“Capitalism has brought increasing informalisation of work in society. Substantiate your answer.” (2020)
Informalisation of work is the process by which employment loses the protections of the “standard employment relationship”: a written contract, secure tenure, regulated hours, social security and collective bargaining. Modernisation theory expected capitalism to formalise work; since the 1970s, capital’s search for flexibility has made informality spread instead.
Theoretical grounding
- Karl Marx (Capital, Vol. I, 1867): accumulation creates a reserve army of labour (floating, latent and stagnant) that disciplines the employed and depresses wages. Insecure, casual labour is a product of capitalism, not a pre-capitalist relic.
- Jan Breman and Marcel van der Linden (2014) argue that the secure Fordist job was a short post-war exception in the West. Informality is capitalism’s historical norm, now returning worldwide.
- David Harvey (The Condition of Postmodernity, 1989) traces the shift from Fordism to flexible accumulation: flexible labour markets, subcontracting and weaker unions.
- John Atkinson’s “flexible firm” (1984): a small protected core ringed by a numerically flexible periphery of temporary, part-time and outsourced workers.
Mechanisms of informalisation
- Subcontracting chains: brands push production, and legal liability, down to contractors and home-based workers in garments, electronics and beedi.
- Contractualisation inside formal firms: permanent and contract workers do identical work for unequal pay. The National Commission for Enterprises in the Unorganised Sector (2007) called this the “informalisation of the formal sector”.
- Deregulating states: governments competing for investment loosen labour law.
- Platform capitalism: Nick Srnicek (Platform Capitalism, 2016) shows platforms controlling work through data while calling workers “partners”. The algorithm supervises, and the firm escapes an employer’s obligations.
- Outsourced services: security, cleaning and care supplied through agencies.
Indian evidence
- Organised manufacturing: contract workers rose from about 20 per cent of workers in 1999-2000 to 42 per cent in 2023-24 (Annual Survey of Industries). Informality is growing inside capitalism’s most modern segment.
- Whole workforce: the ILO–IHD India Employment Report 2024 finds nearly 90 per cent of workers informally employed. PLFS 2025 records 56.2 per cent self-employed, 20.2 per cent casual and only 23.6 per cent in regular wage work, much of it without contracts.
- Gig work: NITI Aayog (2022) counted 77 lakh gig workers in 2020-21 and projects 2.35 crore by 2029-30.
- Law: the Industrial Relations Code, in force since 21 November 2025, raises the threshold for prior permission for lay-offs and closures from 100 to 300 workers and recognises fixed-term employment.
- Advanced economies: Guy Standing (The Precariat, 2011) and Arne L. Kalleberg (“Precarious Work, Insecure Workers”, 2009) document agency, zero-hours and gig work spreading in the North.
Qualifications
- Informality predates capitalism: in India the unorganised sector dominated employment long before liberalisation, rooted in peasant farming and caste-based crafts.
- Non-economic causes: Barbara Harriss-White (India Working, 2003) shows caste, gender and kinship regulating informal markets, and weak enforcement is a political choice as well as an economic one.
- Counter-trends: capitalism also formalises through digital payrolls and provident fund enrolment. The Code on Social Security, 2020, obliges aggregators to pay 1–2 per cent of turnover into a gig workers’ fund. The ILO put India’s social protection coverage, including welfare schemes, at 64.3 per cent in 2025, up from 19 per cent in 2015.
- Worker agency: platform strikes and state gig-worker laws (Rajasthan 2023, Karnataka 2025, Telangana 2026) show resistance.
Conclusion
The statement holds for contemporary capitalism. Flexibility is its organising principle, and informalisation is how labour pays for that flexibility. The outcome is not fixed, however. How far informality spreads depends on the balance between capital’s mobility and labour’s capacity, through the state and collective action, to re-embed work in social protection.