How will you know whether a worker is working in the informal sector?
A worker is working in the informal sector if they are employed in enterprises that do not fall under the formal sector category. The formal sector includes all public sector establishments and those private sector establishments which employ 10 hired workers or more.
Therefore, workers in the informal sector are those who work in private establishments with fewer than 10 hired workers. This includes millions of farmers, agricultural labourers, owners of small enterprises, and people working in those enterprises, as well as the self-employed who do not have any hired workers.
Additionally, informal sector workers do not get regular income and lack protection or regulation from the government. They do not enjoy social security benefits and can be dismissed without any compensation.
Explanation
The textbook clearly defines the distinction between formal and informal sectors based on employment size. Formal sector establishments are those public sector establishments and private sector establishments employing 10 or more hired workers. All other enterprises and workers fall under the informal sector. The context also lists characteristics of informal sector workers such as irregular income, lack of government protection, and absence of social security benefits.
Solution Steps
Step 1: Identify the definition of formal sector - public sector and private sector with 10+ hired workers
Step 2: Apply the exclusion criteria - all other enterprises and workers form the informal sector
Step 3: List the characteristics of informal sector workers - irregular income, no government protection, no social security