The structure of the labour force is widely conceived in terms of the distinction between industrial workers and the urban poor, permanent and casual workers and, particularly, in the rather diffuse and over-extended ‘case’ of the Third World, the organized and unorganized, or the formal and informal sector. The narrow front of industrialization, on the one hand, and the substantial inflow of rural migrants to the city who cannot be contained within it, on the other, has appeared to lend considerable force to this description.

Conventionally, the formal sector is defined in terms of economic activities which are governed by state regulation, usually associated with large-scale factory production and operated generally on the basis of power-driven machinery. They are predominantly capital intensive and often monopolistic. Their markets are protected either by tariffs or by the size, concentration and dominance of the industry and their workforce by labour laws. Organized sector workers are believed to enjoy a greater degree of unionization and command higher levels of skill and wages than the unorganized labour force. The labour process is supposedly more sophisticated; the division of labour more developed. The informal sector, by contrast, is characterized by small producers, labour-intensive methods and highly competitive product markets.