Skip to main content
SpringerLink
Log in

The Labour Market in India

  • Chapter
  • First Online:
Book cover Disparity and Discrimination in Labour Market Outcomes in India

  • 302 Accesses

Abstract

In this chapter, Borooah outlines the salient features of the labour market in India. First, there has been a large shift in the workforce from agriculture to industry and services between 1951 and 2012, with more recent data showing these trends continuing. A consequence of these changes is that productivity in agriculture, relative to overall productivity, has fallen sharply while that of services has risen dramatically. A second noteworthy feature of the Indian labour market is the low participation rate, defined as the proportion of the population aged 15–65 years (the “working-age” population) that is either working or seeking employment. In particular, the low (by international standards) female participation rate, which was within the 34–37% range in the 15-year period up to 2005, has declined further and stabilised at a rate of 27%. A third feature of the Indian labour market is the preponderance of informal workers and the domination of the labour market by the unorganised sector comprising enterprises employing less than ten workers. A fourth feature of the Indian labour market is the existence of draconian labour market regulations which constrain the freedom of employers. The last feature of the Indian labour market is government provision of jobs to the rural poor under the auspices of the National Rural Employment Guarantee Act (NREGA).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 49.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 64.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 99.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Where Forward Castes include Christians, Sikhs, and Jains who are not from the ST/SC/OBC-NM.

  2. 2.

    Visaria (1967).

  3. 3.

    Venkatanaryana and Naik (2012).

  4. 4.

    Dasgupta and Kar (2018).

  5. 5.

    Woetzel et al. (2017).

  6. 6.

    In 1951, agricultural productivity was (0.51/0.72) × (GDP/Employment), while industrial and service sector productivities were, respectively, (0.19/0.11) and (0.30/0.17) × (GDP/Employment). By 2012, these figures were (0.14/0/47) × (GDP/Employment) for agriculture, (0.27/0.25) × (GDP/Employment) for industry, and (0.59/0.28) × (GDP/Employment) for services.

  7. 7.

    Such as, inter alia, the Industrial Disputes Act, 1947; the Factories Act and the Employees’ State Insurance Act, 1948; the Employees’ Provident Fund and Misc. Provisions Act, 1952; the Contract Labour (Regulation and Abolition) Act, 1970.

  8. 8.

    Srija and Shirke (2014).

  9. 9.

    In 2017, employment in organised manufacturing was 10.1 million. https://economictimes.indiatimes.com/jobs/countrys-organised-sector-created-4-lakh-jobs-in-2016-17/articleshow/62313543.cms (accessed 22 December 2018).

  10. 10.

    Woetzel et al. (2017). The annual growth rate, g, is obtained by solving the equation 456 × (1 + g)4 = 463.

  11. 11.

    In 2011–12, 90% of informal jobs were in the unorganised sector and 10% were in the organised sector (Srija and Shirke 2014).

  12. 12.

    See Hall and Hitch (1939).

  13. 13.

    \( \dot{p}= d p/ dt,\dot{w}= d w/ dt,\mathrm{and}\kern0.28em \dot{\pi}= d\pi / dt \).

  14. 14.

    See The Economist, “Powering Ahead: India’s Once Shoddy Transport Is Getting Much Better”, 17 July 2017, for details of transport infrastructure spending in India.

  15. 15.

    The average labour/capital ratio of these 97 industries was 0.26. Industries with a labour/capital ratio greater than 0.26 were considered to be labour intensive, with the others being regarded as capital intensive.

  16. 16.

    World Bank (2010), Bhagwati and Panagariya (2013), and Joshi (2016).

  17. 17.

    https://indianexpress.com/article/cities/mumbai/8142-cases-pending-in-mumbai-labour-courts-5050589/ (accessed 22 December 2018).

  18. 18.

    This sometimes leads to the phenomenon of “sick” firms which, after at least five years of existence, had incurred accumulated losses equal to or exceeding their entire net worth at the end of any financial year.

  19. 19.

    See Bhagwati and Panagariya (2013, Chap. 8) for a detailed exposition of the pernicious effects of labour laws in India.

  20. 20.

    The 1970 Contract Labour (Regulation and Abolition) Act.

  21. 21.

    The 1948 Minimum Wages Act; the 1948 Employees’ State Insurance Act; and the 1952 Employees’ Provident Fund and Miscellaneous Provisions Act.

  22. 22.

    The 1947 Industrial Disputes Act.

  23. 23.

    The Economist, “Culture and the Labour Market Keep India’s women at Home”, 5 July 2018, https://www.economist.com/briefing/2018/07/05/culture-and-the-labour-market-keep-indias-women-at-home

  24. 24.

    World Bank data, https://data.worldbank.org/indicator/SL.TLF.CACT.FE.ZS (accessed 26 December 2018).

  25. 25.

    The Economist, “Culture and the Labour Market Keep India’s women at Home”, 5 July 2018.

  26. 26.

    The Economist, “Culture and the Labour Market Keep India’s women at Home”, 5 July 2018.

  27. 27.

    The Economic Times, “Q&A format likely cause for National Sample Survey Organisation gaps: Experts” https://economictimes.indiatimes.com/news/economy/indicators/qa-format-likely-cause-for-national-sample-survey-organisation-gaps-experts/articleshow/9032531.cms (accessed 26 December 2018).

  28. 28.

    See also Choudhury (2011).

  29. 29.

    Desai et al. (2015).

  30. 30.

    See The Hindu, “Six Women in Meerut Defy Boycott and Go to Work”, https://www.thehindu.com/news/national/other-states/six-women-in-meerut-village-defy-boycott-go-to-work/article7228650.ece (accessed 27 December 2018); see also Barry (2017).

  31. 31.

    The Hindu, “Widespread Job Restrictions on Indian Women: World Bank Report”, https://www.thehindu.com/news/national/widespread-job-restrictions-on-indian-women-world-bank-report/article7635949.ece (accessed 26 December 2018).

  32. 32.

    As articulated, for example, in Nussbaum (1997).

  33. 33.

    Wages under NREGA in each state were to be paid according to the Minimum Wages Act of 1948 for agricultural labourers in that state (Ghosh 2013). Daily wages under NREGA in 2018 varied from ₹168 in Bihar to ₹281 in Haryana. In both cases, the NREGA wage was below the state’s minimum wage, which was ₹237 in Bihar and ₹326 in Haryana: Business Today, “Govt. May Raise Minimum Wage for MGNREGA Workers”, https://www.businesstoday.in/current/economy-politics/govt-may-raise-minimum-wage-for-mgnrega-workers/story/281560.html (accessed 5 January 2018). Unemployment benefit was provided at a minimum of one-fourth the wage for the first 30 days of “unemployment” and then at a minimum of one-third the wage for the subsequent period.

  34. 34.

    The Indian government uses means-testing in several other contexts: for example, the provision of health insurance under the Rashtriya Swasthya Bima Yojana (RSBY) is restricted to BPL households.

  35. 35.

    See Lindert et al. (2007).

  36. 36.

    NREGA website, http://www.nrega.nic.in/netnrega/mgnrega_new/Nrega_home.aspx (accessed 30 December 2018).

  37. 37.

    ILO Social Protection website, https://www.social-protection.org/gimi/gess/ShowWiki.action?id=3044 (accessed 30 December 2018).

  38. 38.

    Suarez et al. (2010).

  39. 39.

    The figures in this paragraph are from Mathur and Bolia (2016) and Ranjan (2016).

  40. 40.

    Babu et al. (2014).

  41. 41.

    See Bhagwati and Panagariya (2013, Chap. 14) on this point.

  42. 42.

    As reported in the Financial Express, “NREGA Failed to Create Durable Assets: Jairam Ramesh”, https://www.financialexpress.com/archive/nrega-failed-to-create-durable-assets-jairam-ramesh/1208421/ (accessed 31 December 2018).

  43. 43.

    This is particularly relevant in the case of migration. Farmers in Punjab and Haryana—the granaries of India—rely on migrant labour from Bihar and eastern Uttar Pradesh in much the same way that farmers in Britain rely on migrant labour from Eastern Europe to, say, pick strawberries. Since one of the aims of NREGA is to reduce migration from villages, it is likely that the supply of migrant workers to farmers in states like Punjab and Haryana will be affected in much the same way that Brexit will reduce the supply of migrant workers to British farms.

  44. 44.

    Mathur and Bolia (2016).

References

  • Aggarwal, A. (2017). Ten Ways MGNREGA Workers Do Not Get Paid. Economic and Political Weekly, 52.

    Google Scholar 

  • Babu, V. S., Dheeraja, C., Kanth, G. R., & Rangacharyulu, S. V. (2014). Frequently Asked Questions on NREGA Guidelines. New Delhi: Ministry of Rural Development, Government of India.

    Google Scholar 

  • Barry, E. (2017, October 27). In India, a Small Band of Women Risk It All for a Chance to Work. New York Times.

    Google Scholar 

  • Bercholz, M., & Fitzgerald, J. (2016). Recent Trends in Female Labour Force Participation in Ireland. In Quarterly Economic Commentary (pp. 49–81). Dublin: Economic and Social Research Institute.

    Google Scholar 

  • Bhagwati, J., & Panagariya, A. (2013). Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries. New York: Public Affairs.

    Google Scholar 

  • Borooah, V. K. (2016). Deconstructing Corruption: A Study of Cash-for-Favours in Rural India. Journal of South Asian Development, 11, 1–37.

    Article  Google Scholar 

  • Choudhury, S. (2011). Employment in India: What Does the Latest Data Show? Economic and Political Weekly, 46, 23–26.

    Google Scholar 

  • Das, D. K., Wadhwa, D., & Kalita, G. (2009). The Employment Potential of Labor Intensive Industries in India’s Organized Manufacturing (Working Paper) (Vol. 236). New Delhi: Indian Council of International Economic Relations.

    Google Scholar 

  • Dasgupta, I., & Kar, S. (2018). The Labor Market in India Since the 1990s. IZA World of Labor, 2018, 425. https://doi.org/10.15185/izawol.425.

    Article  Google Scholar 

  • Desai, S., Dubey, A., & Vanneman, R. (2015). India Human Development Survey-II. New Delhi/Ann Arbor: University of Maryland and National Council of Applied Economic Research/Inter-university Consortium for Political and Social Research.

    Google Scholar 

  • Dixon, A. (2018). Women in India’s Economic Growth. Mumbai: Economic Times Economics Forum. https://www.worldbank.org/en/news/speech/2018/03/17/women-indias-economic-growth. Accessed 27 Dec 2018.

  • Fletcher, E. K., Pande, R., & Moore, C. T. (2017). Women and Work in India: Descriptive Evidence and a Review of Potential Policies (Centre for International Development Working Paper) (Vol. 339). Cambridge, MA: Harvard University.

    Google Scholar 

  • Ghosh, R. (2013). A Bird’s Eye View into National Rural Employment Guarantee Act. http://www.worldbank.org/content/dam/Worldbank/document/SAR/Saesm-Paper-MNREGA-Rumela-Ghosh.pdf. Accessed 5 Jan 2019.

  • Gupta, A. (2015). Effect of Trade Liberalization on Gender Inequality: The Case of India. Ph.D. Thesis, University of Texas, Houston.

    Google Scholar 

  • Hall, R. E., & Hitch, C. (1939). Price Theory and Business Behaviour. Oxford Economic Papers, 2, 12–45.

    Article  Google Scholar 

  • Hasan, R., & Jandoc, K. R. L. (2012). Labor Regulations and the Firm Size Distribution in Indian Manufacturing (Working Paper 2012-3, Columbia Program on Indian Economic Policies). New York: Columbia University.

    Google Scholar 

  • Hasan, R., Mitra, D., & Sundaram, A. (2010). The Determinants of Capital Intensity in Manufacturing: The Role of Factor Endowments and Factor Market Imperfections. https://pdfs.semanticscholar.org/5fe2/6aff160176ea8d2bc632d2e08cafe6628eed.pdf. Accessed 24 Dec 2018.

  • Idson, T. L., & Oi, W. Y. (1999). Workers Are More Productive in Large Firms. American Economic Review (Papers and Proceeding), 89, 104–108.

    Article  Google Scholar 

  • Joshi, V. (2016). India’s Long Road: The Search for Prosperity. Gurgaon: Penguin Books.

    Google Scholar 

  • Kapsos, S., Silberman, A., & Bourmpoula, E. (2014). Why Is Female Participation Rate Declining So Sharply in India? (ILO Research Paper) (Vol. 10). Geneva: International Labour Office.

    Google Scholar 

  • Khera, R. (2017). Impact of Aadhaar on Welfare Programmes. Economic and Political Weekly, 52, 62–70.

    Google Scholar 

  • Li, T., & Sekhri, S. (2013). The Unintended Consequences of Employment Based Safety Net Programs. Charlottesville: University of Virginia. http://people.virginia.edu/~ss5mj/unintendedeffects_safetynets.pdf. Accessed 6 Jan 2019.

  • Lindert, K., Linder, A., Hobbs, J., & de la Brière, B. (2007). The Nuts and Bolts of Brazil’s Bolsa Família Program: Implementing Conditional Cash Transfers in a Decentralized Context (Social Protection Discussion Paper) (Vol. 0709). Washington, DC: The World Bank.

    Google Scholar 

  • Mathur, S., & Bolia, N. (2016). Worst Year Ever for NREGA. IndiaSpend.Org. https://thewire.in/economy/worst-year-ever-for-mgnrega-23-drop-in-assets-created. Accessed 31 Jan 2018.

  • Mazumdar, D. (2001, February 5–9). Small and Medium Enterprise Development in Equitable Growth and Poverty Alleviation. Paper Presented at the Asia and Pacific Forum on Poverty: Reforming Policies and Institutions for Poverty Reduction. Manila: Asian Development Bank.

    Google Scholar 

  • Moore, H. (1911). Laws of Wages: An Essay in Statistical Economics. New York: Augustus M. Kelley.

    Google Scholar 

  • National Commission for Enterprises in the Unorganised Sector. (2008). Report on Definitional and Statistical Issues Relating to Informal Economy. New Delhi: Government of India.

    Google Scholar 

  • Nussbaum, M. C. (1997). Capabilities and Human Rights. Fordham Law Review, 66, 273–300.

    Google Scholar 

  • Oi, W. Y., & Idson, T. L. (1999). Firm Size and Wages. In O. C. Ashenfelter & D. Card (Eds.), Handbook of Labor Economics Volume 3B. Amsterdam: Elsevier B.V.

    Google Scholar 

  • Planning Commission. (2011). Faster, Sustainable and More Inclusive Growth – An Approach to the Twelfth Five Year Plan. New Delhi: Government of India.

    Google Scholar 

  • Ranjan, R. (2016). Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): A Critical Appraisal of Its Performance since Its Inception. Indore Management Journal, 8, 55–73.

    Google Scholar 

  • Sapkal, R. S. (2016). How Law and Law Enforcement Affect Labour Markets in Developing Countries. Ph.D. Thesis, Erasmus University, Rotterdam. http://ediss.sub.uni-hamburg.de/volltexte/2017/8275/pdf/Dissertation.pdf

  • Sen, A. K. (2000). Social Exclusion: Concept, Application, and Scrutiny, Social Development Papers No. 1, Office of Economic and Social Development. Manila: Asian Development Bank.

    Google Scholar 

  • Srija, A., & Shirke, S. V. (2014). An Analysis of the Informal Labour Market in India, Confederation of Indian Industry. http://www.ies.gov.in/pdfs/CII%20EM-october-2014.pdf. Accessed 21 Dec 2018.

  • Suarez, S., Soares, D., Ribas, R. P., & Soares, F. V. (2010). Targeting and Coverage of the Bolsa Família Programme: Why Knowing What You Measure Is Important in Choosing the Numbers (Working Papers 71). Brasilia: International Policy Centre for Inclusive Growth.

    Google Scholar 

  • Venkatanaryana, M., & Naik, S. V. (2012). Growth and Structure of Workforce in India: An Analysis of Census 2011 Data. https://mpra.ub.uni-muenchen.de/48003/1/MPRA_paper_48003.pdf. Accessed 21 Dec 2018.

  • Visaria, P. (1967). The Labour Force in India: 1951–1976. Economic and Political Weekly, 2, 1415–1416.

    Google Scholar 

  • Woetzel, J., Madgavkar, A., & Gupta, S. (2017). India’s Labour Market: A New Emphasis on Gainful Employment. New Delhi: McKinsey Global Institute.

    Google Scholar 

  • World Bank. (2010). India’s Employment Challenge: Creating Jobs, Helping Workers. New Delhi: Oxford University Press.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Economics & Politics, University of Ulster, Belfast, UK

    Vani Kant Borooah

Authors
  1. Vani Kant Borooah
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Vani Kant Borooah .

Rights and permissions

Reprints and permissions

Copyright information

© 2019 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Borooah, V.K. (2019). The Labour Market in India. In: Disparity and Discrimination in Labour Market Outcomes in India. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-16264-1_1

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-16264-1_1

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-16263-4

  • Online ISBN: 978-3-030-16264-1

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation