Yes, it is necessary to generate employment in the formal sector rather than in the informal sector. Developmental planning envisaged that as the economy grows, more and more workers would become formal sector workers and the proportion of workers in the informal sector would dwindle.

Workers in the formal sector enjoy several advantages. They have a regular income and earn more than those in the informal sector. They also enjoy social security benefits. The government enables them to protect their rights through labour laws. These workers can form trade unions and bargain with employers for better wages.

In contrast, the informal sector is characterized by job insecurity. Workers here do not get regular income and do not have any protection or regulation from the government. They can be dismissed without any compensation. The technology used in informal enterprises is often outdated, and they do not maintain accounts. Furthermore, workers in this sector often live in slums and are squatters.

Currently, the situation is concerning as only about six per cent of the workforce is in the formal sector, while 94 per cent are in the informal sector. Economists point out that the reform process initiated in the early 1990s resulted in a decline in the number of workers employed in the formal sector. Therefore, shifting employment to the formal sector is essential for ensuring worker welfare and economic stability.