Question

Differentiate between formal sector and informal sector.

Answer 1

Differences between formal sector and informal sector.

$\begin{array}{cc}\text{Formal Sector}& \text{Informal Sector}\\ \text{All public and private sector}& \text{All establishments which}\\ \text{establishments which}& \text{employ less than 10 workers}\\ \text{employ 10 or more hired}& \text{comprise the informal}\\ \text{workers comprise the formal}& \text{sector.}\\ \text{sector.}& \\ \text{Government excercises}& \text{Government has no control}\\ \text{control over this sector by}& \text{over this sector.Except for}\\ \text{passing necessary acts and}& \text{the Minimum Wages Act,no}\\ \text{formulating rules and}& \text{other act is applicable on}\\ \text{regulations.}& \text{this sector.}\\ \text{Workers working in this}& \text{Workers working in this}\\ \text{sector are entitled to social}& \text{sector are not entitled to}\\ \text{security benefits.}& \text{social security benefits.}\\ \text{The workers working in}& \text{The workers working in}\\ \text{formal sector have a right to}& \text{informal sector do not enjoy}\\ \text{form tade unions.}& \text{any such right.}\\ \text{Formal sector offers better}& \text{The pay scals in the}\\ \text{pay scales to its workers.}& \text{informal sector are}\\ & \text{comparatively low.}\\ \text{Workers working in formal}& \text{Workers working in informal}\\ \text{sector enjoy job security.}& \text{sector does not enjoy job}\\ \text{They cannot be dismissed}& \text{security. They can be}\\ \text{without giving them a due}& \text{dismissed without a notice}\\ \text{notice and/or}& \text{and no compensation is}\\ \text{compensation.}& \text{offered to them.}\end{array}$