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Difference Between Organised and Unorganised Sector

Sectors are majorly divided into three categories primary, secondary and tertiary. Based on the employment conditions these are further classified as an organised and unorganised sector. The organised sector is one that is incorporated with the appropriate authority or government and follow its rules and regulations. On the contrary, the unorganised sector can be understood as the sector, which is not incorporated with the government and thus, no rules are required to be followed.

While the former is related to business, government, industry involving large-scale operations, the latter include small scale operation, petty trade, private business, etc. There is a slight difference between organised and unorganised sector, which is explained in this article in detail. Have a look.

Content: Organised Sector Vs Unorganised Sector

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Conclusion

Comparison Chart

Basis for Comparison Organised Sector Unorganised Sector
Meaning The sector in which the employment terms are fixed and employees have assured work is Organised sector. The sector that comprises of small scale emterprises or units and are not registered with the government.
Governed by Various acts like Factories Act, Bonus Act, PF Act, Minimum Wages Act etc. Not governed by any act.
Government rules Strictly followed Not followed
Remuneration Regular monthly salary. Daily wages
Job security Yes No
Working hours Fixed Not fixed
Overtime Workers are paid remuneration for overtime. No provision for overtime.
Salary of workers As prescribed by the government. Less than the salary prescribed by the government.
Contribution to Provident fund by the employer Yes No
Increment in salary Once in a while Rarely
Benefits and perquisites Employees get add-on benefits like medical facilities, pension, leave travel compensation, etc. Not provided.

Definition of Organised Sector

The sector, which is registered with the government is called an organised sector. In this sector, people get assured work, and the employment terms are fixed and regular. A number of acts apply to the enterprises, schools and hospitals covered under the organised sector. Entry into the organised sector is very difficult as proper registration of the entity is required. The sector is regulated and taxed by the government.

There are some benefits provided to the employees working under organised sector like they get the advantage of job security, add on benefits are provided like various allowances and perquisites. They get a fixed monthly payment, working hours and hike on salary at regular intervals.

Definition of Unorganised Sector

The sector which is not registered with the government and whose terms of employment are not fixed and regular is considered as unorganised sector. In this sector, no government rules and regulations are followed. Entry to such sector is quite easy as it does not require any affiliation or registration. The government does not regulate the unorganised sector, and hence taxes are not levied. This sector includes those small size enterprises, workshops where there are low skill and unproductive employment.

The working hours of workers are not fixed. Moreover, sometimes they have to work on Sundays and holidays. They get daily wages for their work, which is comparatively less than the pay prescribed by the government.

Key Differences Between Organised and Unorganised Sector

The difference between organised and unorganised sector can be drawn clearly on the following grounds:

  1. Organised Sector is a sector where the employment terms are fixed and regular, and the employees get assured work. Unorganised sector is one where the employment terms are not fixed and regular, as well as the enterprises, are not registered with the government.
  2. A number of acts apply to an organised sector like Factories Act, Bonus Act, PF Act, Minimum Wages Act, etc. whereas unorganised sector is not governed by any such act.
  3. The government rules are strictly followed in the organised sector, which is not in the case of unorganised sector.
  4. In organised sector, the employees draw regular monthly salaries. On the other hand, in the unorganised sector, the workers are paid on a daily basis.
  5. Job security exists in the organised sector, but not in the unorganised sector.
  6. The organised sector, provide additional remuneration to employees for overtime. Conversely, there is no such provision for overtime in case of the unorganised sector.
  7. In organised sector, the salaries of employees are as per government norms. In contrast to an unorganised sector where wages are below, what is prescribed by the government.
  8. In organised sectors, workers get a hike on salary, once in a while. As opposed to an Unorganised sector where the salaries or workers are rarely hiked.
  9. Employees get add-on benefits like medical facilities, pension, leave travel compensation, etc. in the organised sector, which is not provided to the employees working in unorganised sector.


The organised sector includes those factories, enterprises, industries, schools, hospitals and units which are registered with the government. It also includes shops, clinic and offices that possess a formal license. On the other hand, unorganised sector construction workers, domestic workers, workers working on the streets, people working in small workshops not affiliated with the government. The is low unemployment in the organised sector as compared to the unorganised sector.

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