Differentiate between formal sector and informal sector. - Vidyadip

Question

Differentiate between formal sector and informal sector.

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Answer

Differences between formal sector and informal sector:

S.No.	Formal Sector	Informal Sector
1.	All public and private sector establishments which employ 10 or more hired workers comprise the formal sector.	All establishments which employ less than 10 workers comprise the informal sector.
2.	Government exercises control over this sector by passing necessary acts and formulating rules and regulations.	Government has no control over this sector. Except for the Minimum Wages Act, no other act is applicable on this sector.
3.	Workers working in this sector are entitled to social security benefits.	Workers working in this sector are not entitled to social security benefits.
4.	The workers working in formal sector have a right to form trade unions.	The workers working in informal sector do not enjoy any such right.
5.	Formal sector offers better pay scales to its workers.	The pay scales in the informal sector are comparatively low.
6.	Workers working in formal sector enjoy job security. They cannot be dismissed without giving them a due notice and/ or compensation.	Workers working in informal sector does not enjoy job security. They can be dismissed without a notice and no compensation is offered to them.

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