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Employment growth
Structural transformation agriculture's share declining from 62% in 1993-94, to 54% in 2004-05. Low or negative employment elasticity. Employment is shifting towards services, not industry. Between 1997-04, 1.8 million (6.4%) jobs lost in organised sector including 1.2 million (18%) in manufacturing.
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Wages
Agricultural Wages have since 1980s Yet lower than minimum wages. Casualisation of employment contracts in all sectors. Decline in self employment. Wages still low to overcome absolute poverty.
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Labour legislations
Mostly deal with the organised sector. Extent of protection and benefits increase size of firm or factory. Minimum wages practically ineffective; no national minimum wage; no social security. Job-security law in organised sector reportedly makes it impossible to lay-off and retrench workers.
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Policy implications
Dismantle state intervention in labour market pay and perks to be market driven; wage bargaining to be decentralised. Repeal job-security laws and contract labour act. National minimum wage. Social security.
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No evidence of adverse effects of job security law. Secular in union strength. More lockouts than strikes (Figure 4). in wage-rental ratio (Figure 5).
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Does it mean everything is fine? No, I do not think so. Need for rationalisation of laws.
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Employment concern
Declining employment elasticity. Related to it declining agricultural growth, and agrarian distress. Poor rural infrastructure Employment guarantee scheme.
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In sum
Reformists believe lack of flexibility in industrial labour market is holding up industrial out and export growth. Evidence does not seem to support such a proposition. But it does not mean that the labour market is working fine far from it. Need to move towards income security, more rational labour laws, and greater shop floor democracy.
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In sum
Perhaps the bigger concern is agricultural deceleration, agrarian distress, and inadequate rural employment growth. Employment guarantee scheme hold promise, but faces political and bureaucratic resistance. These two alternatives perspectives hold divergent visions of India.
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3.6 3.6
2.9 2 1.1
1.3
1.3
Foodgrains 1991-05
Nonfoodgrains
Cereals
Rice
Wheat
1991-00
Crops
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80 60 40 20 0
19 74 19 76 19 78 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00
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16
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Strikes
Lockout
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120 100 80
Index
60
40 20 0
Year ending
Wage-rental ratio
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19