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Behind the Curtains: Recognising the Work of Women in the Informal Economy in India

Updated: Oct 5, 2023

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According to a study by the International Labour Organisation, 81.8% of women in India are concentrated in the informal economy. Such nontaxable or under-the-table kind of work has more or less prevented women from entering into the formal side of a dignified work spectrum. For decades, women have been making their labor supply decisions by not only considering leisure and labor tradeoffs but also home-bound decisions regarding goods and services (including caring for children). Already subject to vulnerable, low-paid, or undervalued jobs, the COVID-19 crisis led to unprecedented job losses affecting women the most and further widened gender gaps.

In this regard, this paper explores the presence of women in the informal sector that are subject to a ‘double penalty’, whereby they are not just part of the informal sector but are unfairly positioned even within it. We show that women pose a greater risk and burden within the informal sector as compared to men while assessing the current policy interventions and highlighting the gaps within them. We focus on India owing to its unique cultural intricacies that impact the nature of informal sector work. Through this analysis, we also arrive at a set of policy recommendations to improve the effectiveness of catering to the informal sector from a gender-sensitive perspective.

The International Labour Organisation broadly defines the informal sector as encompassing all economic activities that are insufficiently governed by the formal law of the land. Informal workers have no social protection, lack formal guarantees or documentation of their labor, and can be engaged in unpaid or even underpaid work. An informal economy is capable of creating a shadow economy that can detrimentally affect the GDP output of a nation due to its inability to be taxed. The interdependence between informal and formal markets even in major sectors like agriculture or infrastructure is a common feature in most developing countries. While some argue that informal work provides subsistence to many unskilled workers in such countries, formalization of the economy is necessary not just to enable productivity improvement of labor but also to secure the dignity of labor.

2. Global Phenomenon

The informal economy has been a global phenomenon created in different ways and scenarios across countries and regions. It is not restricted to developing countries, but, informality has come to constitute a major structural feature of society both in industrialized and less developed countries. Asian countries, particularly South Asian countries have been dealing with challenges in the form of a rapidly growing informal economy. More often than not, limited employment creation in the formal economy leads to people adjusting to job finds in the informal sector. Here, there is an evident gender bias, as a larger proportion of women, compared to men, take up the informal jobs space. This bias is also noticed in the usage of contract labor and outsourcing of production in these countries, which tend to create informal employment even amidst the formal sector.

As per the Global Gender Gap report 2023, even when women secure employment, they often face substandard working conditions: a significant portion of the recovery in employment since 2020 can be attributed to informal employment, whereby out of every five jobs created for women, four are within the informal economy; for men, the ratio is two out of every three jobs.

3.A Closer Lens into South Asian Nations

South Asia is dominated by informal workers’ labor markets in both urban and rural areas. More than half of the workforce (with the perpetual gender bias as mentioned earlier) in most Southeast Asian countries earns their living in the informal sector, with a proportion that surpasses 80% in Cambodia and Myanmar; except Singapore, Brunei, and Malaysia, where formal workers are in the majority.

Most of the women in all the four countries mentioned above, engaged in the informal sector, are either illiterate or lowly educated; therefore, are unable to move out of the subsistence level. Further constrained by the lack of support systems such as training, skills, marketing services and policy measures. The working condition of informal workers thus remains seemingly unchanged as the inclusive development plans and policies initiated meant to improve living conditions of all workers rarely reach into the informal economy.

Closer home, we note that India’s female labour force participation rate is dismally low as compared to its neighbours immediate neighbours; in fact, it is the lowest amongst BRICS countries. A spike in this participation rate is only seen during times of economic distress, when female participation in the labour force accounts for supplemental income. In India, 82% of India’s working women throng the informal sector in fields such as domestic work, waste picking, construction, street vending etc. They lie outside the scope of government protection policies.

Gender inequality is deeply rooted in the informal sector. The United Nations Entity for Gender Equality and the Empowerment of Women defines the informal sector of economy as a ‘grey economy’, wherein women are unprotected by labour laws or social protection benefits, toil under low wages, and are positioned at high risk of health and sexual harassment. The contribution of women in unpaid household or domestic work is overlooked. Even as ‘employers’, the representation of women as compared to men is rather skewed. Data from G20 countries shows us that only about 1% of women are employers in the informal sector, as compared to 3% of men. It is noticeable that women seek work in the informal sector with much more ease, and due to a relative convenience of entry it provides. Formalities like skills, training and paperworks are not required thus creating a platform of easy source of income for unskilled.

4.Challenges to Women in the Informal Sector

While there are common challenges that a worker in the informal sector may face, we focus on the unique challenges that may be posed to a female participant in the informal sector. These are broadly highlighted in the fields below -

a) Discrimination by age and ethnicity

According to a UN Women study, older women are much less likely to have a pension. Younger women between the ages of 15-24 find an unduly high representation in the informal sector, albeit with dimming future prospects owing to the lack of social protection or employment benefits that will perpetuate the vicious cycle of gender inequality.

On the basis of ethnicity, we find that the representation of tribal and unskilled women is significantly higher in the informal sector of India. They are engaged in activities ranging from local crafts to small-scale farming, but find little entry into the formal markets despite producing for it. The best example of this is the textile and crafts industry in India. Migrant workers represent a huge population of ethnically diverse workforce as well. An overwhelming number of 44% of migrant workers globally are women. The restrictions they face to their infusion into the culture, let alone the economy, is evident by the struggles of various groups globally fighting for access and recognition.

These factors are further compounded by their sexual orientation, their level of education, and physical disabilities. With a rise in the level of education - specially secondary and tertiary education - there is lesser likelihood of involvement in informal employment.

b) Gender pay gaps

The wage disparity between female and male workers is not an issue peculiar to the informal sector alone. However, its prevalence in the informal sector exacerbates the pitiable condition of women within it. Women tend to be concentrated in the lower rungs of informal employment such as in household or care work which are lower-paying than activities such as real estate construction work where men are employed. In the male dominant sectors such as construction, women are paid 30-40% less and employed in the hazardous activities such as carrying load or working in brick kilns. The relatively (minimally) skilled activities are reserved for men.

c) Risk of sexual harassment

The gaping absence of formal laws and the socio-political identity of women that are commonly employed in the informal sector, leave them more susceptible to unreported cases of sexual harassment. In India, the 1997 Vishakha Guidelines seeking to establish protection against sexual harassment at the workplace, attempts to establish dignity of labour. However, this failed to explicitly address the cause of women employed in the informal sector. There is also little protection for such women against the social backlash they face for voicing their complaints. The ‘isolating or male-dominant spaces occupied by them (such as in domestic work) are not complemented by representation in labour unions or support spaces where they can seek justice.

d) Undue burden of hygiene oriented work

The practice of waste disposal in India is heavily intertwined with its caste consciousness. These workers range from ragpickers, to waste collectors/ sorters, and even manual scavengers- the latter working in the most inhumane conditions, come from the lowest rungs of the social order. Sidelined around issues of purity and pollution, a closer look into the issue will uncover a gender based angle, as close to 95% of the 13 lakh engaged in manual scavenging are women. They are also held responsible for disposal of menstrual waste as its ‘generators’ in particular. Poverty and lack of formal education constitute the major factors for pushing women into menial labour such as rag picking and manual scavenging. As Gail Omvedt puts it, these women constitute the downtrodden among the downtrodden section of the society who are subject to further ostracisation not just because of their work but further because of their gender and social status.

The pandemic only intensified this burden on women, who were engaged in the ‘cleaning and caring’ verticals both at the household level as well as outside of their homes in handling contaminated materials.

e) Maternal and household responsibilities

Women are seen as the primary caregivers globally. This cultural expectation set on women overlooks and leads to a dismissal of their immense contribution to the labour market. According to the 2020-21 Periodic Labour Force Survey, women in the working age group (15-59 years) remain engaged disproportionately largely in the household duties. The shares are 46% in rural and 57% in urban areas, as compared to men that are less than 1% in both rural and urban areas. It is interesting to note that the %age of urban women engaged in household duties despite their educational qualifications is higher than that of rural areas. This might be credited to a peculiar phenomenon around comparatively higher economic classes in India, wherein women are restricted to familial responsibilities, whereas the primary income source is men. The failure of the state to provision women engaged in unpaid domestic work with adequate domestic assistance (such as for childcare), or suffering a ‘wage penalty due to their break from working years for the same, are primary reasons for the meagre participation numbers.

5.Comparative Study with Japan

In order to recognize the power of women's formal economic participation, Japan adopted womenomics in 2013 under Prime Minister Shinzo Abe, as a core pillar to Japan’s economic growth and strategy. Womenomics — a concept coined by Kathy Matsui, chief Japan strategist for Goldman Sachs — is a policy strategy based on research demonstrating that closing the gender gap in formal labour force participation would counter Japan's ageing workforce and boost GDP by 13 to 15%.

Since this policy intervention, there has been a rise in female labour force participation in Japan, however, it came to notice that persistent cultural pressures still prevent women from staying consistent in the workforce. Japan enacted the fourteen-week paid leave policy  ( the standard suggested by the International Labour Organization). However,  68% of women quit their jobs upon marriage or childbirth. Further, Japan offered one of the world's most generous gender-neutral parental leave policies; but only 2% of fathers ended up taking any leave, compared with 83% of mothers. Those women who do remain economically active were noticed to be more likely to pursue part-time or irregular work, again going back to informal job categories of sorts.

To counter these trends, the Japan government pledged to bring policies which incentivize the use of gender-neutral leave policies, allow for flexible work environments, reform the tax code to reward dual earners, and combat workplace discrimination. The government has also committed to expanding access to childcare, creating half a million new daycare spots by 2019. These efforts have to a certain extent helped Japan better capitalise on the growth potential of womenomics policy. If further proven successful, it could become a template for other nations, especially across Asia, facing similar challenges through their persistent gender-biased informal economic employment.

6.Current Policy Landscape

As the informal sector has persisted since times immemorial, governments from time and now have been coming up with policies and schemes like introducing Goods and Services tax to counter shadow economies, digital payments to enrolling of informal sector employees on government portals like E-Shram to encourage registration of unorganised workers, thus benefiting the women stuck in loops of staying in informal employment spaces, and to bring them to the formal side of the employment spectrum. The existing schemes have been mapped below -

1.Rashtriya Mahila Kosh - a national credit agency established to provide financial assistance to poor women in the informal sector and for supporting their livelihood and entrepreneurial activities.

2.National policy for skill development and entrepreneurship - aims to provide skill development opportunities with a special focus on women in the informal sector. Thus enhancing their employment and entrepreneurial capabilities for the formal jobs sector. It addresses key obstacles like low aspirational value, lack of formal education, lack of focus on outcomes, low quality of training infrastructure and trainers, etc.

3.PM SVANidhi- PM Street Vendor’s AtmaNirbhar Nidhi - provides working capital loan to street vendors for them to be able to resume their livelihoods which had been adversely affected due to the Covid-19 lockdown. Women constitute about 40 per cent of the total vendors, with nearly 30 % of them being the sole earning members in their families. So, it becomes extremely important for them to be able to access easy loan provisions.

4.PM Mudra Yojana- Provides loans to micro and small enterprises , including those in the informal sector, indirectly benefiting women in the informal space by offering them access to financial resources.

5.Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act (commonly known as the POSH Act) - does not just provide for protection of working women against any kind of sexual harassment in the workplace, but it also provides for the formation of local committees by district administration to take up cases of sexual harassment of women in the informal sector and for workplaces with less than 10 employees.

6.National Creche Scheme (2017) - now under an umbrella scheme called Mission Shakti- providing financial grants for daycare facilities for the children (aged six months to six years) of working women. Especially helpful to those women whose workplaces don't have creches or nurseries – any workplace that employs fewer than 50 employees is exempt – and women working in the informal sector.

7.Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) - provides guaranteed employment opportunities to rural households, with special emphasis on women’s participation to ensure their empowerment and financial independence.

The schemes highlighted above are some of the few provisions which include the benefits to women in the unorganised jobs sector. However, the downside is that these have been poorly implemented. Let us delve into the methods of enhancing the current situation through both existing and future policies along with associated recommendations and suggestions. These ultimately need to be embraced by all the stakeholders to consider and abide by, if approved, with the collective aim of pursuing social, economic and political justice for women employed in India’s informal jobs sector.

1. The Ministry of Women and Child development needs to make a proposal to the Ministry of Finance for a dedicated budget that needs to be provided to the Sexual Harassment Of Women at Workplace (Prevention, Prohibition and Redressal) Act (also known as the POSH Act). This will help activate the local committees (created by every District Officer to receive complaints of sexual harassment from establishments where an Internal Committee has not been constituted due to having less than ten workers, typical of informal job spaces majorly thrived by women) to become functional and incentivised enough to conduct its responsibilities with accountability. It has been found that most women workers are unaware of the provisions of the POSH Act. This means elaborate publicity of the provisions is required for increasing awareness, a vivid responsibility of the state governments as per the act, along with monitoring of the implementation and maintaining of database on sexual harassment reports. For this, state governments can very well take help from print and television media. Furthermore, it is advisable for the Supreme Court to encourage the Government Of India, to ratify ILO’s 2019 violence and harassment convention, which can establish clear standards of responsibility in addressing workplace violence and harassment.

2. In addition to the above mentioned considerations, the State Governments should take the responsibility of providing funds under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) (PoSH) Act, 2013 for more accountability and transparency in the funds disbursal through a single source. It has been previously observed that in the PoSH Act, 2013, neither the central nor the state governments disbursed funds as mandated by the (PoSH) Act, 2013.

3. The Ministry of Labour and Employment should take into immediate consideration that, currently, the workers in the informal sector are largely not protected by the Maternity Benefit (Amendment) Act 2017 because such workplaces do not have more than 10 employees. Although the ‘State building and other construction workers’ welfare boards provide financial aid to pregnant construction workers, the ministry needs to make such boards exist for women employed as domestic workers, home-based workers, waste pickers, street vendors, etc. with immediate effect. The need for such provisions should be directed by the central governments to the state governments, for them to consider the Code on Social Security, 2020, and further lead to the creation of such State Social Security Boards for the numerous informal work segments, with appropriate fundings and subsequent audits, so that ambition of such an idea never goes out of focus. This state board will be accountable to provide maternity benefits to the women in the unorganised sector, along with other welfare schemes such as work injury benefits, housing, educational schemes for children, skill upgradation of workers, and so on.

4. The Ministry Of Women and Child Development should provide regular analysis and datasets of the workings of the National Creche Scheme. Observations of reduction in the number of creches under the NCS across the country (excluding the pandemic years) should be accompanied by a thorough analysis of how on ground realities need to be changed. In order to improve the numbers, the reach of the NCS can be expanded through collaborations with different public and private stakeholders. These should necessarily include local NGOs, community organisations, local government bodies, Anganwadi and Asha workers, startups willing to work in this direction. Also, the Ministry Of Women and Child Development should keep a thorough proposal to the finance Ministry to create provisions of financial incentives through tax benefits or subsidies to encourage private organisations, businesses, streamlined approval process, training programs for staff and caregivers. Such steps will create a space important enough for the Creche provisions to be taken seriously, across the country, thus encouraging women (along with their children) in the unorganised job spaces to get their works’ value in one of the most formal, dignified ways, without personal compromises.

5. It is no surprise that household duties like childcare and traditional social norms restrict capable women especially from the lower socioeconomic backgrounds to the informal sector. It is important to hold accountable the stakeholders like regional and local government bodies, to implement policies which promote economic empowerment and dignity of women in the informal job spaces and to provide them opportunities for transitions to formal job spheres. Women’s rights organisations, and advocacy groups need to be the voice of women in these jobs. Media and communication outlets should be specifically directed to publicise policies and awareness campaigns which address persistent cultural barriers and stigma about women's work and should be repeated time and again in the remotest corners of the urban and rural spaces.

6. Organisations like BASIX (a livelihood promotion institution), Self Employed Women's Association, and Ujjivan (a financial services provider to the economically active poor), should be promoted by the Central government through its various ministries and schemes extensively on a national level. Their role in formalising the informal job spaces for women will be of much significance if activated with the right approach.

7. Private sector companies should follow in the footsteps of corporate giants like Walmart and the IKEA Foundation, who attempt to provide women with skills training and access to savings and credit, health care, and childcare, among other services. Such efforts should be promoted and highlighted in a way that the smallest of organisations follow. The Central and State Governments can provide incentives in the form of easy land and financial provisions on the condition of a company or organisation willing to take positive steps for the upliftment of women in the informal job sector by helping them in every step of the way in which women of the formal sector are able to progress.

8. Central Government’s skills development and upliftment provisions should also include provisions which improve availability and access to relevant education and training programs, skills enhancement, and ensuring safe and accessible transport. The transport departments in different states should be made responsible for providing safe and dignified commutation 24X7 at low cost for women from socio economically poor backgrounds stuck in informal job spaces.

9. The Central Government should create an economic reforms committee and promote an economic growth model that creates specific job opportunities which empower women to be able to access better jobs or start up a business, and take advantage of new labour market prospects as the country grows. Framing and executing policies with active awareness of the “gender-specific” challenges that women in the informal sector face need active formulations and implementations.

10. Uptil now, we understand that gender dynamics have held women back on accounts of financial inclusion, a situation which requires the earliest transformation. Commercial banks which have till now focused their financial services and resources on male customers and established companies that follow formal business practices, should now start focusing equally on the growing segment of the informal economy constituted by women in majority. Although many microfinance institutions (MFIs) have emerged to this challenge, by focussing primarily on women, to change the status quo, much more is needed- from formalising MFIs to providing women with financial knowledge. Furthermore, today, research shows that women tend to allocate a larger portion of their income to household consumption than their male counterparts do. Focusing on women’s financial inclusion will yield positive outcomes for households, communities and society at large.

11. Universities, colleges, schools, should train their students with financial education and in this process create volunteers through the social services teams within and outside campuses for providing basic skills to women and children outside campuses. It can include education and awareness related to earning, spending, budgeting, borrowing, saving, and using other financial services such as insurance and money transfers. Thus, creating a chain effect through top down approach, made possible through- community based workshops, peer educators, digital and visual resources use, storytelling and role models who improved their financial situation, providing practical real life exercises for hands on approaches, evaluation and impact assessments to track their financial behaviours. All of this with further collaborations of NGOs, community centre’s, schools and women’s groups to reach a wider target group.

12. Central and State Governments need to make several adjustments on the supply-side of the economy, such as improving infrastructure investment in education, and addressing job creation bottlenecks could also enable more women to enter the labour force. Finally, higher social spending can also lead to higher female labour force participation by boosting female stocks of human capital. At the grassroots level, detailed planning and implementation can be guided through a structured participatory diagnosis-dialogue-planning process. Specific formalisation through assistance to the local collators or existing services should be strengthened and expanded.


Throughout history and in contemporary times, women have continued to shoulder the dual responsibilities of workplace and home, to make ends meet. Extensive efforts need to be made in order to empower and support women labourers in both these roles by formalising and improving the fragmented and informal job sector. This policy paper in its attempt to highlight the issues faced by women in unorganised sector that range from gender inequality, limited access to education, discrimination, sexual harassment, excessive work demands, meagre wages, long working hours, increased vulnerability during the COVID-19 pandemic, and the persistent struggle to meet basic family needs, also surfaces the dire need for laws and policy interventions to recognise the intersectionality of women’s position in society and in the economy. The question of women facing inequality at unorganised workspaces persists due to the underrecognition of their work and contribution, and calls for immediate intervention through practical policymaking and involvement of a diverse array of stakeholders. We hope that this paper, along with the abundance of literature, will be the starting point in addressing the need to support women’s work in the informal as much as in the formal sector.

Meet The Thought Leader

Vamsi is a mentor at GGI, and has a diverse background that includes being a former McKinsey employee and a graduate of IIT Madras. He possesses a broad skill set encompassing strategy and operations, gained from his various roles and industry exposure.

Meet The Authors (GGI Fellows)

Vishesha graduated from Lady Shri Ram College for Women. She completed her Master’s at the London School of Economics and Political Science where she specialised in Social Policy. She is currently associated with Teach For India (part of the Teach For All global network), and is particularly interested in the role of non-governmental organisations in social development and policy formulation.

Gauri is a graduate from Miranda House, Delhi University, and currently working as a Senior Associate in the Governance and Policy division at a political consulting firm. Her professional interests include public policy, impact, development and communications. Additionally, she is an avid reader, enjoys writing and loves going for long walks on a breezy day.

If you are interested in applying to GGI's Impact Fellowship program, you can access our application link here.


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