagged the absence of comprehensive protections for domestic workers in a 2025 case, signalling that the legal gap is now widely recognised.

Lack of education and skills

Education and skill levels strongly shape what urban informal workers can earn. Although urban workers tend to be more educated than their rural counterparts, this does not translate into better skills. A study of unorganised labour notes that around 90% of the urban informal workforce is unskilled or low-skilled, meaning education alone is not enough to move people into better-paid work. Without vocational training, workers remain stuck in jobs that offer easy entry but low returns.

This skills gap has consequences across generations. Children of informal workers often start working early, miss schooling, and inherit the same limited opportunities. Skill development is therefore not just an economic question but a question of breaking intergenerational poverty.

Unemployment and underemployment

High unemployment and underemployment add another layer of vulnerability. Many urban informal workers are not jobless in the strict sense, but they are underemployed, working fewer hours than they want or in jobs far below their capacity. A street vendor who sells for a few hours, a daily-wager who finds work only on some days, and a part-time helper juggling several homes are all underemployed. This irregular work means income is unpredictable, savings are impossible, and a single illness can push a family into crisis.

Policy responses and their gaps

The government has introduced several measures to support informal workers. The Code on Social Security, 2020 includes a dedicated chapter for inter-state migrant workers, defines them as those earning up to Rs 18,000 a month, and offers benefits such as the option to access the public distribution system either in the home state or the state of employment. The e-Shram portal, launched in 2021 by the Ministry of Labour and Employment, aims to build a national database of unorganised workers, and over 30 crore workers had registered by late 2024. Schemes like PM SVANidhi provide credit support to street vendors.

The gaps, however, remain wide. Critics argue that the social security code lacks strong provisions for workers in times of crisis and does not guarantee true portability. The Building and Other Construction Workers welfare scheme sets pension eligibility at age 60, yet many construction labourers cannot work past 45 due to physical strain. And while e-Shram registration brings workers into a database, registration without legal protection risks becoming symbolic rather than substantive. The challenge ahead is to convert recognition on paper into real rights: fair wages, defined working conditions, grievance redressal, and social security that actually reaches the worker.

What do you think? Should India enact a dedicated central law for domestic workers, or can the existing labour codes be reformed to cover them effectively? And if welfare entitlements were made fully portable across states, how much would that change the lives of urban migrant workers?

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Table of Contents

Who are urban unorganised workers? 🔗

Insecure employment and the absence of job security 🔗

No written contracts 🔗

Poor working conditions and inadequate wages 🔗

Migrant workers: the backbone that stays excluded 🔗

Discrimination and exploitation 🔗

Housing and the portability of entitlements 🔗

Domestic workers and the missing employer-employee relationship 🔗

Why the law struggles to reach them 🔗

Lack of education and skills 🔗

Unemployment and underemployment 🔗

Policy responses and their gaps 🔗