The correct option is 1 and 3 only.
Explanation
The economy is broadly classified into the formal (organized) and informal (unorganized) sectors based on employment conditions. The formal sector comprises enterprises where employment terms are fixed and regular, and employees are provided with assured work and social security coverage mandated by law.
Statement-wise Analysis:
- Statement 1 is Correct: Workers in the formal sector are legally entitled to social security benefits. These include the Employees' Provident Fund (EPF), gratuity, medical benefits under the Employees' State Insurance Corporation (ESIC), and paid leave. These protections are enforced through various labor laws.
- Statement 2 is Incorrect: Workers in the formal sector are not barred from forming trade unions. In fact, the right to form associations or unions is a fundamental right under Article 19(1)1 and 3 only of the Constitution of India. The Trade Unions Act, 1926, specifically provides for the registration and regulation of trade unions, which are most active in the organized sector to facilitate collective bargaining.
- Statement 3 is Correct: Wages in the formal sector are generally higher than those in the informal sector. Formal sector employers are mandated to adhere to the Minimum Wages Act and other compensation regulations, whereas the informal sector often lacks regulatory oversight, leading to lower and irregular wages.
Key Takeaway:
The defining characteristics of the formal sector are job security, entitlement to social security benefits (PF, Gratuity), and legal protection under labor laws, including the right to organize into trade unions.