The crisis of informal work and the new urban poor in India

by Aditi Singh

India has always had a large informal workforce, but the shape of that informality is changing. In cities, a new kind of urban poor is emerging. These are people who often work long hours, sometimes for multiple employers or platforms, but still live one accident or illness away from crisis. Their work is flexible on paper but rigid in reality, and their lives sit at the meeting point of low wages, high costs and very weak social security.

The scale of informality is vast. According to a report from International Labour Organization (ILO), a significant portion of Indian workers remain in informal employment across sectors, including urban settings. These include street vendors, domestic workers, construction labourers, home-based producers, small shopkeepers, platform workers and many others who keep cities running but remain largely invisible in official narratives.

The pandemic exposed how fragile these livelihoods are. ILO-UNICEF and other international analyses have documented steep declines in informal employment during lockdown periods — millions lost income almost overnight. Recovery has been partial, but for many workers earnings remain low, insecure, and erratic. 

The rise of the gig and platform economy sits right in the middle of this story. In urban India, app-based work in delivery, ride-hailing, logistics and household services has grown rapidly. Government and think-tank reports such as by NITI Aayog emphasise job creation potential and flexibility in these models. 

But independent studies paint a more complex picture. The 2024 Fairwork India Ratings report, which evaluates labour standards of platform workers, documented widespread failures: most platforms scored poorly on fair pay, safe conditions, transparent contracts, and worker representation. Many workers reported that platforms treat them as “partners”, avoiding responsibility for wages or benefits, and that algorithmic changes can cut effective pay suddenly. 

Workers have begun to resist. In multiple cities in 2023 and 2024, gig-worker strikes and protests were reported over pay cuts, unfair conditions and arbitrary account suspensions — signalling that platform labour is no longer invisible. 

Beyond platforms, the broader informal urban economy remains deeply vulnerable. Many small shops, repair stalls, home-based units, and informal service providers operate on thin margins. Municipal policies, eviction drives or urban redevelopment plans can wipe out entire livelihoods overnight. Researchers have highlighted that unincorporated sector employment remains large but insecure, and that many workers have no access to social security, housing rights, or formal labour protections. 

Climate change and rising urban living costs further add to this vulnerability. Heat waves, floods, pollution and unpredictable weather put informal workers — often working outdoors — at high risk. Lack of stable income or savings makes them especially vulnerable during crises.

Labour law reform is on the agenda. The new labour codes consolidate many older laws and aim, in theory, to extend certain protections and social security to gig and unorganised workers. Yet analysts and trade unions argue that without clear implementation mechanisms, funding, and accountability, these laws may remain aspirational rather than effective. 

Despite these structural problems, there are signs of reorganisation. Worker collectives and unions — both offline and online — are forming for gig and informal workers. They use digital tools, legal clinics and collective bargaining to demand transparency, fair pay, portability of benefits and recognition as workers rather than independent contractors. 

The deeper question is about the kind of development model the country is building. A city can boast of high growth, new infrastructure, and technology hubs. But if delivery workers, domestic staff, construction labourers or street vendors cannot live with dignity, security and basic rights, then that growth is exclusionary. The crisis of informal work and the rise of the new urban poor should not be treated as a side effect of progress; they must become central to how we define just and inclusive development.

References

“Fairwork India Ratings 2024: Labour Standards in the Platform Economy”, Fairwork — https://fair.work/wp-content/uploads/sites/17/2024/10/Fairwork_India_Report_2024.pdf 

“India’s platform economy and gig labour: policy note”, ILO — https://www.ilo.org/media/526416/download 

“Fair platform work — Gig economy report”, VVGNLI field survey, 2025 — https://vvgnli.gov.in/sites/default/files/Platform%20Employment.pdf 

“Gig economy jobs surge but worker protection lags”, media coverage of Fairwork findings — https://www.drishtiias.com/daily-updates/daily-news-editorials/empowering-india-s-gig-workforce 

Research report “Economic Lives of Digital Platform Gig Workers: Delivery Drivers in India”, IDinsight (2025) — https://www.idinsight.org/wp-content/uploads/2025/02/DERII-India_-Descriptive-Study-Report.pdf