CHAPTER – 3

Structure of Indian Labour Market

Labour market is a place where employee and workers come in direct contact with
each other. In the labour market, the worker struggle for the best job satisfaction and
employers take part to pick the best. In other words labour market is that place in which
workers participate for jobs and employers contest for workers, so without competition
there would be no market. In an economy labour market operates with demand and supply
of labour. In a market worker„s supply is supply of labour and labour demand is the firm s
demand for labour. It is only changes in the bargaining power which pulls the supply and
demand of labour in the market.

Globally Indian economy is considered as one of the fastest growing economy in

the world. Further it is apprehended that India„s demographic dividend to increase with the
growth of population from 1 billion in 2004 to 1.4 billion in 2026. It is estimated that 83
percent of this increase to be in the 15-59 age group. If this dividend is channeled by 2025,
than India will not only have 25 percent of the total world‟s workforce but its per capita
income will be $1400, which currently touches at around $1000.1 Majority of the world„s
economy and population are still established in traditional structures and activities. So, in
India the labour market basically spread across the agriculture sector and the urban formal
(organized) and informal (unorganised) sector.

India‟s large working population is the part of the unorganized sector that is over
94 percent. The Indian labour market is divided in two segments viz organized or formal
sector and other is unorganized sector which is also known as informal sector. Organized
sector in India is that sector which are registered as well as pay tax (income tax, sales tax)
or which are licensed organization. All self-employed, unlicensed or unregistered
economic activity such as rural traders, handicrafts, farmers and owner manned general
stores etc. refers to unorganized sector or own account enterprises.

In India the unorganized labor is divided into four sections as per the India‟s
Ministry of labour, in its 2008 report.2 The Indian unorganized labour force has been
divided into following sections nature of employment, occupation service segment and

46
especially wrecked (distressed) section. The unorganized nature of employment category
includes attached agricultural labourers, migrant workers, bonded labourers, casual and
contract labours.3 A separate category of occupation group which includes landless
agricultural labours, share croppers, small and marginal farmers, fishermen, weavers,
leather workers those engaged in animal husbandry, labeling and packing, beedi rolling,
building and construction workers, salt washers, artisans, workers in oil mills, workers in
brick klins and stone quarries and workers in saw mills. Another separate category
dedicated in service workers such as, domestic based workers, vegetable and fruit sellers,
barbers, pavement hawker, newspaper sellers, and handcart operators. The last unorganized
category labour includes especially distressed that is scavengers, toddy tapper , drivers
(animal driven vehicles), loaders and un-loaders.4 The condition of the unorganized sector
is not so good in India which has low productivity as well as bad living and working
condition and also have low wages. More over unorganized sector in India has about 94
percent of workers in it which in turn creates 57 percent of India‟s national domestic
product which is still very less per workers than the organized sector.5

Unorganised sector is the one of the biggest sector of the Indian economy. At the
same time it supports half of the working population in both the rural as well as urban area.
Still, there is a huge difference if a comparison is made between rural unorganized sector
and urban unorganized sector. If there is a comparative analysis of rural unorganized sector
with urban unorganized sector, there is a big gap in productivity efficiency of both areas.
Rural unorganized sector have the lowest income jobs than urban ones. Poverty
significantly high in rural areas where the families all working age members have only
worked the unorganized sector throughout their lives.6 Poverty, migration and unstable
employment are the another prominent features of unorganized sector workers. Out of total
workers near about 30 million workers are most in agriculture and migrant workers and
stable employment is not available for them, about 52 percent of Indian labour alone
employed dairy, agriculture, horticulture and related occupations.

The Indian Labour Market and Informalisation

There has been an increasing trend of informalization of industrial labour in India

since 1980s. It is found in two styles that is increasing share of the unorganized sector in

47
manufacturing employment and informalization of the unorganized manufacturing sector
itself by subcontracting and use of contract and temporary workers. In India and as well as
in other developing countries of the world a large segment of the workforce is part the
informal sector. Now a days it not only economics that unorganised sector has become
more famous subject of study but, also it has its important place in sociology and
anthropology. As NSSO report reveals that in 2009-10 in the non agriculture sector, nearly
71 percent of the workers in rural areas and 67 percent in the urban areas worked in the
informal sector. It finds that the informal sector activities are concentrated primarily in the
manufacturing, transport, storage communication, construction wholesale and retail trade.7

A latest report on the National Commission for Enterprises in the Unorganised

Sector (government of India) finds that 86 percent of the total employment in 2004-05 was
in the informal sector. Further, the agricultural sector consists almost entirely of informal
workers. The non-agricultural workers in the informal sector were 36.5 percent of the total,
most of whom were self-employed. From 1999-00 to 2004-05 most of the increase in
employment in the formal sector was of informal workers.8

In a wider sense, informalization of the labour market mean a situation in which the
ratio of the informal labour force to the formal labour force or the share of the informal
labour force in the total labour force-increases over time. Whereas in the narrow sense it
refers to the informalization of once-formal jobs in (mainly) developed countries.

Many labour statisticians have used the term “Informal Sector” refers to
employment in informal enterprises (that is small and unregulated enterprises) in case of
the developing countries. Recently a new term is adopted by them that is “Informal
Employment which means more broadly, to all forms of informal employment that is
unprotected and unregulated employment both inside and outside informal enterprises.
Now-a-days many researcher, planners, observers and labour economists are finding the
distinction between the broader concept of “Informal Employment and the “informal
sector”.

Informal Sector

As per ILO definition, a person is considered a part of the informal sector if he is

working with unregistered enterprises.9 In India the National Commission for Enterprises

48
in the Unorganised Sector (NCEUS) was set up in 2004 as a policy group to inform the
national government on the size and policy needs of the informal sector. The National
Commission for Enterprises in the Unorganised Sector had defined informal sector slightly
in different manner.10 According to the Commission, firms being in the informal sector
must additionally employ less than 10 workers (according to firm size).

Informal Employment

The both definition recommended by the ILO and NCEUS, in which wage
employees are treated to be in the informal employment if they do not receive standard
„Social Protection‟. Though, the ILO and NCEUS exercise different criteria for
distinguishing self-employed workers from the rest. The NCEUS still uses social
protection scale, whereas the ILO agree that the informal sector definition be applied first
enterprises status before the social protection information. As per ILO if wage employed
workers are working in a registered firm, they would be counted under formal employment
that is excluded from informal employment.11

In comparison to it, in developed countries, the concept of informal sector or

informal employment has been used by very few planners, labour statistician and
economists. The new concept generally used for forms of work which has been
informalised or flexiblised is „Non Standard Work‟. Non standard work describe the forms
of work that is associated with not confirm to regular employment, no full time
employment with a one employer and no year round employment.

Thus, Informal employment includes:

Own- account workers working in their own informal enterprises,

Members of informal producers cooperatives,

Employees having informal jobs, whether employed by formal sector enterprises

or informal sector enterprises or as domestic based workers employed by
households,

Own account worker producing goods extensively for own final use by their own
household, and

49
 Contributing family workers, irrespective of whether they work in the formal or
informal sector enterprises.12

Definitions of Informal Sector

The informal sector is one of the most growing and dominant sector of the Indian
economy. This sector has a large number of distinct features like easy entry (anyone who
wishes can join this sector and find some sort of work), a small scale of operation, unstable
employee- employer relationship, no need of formal education. Most of the workers in this
sector are self-employed, unpaid family or domestic workers, street vendors. This part of
an economy that is neither taxed, nor monitored by any form of government is termed as
Informal sector, Informal economy or Grey economy.13

Broadly defined, the informal labour force includes the self-employed in informal
enterprises (that is small and unregulated) as well as the wage labourers employed in
informal jobs (that is unregulated & unprotected) in both urban and rural areas.14

The concept of identifying and defining the informal worker and the informal
sector is a continuing debate. The efforts are made at conceptual level to identify the
informal sector and differentiate it from the formal sector. It has been argued that the
capital centric development is responsible for the growth in the Informal sector and in the
recent years, there is growing literature of understanding linkage of the informal sector
with formal sector. Historically, it was opined that, with the growth of modern industries,
informal sector would be absorbed, and would transform itself into a modern workforce.
However, the analysis that the economic development will eventually absorb the surplus
labour in the traditional sector, has been proven wrong, as informalization and
unemployment in the developing countries has always existed and is on the rise in recent
decades.15

The International Conference on Labour resolution adopted the definition of

informal sector enterprises on the basis of the following criteria:

i) These are private unincorporated enterprises that is enterprises owned by

individuals or households that are not constituted as separate legal entities
independently of their owners, and for which no complete accounts are available

50
 that would permit a financial separation of the production activities of the
enterprise from the other activities of its owners . Private unincorporated
enterprises include unincorporated enterprises owned and operated by individual
household members or by several members of the same household, as well as
unincorporated partnerships and co-operatives formed by members of different
households, if they lack complete sets of accounts.

ii) All or at least some of the goods or services produced are meant for sale or barter,
with the possible inclusion in the informal sector of households producing domestic
or personal services in employing paid domestic employees.

iii) The size of these enterprises in terms of employment is below a certain threshold to
be determined according to national circumstances, and/or they are not registered
under specific forms of national legislation (such as factories‟ or commercial acts,
tax or social security laws, professional groups‟ regulatory acts, or similar acts,
laws or regulations established by national legislative bodies as distinct from local
regulations for issuing trade licenses or business permits), and/or their employees
are not registered.

iv) These enterprises are engaged in non-agricultural activities, including secondary

non-agricultural activities of enterprises in the agricultural sector.16

The first National Commission on Labour defined unorganized sector workforce as

those workers who have not been able to organize themselves in pursuit of their common
interest due to certain constraints like casual nature of employment, ignorance and
illiteracy small and scattered size of establishments.17

At periodicals intervals the National Sample Survey Organization (NSSO) which

have been conducting surveys on unorganized enterprises extensively adopted the
following criteria for the identification of unorganized sector.

i) All enterprises except those run by the Government in the case of service industries
(Central state and Local Body) and in the corporate sector were considered as
unorganized.

51
ii) In the case of manufacturing industries, the enterprises not covered under the
Annual Survey of Industries (ASI) are taken to constitute the unorganized sector.

In 1999-00 a separate informal sector survey was also conducted by NSSO and all
non-agricultural enterprises, excluding those covered under the ASI, with type of
ownership as either proprietary or partnership were treated as informal non-agricultural
enterprises for the purpose of the survey. In the National Accounts, the term unorganized
sector is used to show the residual enterprises, which are not included in the „organized
Sector‟.18

Informal and formal Sector in India

Over the years the issue of defining the concept of informal sector or economy has
remained debatable. There is no mention of informal sector in Indian official statistical
documentation.

Informal sector has been defined by National Sample Survey Organization in terms
of all unincorporated proprietary enterprises and partnership enterprises,

An enterprise may be owned or operated by a single household or by several

household jointly or by an institutional body. The proprietary enterprises are those
where an individual is the sole owner of the enterprises whereas Partnership
enterprises are those where partners (from the same household or different
household agree to share the profits of a business carried on by all or any one of
them acting for all.

An enterprise which is engaged in the production and/or distribution of some goods

and /or services meant for the purpose of sale, whether fully or partly.

An enterprise is differentiated between an Own Account Enterprise (OAE) and an

establishment. A household labour, usually run without any hired workers
employed on a fairly regular basis termed as an OAE. An Establishment has been
less than 10 workers with at least one hired labourer on a fairly regular basis. An
Establishment is further divided between Directory Establishment (DE), and Non-
Directory Establishment (NDE), In which enterprises employs more than 5 workers
(or less than 6 workers) with at least one hired labourer is termed as A DE (or

52
 NDE). In India Official statistics (e.g. National Accounts Statistics) distinguish
between organized and unorganized sectors in different contacts.

Enterprises covered (or not covered) by the Annual Survey of Industries (ASI) fall
under the purview of the Organized (or unorganized) Sector.

The organized Sector comprises of enterprises, and information (for example

statistical data) on their activities is available or collected regularly (for example.
registered manufacturing units). The unorganized sector comprises of enterprises
and information on their activities is not regulated under any legal provision or
regular account on their activities is not maintained by enterprises themselves.

Manufacturing units (for example all manufacturing processing, repair and

maintenance service units) registered (or not registered) under the Factory Act 1948
belong to the organized (or unorganized) sector. That is, factories employing 10 or
more (or less than 10) workers and using power or employing 20 or more (or less
than 20) workers without using power in the reference year, belong to the registered
(or unregistered) manufacturing sector.

There is difference in the composition of the unorganized and informal sector. In

reality, the unorganized sector comprises of enterprises run by co-operative societies,
trusts, private and public limited companies (non ASI) and unincorporated proprietary or
partnership enterprises. Thus in India the informal sector is a part of unorganized sector.
So, in reality the alternative definitions and concepts includes the unorganized sector is
wider in its scope and it further include unregulated, unregistered informal enterprises and
establishment in manufacturing and service sector.19

Recently, (ILO and SNA) adopted the new International definition of the informal
sector in 1998, the Department of Statistics in India constituted an expert group to
reconciliate various concepts and definitions related to the informal sector. The main idea
behind this act was to develop a good and harmonized definitions and survey methods on
the informal sector, so in a more exhaustive manner as to make it internationally
comparable and also to count workers and their contribution to output. This group after
long activity showed that as mentioned in the International Conference of Labour
Statisticians ICLS „own account enterprises‟ and „enterprises of the informal employers‟
53
are very near to two terms used in Indian Statistical System that is „Own Account
Enterprises and Establishments ‟(Enterprises with at least one hired worker employed on a
fairly regular basis). So as per the suggestion of this group for implementing, to the extent
feasible, the recommendation of the ICLS and SNA. Further it was also found by expert
group that this type of enterprises based definition s a good coverage of enterprises to work
out the value addition by industry group necessary for National Account Statistics
(NAS).20

NSSO had defined all unincorporated proprietary and partnership enterprises as

informal sector enterprises for the purpose of the survey. In India the concept and new
definition differs largely from the traditional concept of unorganized sector. So, the
informal sector is conceptually considered as a sub-set of the unorganized sector.21

The latest version and the most acceptable definition of „unorganized sector‟ and
„unorganized employment‟ in the Indian context have been recently given by the National
Commission for Enterprises in the Unorganized Sector (NCEUS) which has combined all
the definitions as below:

“The unorganized sector consists of all unincorporated private enterprises owned

by individuals or households engaged in the sale and production of goods and services
operated on a proprietary or partnership basis and with less than ten total workers”

And

“Unorganized workers consist of those working in the unorganized enterprises of

households, excluding regular workers with social security benefits, and the workers in the
formal sector without any employment/social security benefits provided by the employers”
NCEUS,

The term „organized‟ and „unorganized‟ are used interchangeably with formal and
informal by NCEUS in its definition. It has analyzed the informal sector in India, by
classifying the workforce into following segments:

1. Unorganized non-agricultural workers

a) Wage workers in non-agricultural sector

b) Self-employed workers in non-agricultural

54
 c) Women workers in non-agriculture

2. Other disadvantaged workers (Migrant, Child and Bonded Labour)

3. Agriculture workers

a) Agriculture workers

b) Farmers22

Contribution of Unorganised Sector to Indian Labour Market

The unorganised sector plays an important role in our economy in terms of

employment opportunities, income and poverty alleviation. As this sector provides
employment to the large number of people and it also generates income earning
opportunities for them. Still in India, a large segment of the total workforce is in the
informal sector, which in turn contributes a sizeable share of the country‟s National
Domestic Products (NDP). So, the unorganised sector has a crucial role to play in our
economy in terms of employment, savings, a capital formation and its contribution to the
National Domestic Product. It analyzed the contribution of unorganised segment and also
the share of its different sub sectors to National Domestic Product from 1980-81 to 1994-
95. They found that though the contribution of the unorganised segment to the total NDP
has been declining progressively over time, it accounts for a large share (over 60 percent)
to the consumer goods industries.23

Since early 80‟s even before that the dominance of the unorganised sector to earn
their livelihood and income was such that more than 90 percent of the total work force has
been engaged in this sector. Over the years, the analysis of trend of growth in employment
exhibits that, formal employment growth has always been less than that of total
employment, indicating a faster growth of informal employment. Moreover, a broad
segment consisting of agriculture (both organised and unorganised) and organised non-
farm sector, which currently absorbs nearly Moreover, a broad segment consisting of
agriculture (both organised and unorganised) and organised non-farm sector, which
currently absorbs nearly 70 percent of total workforce is showing a diminishing growth
rate and it is being said that these sectors will stop to absorb more and more labour force
and support large population in it.24

55
 Another contribution of the unorganised sector is that, its relationship with the
organised sector. It means that how these two sectors are inter-connected or inter related
with each other or whether they develop economy as a whole with each other‟s
contribution or not. An overview of the unorganised sector in various key dimensions
comparing with organised sector from 1980-81 to 1998-99.25 There have been the
existence of downward linkage between the organised and unorganised sector means that
the latter lives or dies with former.26

Formal and informal sector are also linked through consumption linkages
production linkages as well as technological linkages. Consumer goods are produced by
traditional informal sector, which mainly sold to the low income consumer. Both goods
that is consumer as well as capital goods are produced by modern informal sector which
are serve to both low and middle income consumers. These goods often compete with the
goods produced by the formal sector. On the other hand, the consumer goods produced by
the modern informal sector generally consumed by the sector itself and the people engaged
in the formal sector. On the other the intermediate products and simple capital goods
produced by the modern informal sector that partly used the sectors own need and partly
serve the demand of the formal sector. So, the modern informal sector‟s production is
complementary to and as well as competitive with the formal sector.27

Thus, it is realized that there is need to develop a comprehensive understanding

about the needs, issues, changes and problems that are taking place in the unorganised
sector. Infact it has been recognised by all sections of researchers, policy makers as well as
planners that the working as well the living conditions in this sector are deplorable and is
most neglected section of the society which deserves a support and policy measures. As it
is one of the biggest sector in economy like ours and it has become a perennial source of
employment generation. Surprisingly, in our country this sector absorbs more than 90
percent of the total work force but still it exhibits the declining trend. At the same time
many organised industries depend on the informal sector for the supply of raw-material.
Thus, it should be noted that it feeds the industries as well as it provides income earning
opportunities to the vast majority of the poorer group of population. Another big fact about
this sector that it absorbs a large segment of female work force in it and for this its role in
absorbing the women workers is undeniable. Thus, it has a significant role in the process of
56
economic development of the country. As unorganized sector provides large employment
opportunities to those who have been otherwise totally unemployed.

Discrimination and Segmentation in Indian Labour Market Gender Perspective

Discrimination and Segmentation is the main characteristic feature of the Indian

Labour Market. It is among the most persistent features of the Indian labour market. It can
be explained by a high degree and numerous bases of segmentation that is economic and
socio-cultural variation, large geographical size, caste and religion based distinctions,
sharp rural-urban divided further add to such common bases of segmentation as gender and
occupation. Labour market institutions such as welfare regulations, unions regulatory
bodies also tend to widen rather than reduce segmentation in the Indian labour market. The
two most important discriminating factors in the Indian labour market are caste and gender.
In India Caste System, defines division of roles in the economic activities, specially in
rural areas and further it had a story influence in the functioning of the economy.
Depending on the status in the caste system (hierarchy) the caste structure is a labour
structure which fixes particular jobs for particular caste groups, in Indian system
occupations are hereditary based and occupational mobility are also collective rather than
individual if, it can occurs.

The highly patriarchal nature of Indian society sets specific roles for women, which
often stops them even entering the labour market. In India discrimination against women in
the payment of wages and income is widely spread. The economic conditions of women
are easily can be judged by the fact that about 94 percent of them are found in unorganised
sector and only 6 percent in the organised sector. There are many reasons for low wages
for women labourers that is the seasonal nature of the demand for labour, the unorganised
nature of employment, the hired labour can be substituted by family labour and last but
note least that is traditional classification of agricultural jobs into male and female. The
secondary based study observed the wage rates of agriculture labourers in major 14 states
of India. It found that in 1964-65 female real wages formed only 64 percent of male wages.
There has been a rise in the share in 1974-75, 1977-78, 1983 and 1987-88 as compared to
1964-65. But, the variation between male and female wages still existed. The major reason
for discrimination of female is traditional bias against female workers. Further this study

57
also found that in the irrigated areas male wages are also better as compared to wages in
the un-irrigated areas.28

In Indian labour market another fact for women labour force is that they are
increasingly being absorbed in the unorganised sector. In this sector women are paid less in
comparison to men for same kind of work and hours spent on work and also exploited to a
greater extent. The working conditions are bad and unsatisfactory in the unorganised sector
for them and further their poverty, ignorance, illiteracy and indebtedness push them to
work at lower wage rates and under poor and bad working conditions.

Female workers are generally outside the reach of trade union organization and
protective labour laws. In this sector female workers are hardly any opportunities to
improve their income as well as their living condition because they generally do traditional
work as domestic servants and as labourers in the unskilled occupation. The nature and
scope of the female„s work ranges from family labour, piece rate work and employment or
self employment. There is dominant role of female workers in urban unorganized sector
and which is quite important too. They work in small activities like work as construction
workers, small trades like brick making and coir and basket weaving etc. The animal
husbandry, dairy, agricultural activities and fisheries etc are those activities in which
female workers are engaged in rural unorganized sector. The condition of female workers
is not so good in rural as well as urban areas in respect of their earning condition, living
condition, education status and employment status. Absence of basic amenities in rural and
urban areas, hardships of city life and further exploitation of these female workers by
employees have added to their misery. The contribution of female workers to the economy
as a whole is very large but still remains unrecognized, and unidentified, yet their services
are valuable and essential. In India the unorganized sector is one of most ignored, diverse
and vulnerable sector. The much concentration of female workers in unorganized sector is
due to so many reasons one of them is because of a section working against females in the
labour market. The other major causes which leads to pitiable condition of female workers
are adverse impact of technological growth on female labour, lack of organization in terms
of making trade unions among female workers, there is no proper human resource
development, policy on improving females employability through training and skill
development and no proper legislation and inefficient enforcement of safety measure to
58
protect female workers mainly in terms of their working conditions. So, it is very
important that under these existing conditions, government should make efforts to improve
working conditions of female workers in terms of working hours, occupational safety as
well as payment of proper wages to them so that large number of female workers who are
engaged with unorganized sector of employment may have mandatory honorable, prudent
and respected work.

Structural characteristics features of the Indian Labour Market

During the last three decades, India has perceived a rapid growth in Gross
Domestic Product (GDP). Firstly, a trend proclaimed in the 1980s and then picked up its
pace in the 1990s, when external and domestic sector economic reforms were first
introduced. During the three decades proceeding of the high growth period, there was only
a very small increase in per capita income and India had grown at around 3 percent per
annum and its population growth rate of about 2.5 percent. It has been above 6.5 percent
during the two decades since early 1990s and further the three decades of high growth, the
average rate of GDP growth has been close to 6 percent. There was substantial rise in per
capita income due to the population growth rate below 2 percent per annum. Due to the
global financial crisis in 2008-09, the Indian economy acknowledged firmly to fiscal and
monetary impetus and achieved a growth rate of 8.6 percent and 9.3 percent respectively in
2009-10 and 2010-11. In 2011-12 and 2012-13 the growth rates slowed to 6.2 percent and
5.0 percent respectively due to many factors like high fiscal deficit and slowing down of
saving and investment rates. Notwithstanding, this slowdown, during growth rate was 7.8
percent per annum with per capita income growing at around 6.3 percent per annum.29
There many other countries like China and Brazil which experienced the slowdown in
growth rates, still Chinese growth rate above 7 percent. Next only to China, India
continues to be one of the fastest growing economics.

59
Table 3.1 Labour Force Participation Rate and Workforce Participation Rate by
Gender in 1983 to 2011-12

LFPR WFPR

Year Male Female Persons Male Female Persons

1983 55.1 30.0 42.9 53.9 29.6 42.0

1993-94 55.6 29.0 42.8 54.5 28.6 42.0

2004-05 55.9 29.4 43.0 54.7 28.7 42.0

2011-12 55.6 22.5 39.5 54.4 21.9 38.6

Source: Computed from various NSSO rounds (India Labour and Employment
report 2014)

Note: LFPR – Labour Force Participation Rate

WFPR – Workforce Participation Rate

One of the main characteristic features of India labour market is that low female
participation rate that is visible in its poor labour sex ratio and also low in worker total
population ratio. The table 3.1 shows that Labour Force participation rate and Workforce
participation rate by gender (Male/Female) for years 1983 to 2011-12. In the following
table it is clearly visible that the overall Labour Force Participation Rate (LFPR) stand at
39.5 percent which for women is 22.5 percent in the year 2011- 12. It is observed in the
table the male Labour Force Participation Rate (LFPR) has been stable at 55.1 to 55.6
percent during three decades from 1983 to 2011-12 but there is declining trend is seen in
the female LFPR that from 30.0 percent in 1983 to 22.5 percent in 2011-12. In the table
almost same trend is exhibited in workforce participation rate.

Another significant feature of the Indian workforce is the predominance of

agriculture that is agriculture still accounts for about half of the total workforce. The open
rate of unemployment is still quite low as in the on most other developing countries. On
the basis of Usual Principal and Subsidiary Status (UPSS) it is around 2.2 percent.
According to the Current Daily Status (CDS) which is one of the most comprehensive
measure of unemployment, it takes into account labour force participation on a daily basis

60
the rate of unemployment goes up to 6 percent only. On the other hand level of poverty is
very high. It obviously means that not open unemployment but that a large proportion of
the workers are poor and they are engulfed in poverty. It means that is an example of
typical labour surplus economy where most people are engaged in low income activities as
well as who cannot afford to be unemployed. Further it means that about half of the
workers being self-employed, they share whatever work is available, leading to widespread
poverty and underemployment.

Dualistic Nature of Indian Labour Market

The Indian Labour Market is dualistic in nature that is it has a large traditional or
low income economy co-existing with high level of growth, surplus productivity and
modern economy. The former is called unorganised/Informal and later the
organised/formal sector. The formal/organised sector is consists of government/public
departments and public/private enterprises plus the private enterprises which employ 10 or
more workers. Organised sector workers enjoys the benefits of social security or protective
benefits and as well as other wage benefits. In this sector, jobs are regular and wages and
salaries are governed by regulations and protected through collective bargaining. So,
wages as well as other benefits are much higher than the unorganised sector. Whereas the
unorganised sector (consisting of private enterprises employing less than 10 workers or
own account workers, including agriculture and non-agriculture) has temporary, casual and
irregular jobs and low productivity. This sector is extremely heterogeneous in nature that is
at one side it comprises of by wholesale traders, large shopkeepers an increasing number of
professionals and big cultivators with high earnings and small and marginal farmers own
account workers and petty producers on the other side. The workers of this sector have
neither protected by government regulation nor unionized in any collective bargaining
power.

61
Table 3.2 Statue of Employment from 1983 to 2011-12

Percentage share in 1983 1993-94 1999-2000 2004-0565 2009-10 2011-12

total Employment

Regular Wages 13.5 13.2 14.0 14.3 15.6 17.6

Formal - - 5.4 5.6 6.4 6.8

Informal - - 8.6 8.6 9.2 11.0

Casual Wage 29.0 32.0 33.2 28.9 33.5 29.9

Employment

Self Employment 57.5 54.7 52.8 56.9 51.0 52.2

Casual and Self 86.5 86.7 86.0 85.8 84.5 82.1

Employment

Organised Sector - - 9.3 11.1 14.0 16.4

Unorganised Sector - - 90.7 88.9 86.0 83.61

Source: Calculated from Various NSSO rounds (India Labour and Employment
report 2014)

The table 3.2 shows the broad features of the Indian labour market and status of
employment from 1983 to 2011-12. It can be observed from the table, regular wage
employment constitutes about 17.9 percent of the total employment. It is further observed
that in the percentage of regular workers there was significant rise for last two previous
periods. However there are only around 40 percent are formal workers and over 60 percent
of the regular workers are informal workers with no social security. In other words 6.8
percent of the total workers have good or decent jobs or we can say that have regular
formal jobs. Since 2004-05 it is important to note that in regular jobs there has been an
increase of one percentage point. In case of casual workers a little less than one-third of the
total workers which is more or less stable (ranging between 30 and 33 percent) during the

62
 period 1983 to 2011-12. In 2011-12 over half of the workers were self employed and their
figure has declined by at least five percentage points since the middle of 2004-05. About
16.4 percent of the total workers are in the organised sector whereas 83.6 percent are in the
unorganised sector. So, it is seen that there has been slow and steady growth of workers in
the organised sector since the early 1990s. So, it is observed that the Indian labour market
is highly dualistic in nature and further during the high growth period this dualism has
sharpened over the time. The small but noticeable change in the trend has been seen since
2004-05. There is increase in the shares of organised sector employment, regular
employment and regular formal employment which indeed is healthy.

Employment Share by Sectors

The Indian Labour Market is mainly comprises of Primary (agriculture and allied
activities) secondary (Construction and manufacturing) and tertiary sector (Financial
Services and Other services). The primary sector of the Indian economy in which majority
of Indian workers are engaged in agriculture and allied activities. Agriculture is expected
to decline in significance in terms of its share in employment and output with the process
of economic development.

Table-3.3 Percentages Shares of Employment and GDP in India(1972-73 to 2011-12)

Sectors Sectoral Share in Employment Sectoral Share in GDP

1972-73 1983 1993-94 2004-05 2011-12 1972-73 1983 1993-94 2004-05 2011-12

Primary 73.92 68.6 63.98 56.3 48.90 41.1 35.5 28.4 19.0 14.1

Secondary 11.3 13.8 14.96 18.78 24.37 24.4 25.8 26.8 27.9 27.5

Tertiary 14.78 17.6 21.07 24.92 26.73 34.5 38.7 44.8 53.0 58.4

Non- 26.08 31.4 36.02 43.7 51.10 58.9 64.5 71.8 81.0 85.9
agricultural

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Calculated on various NSSO round (India labour and Employment report
2014)

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 The table 3.3 will highlights the percentage shares of employment and GDP in
India from 1972-73 to 2011-12. In 1972-73 the proportion of agriculture in total
employment has declined from 73.92 percent to 56.3 percent in 2004-05. Further it has
declined to 48.90 percent in 2011-12. Almost same trend is seen in its share in GDP. It has
declined from 41.1 percent to 14.1 percent in 1972-73 and 2011-12 respectively. Still the
decline in the employment share of agriculture has been much slower than its share in
GDP. During 1993-94 to 2011-12 the decline in GDP share has been much faster that is
from 28.4 percent to 14.1 percent whereas the rate of decline in employment share during
this period has been relatively slow from 63.98 percent to 48.90 percent. Before 1991 (that
is pre-reform period) the decline in the employment share of agriculture has been mostly
remunerated by an increase in the share of the tertiary sector. But, still secondary sector
has been the main gainer of the shift in employment ever since economic reforms. In the
secondary sector its share in GDP has remained constant at about one-fourth of the total
while secondary sector‟s share in employment has increased at a relatively faster rate.
During 1993-94 to 2011-12, yet, the increase in its employment share has not been
consistent with the increase in its share of GDP. Within the secondary sector, construction
has sharply increased its share in employment while manufacturing has increased its share
for both that is employment and GDP but rather slowly. In the tertiary sector, trade
recording a fast increase in its share in employment and a magnificent increase in its share
in GDP in the post-reform period and same is for financial services which accounted faster
increase both in its employment and GDP share, though its share in employment is small.

Migration of Workers across Different States and Rural-Urban Areas

Migration has been a global phenomenon. It has become a part of worldwide

process of industrialization and urbanization due to the expansion of transportation and
communication. Migration is another significant feature of Indian labour market where
workers across different states as well as from rural to urban areas migrate in search of new
employment opportunities. In our economy the workers migrate from under-developed
states to the developed ones to find proper jobs, better earning opportunities and to earn
their livelihood. This mobility in the labour market may be across occupations, work
statuses, location and sectors. Most complex form of worker mobility is the geographical
migration is the one of the most important also. The one of the most common is the
64
distress migration by the rural poor, which is due to the lack of local livelihood
opportunities. The census and the NSSO mainly identify permanent or semi-permanent
migration but fail to capture seasonal migration, the magnitude of which is both large and
growing.30

Generally, people had been migrating from one place to another for the purpose of
education, health, marriage, employment and other social reasons. Migration has been
defined differently by experts educationists and policy makers .United Nations has defined
migration a form of geographical mobility or spatial mobility between one geographical
unit and another generally involving a change in residence from the place of origin to place
of departure to the place of destination or place of arrival.31 Migration may be international
migration or internal migration. International migration means mobility of labour between
the countries whereas internal migration means the movement of labour from one place to
the other within the country. Further internal migration may also be termed as inter-state
(between states) inter-district, intra-district, rural to rural or rural to urban. Migration of
labour broadly takes ways: external migration and internal migration. The internal
migration is more frequent and regular. More rapidly growing phenomena and in
developing Asian economies especially in India have been experience the increase in the
rate of internal migration over the past two decades, it is mainly due to declining job
opportunities in rural areas and increased opportunities in urban areas. Thus, migration is
associated with the process of development as well as modernization. In India , recently in
some states it has been observed that the states where socio-economic indicators are below
the national average or very poor, inspite of several policy measures by state as well as
central Government especially Uttar Pradesh, Bihar, Chhattisgarh, Jharkhand, Odisha, the
internal and inter-states migration are very uncontrollable and unchecked too.

In order to sum up the key features of Indian labour market as it has witnessed a
significant turbulence in the last three decades since the process of liberalization and
globalization of the Indian economy. As the employment share of agriculture has been
declining whereas the secondary sector and tertiary sector has been showing increasing
trend, still the pace of change has been slow as compared to changes in the output share
which ultimately leading to huge unevenness. There is a significant linkage effect of
manufacturing sector with other sectors still has not registered high growth of employment
65
initially due to low growth of output and other institutional bottlenecks. During 2005-12
there has been a decline in female Labour Force Participation Rate. Further the share of
males in more productive and secure jobs is much higher than their female counterparts,
indicating gender discrimination in the labour market. There is substantial segmentation
and dualism in the Indian labour market in terms of various forms that is sectors (organised
and unorganised or formal and informal) locations (rural and urban as well as migration
status) gender, occupation tribes and castes. The dominance of unorganised sector
accounting about 83 percent of all work in the Indian Labour Market.

66
End Notes

1. Ashish Bose in Economic and Political weekly, April 14,2007., p.19

2. “Unorganise Labour” Ministry of Labour Government of India 2009

https://labour.nic.in.

3. Amin Nurul (2002), “The Informal Sector Asia from the Decent work Perspective”
International Labour office, Geneva, p.31.

4. Shankar Nath Stephan (2010), “Street Food Vendors in Delhi: Nomads in the strom
of modernity University of Vienna”, p.45.

5. A.C. Kulshreshitha (May 2011), “Measuring in Unorganised Sector in India”

Review of Income and wealth (Special Issue: The Informal Economy in
Developing Countries: Analysis and Measurement 57 (Supplement SI): S123-S134.

6. Sheila Bhalla (2001), “The restructuring of unorganized sector in India ” Planning

Commission, Government of India. ,p.84

7. Report of the Committee on Unorganised Sector Statistics, National Statistical

Commission Government of India Feb.2012.

8. K. Arjun Sengupta (2009), The Challenge of Employment in India, An Informal

Economy Perspectives, Report of the National Commission for Enterprises in the
Unorganised Sector, Government of India Vol. 1 and 2 , Academic Foundation ,
New Delhi, p. 58

9. ILO (1998), “Decent Work and informal Economy” Report VI, International
Labour Conference; 90th Session (Geneva 2002).

10. Ibid.p.56.

11. ILO (2003), “Statistical definition of Informal Employment: Guidelines endorsed

by seventeenth International Conference of Labour Statisticians.”

12. International Labour Organisation (2003), Guidelines concerning a statistical

definition of Informal employment, endorsed by the seventeenth International
conference statisticians (November-December 2003).

67
13. Ghersi Enrique (1997), “The Informal Economy in Latin America” Cato Journal
(Cato Institute), p.39.

14. Resolution concerning decent work and the informal economy (2002). The General
conference of the International Labour Organization, meeting 90th session.

15. M. Chen (2003), Rethinking the Informal Economy from Enterprises

Characteristics to Employment Relations, Paper in Kudva and Lourdes (Eds.)
“Rethinking Labour Market Informalization: Precarious Jobs, Poverty, and Social
Protection,” Cornell University, 2003.

16. International Labour office (2000), Resolution concerning statistician of

employment in informal statisticians (January 1993): in current International
Recommendation on Labour Statistician; 2000 Edition; International Labour office,
Geneva 2000, p.78.

17. Ajaya Kumar Naik (2009), “Informal Sector and Informal Workers in India”
Kathmandu, Nepal; September 23-26.

18. NSSO (2001), Employment-Unemployment situations in India 1999-200, 55th

Round, Report No. 458-I and II, National Sample Survey Organisation, Department
of Statistics, New Delhi.

19. GOI (2001), Report of the Task Force on Employment Opportunities, Planning
Commission, Government of India, New Delhi.

20. Rafl Hussmanns (2003), ILO Geneva, Statistical definition of Informal

employment: Guidelines endorsed by the seventeenth International conference of
labour statisticians (2003).

21. NSSO (2001), Employment-Unemployment situation 1999-2000, 55th Round

Report No.- I & II, National Sample Survey Organisation, Department of Statistics
New Delhi.

22. NCEUS (2007), Report on condition of work and promotion of livelihood in the
unorganized sector, National commission for enterprises in unorganized sector,
Government of India.

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23. A.C. Kulshrestha, and Gulab Singh (1999), “On contribution of Informal sector in
the Indian Economy”, CSO New Delhi, 3rd meeting of the expert group on informal
sector statistics (Delhi group), May 17-19.

24. Bhalla, G. S. and Hazell (2003), “Rural Employment and Poverty Reduction”,
Economic and Political Weekly, Vol. 38, No. 33.

25. Indrajit Bairaga (2009), “Informal Sector in India contribution Growth and
Efficiency”, paper prepared for the special IARIW-SAIM conference. p.3.

26. Oded Stark (1982), “On Modeling the informal sector”, World development
Vol.10.

27. Janneke Pieters, Ana I, Moreno-Monroy, Abdul A. Erumban (2010), “Formal

sector dynamics: evidence from India”, Groningen Growth and Development
centre, University of Gronign, p.1.

28. E. Krishna Rao (2012), “Gender Based Discrimination in Rural Labour Market: A
Study of two south India villages centre for study of social exclusion and inclusive
Policy”, Pondicery University, R.V. Nagar.

29. Economic Survey (2012-13).

30. Rameez Abbas and Varma Abbas (2014), “Internal Migration in India Raises
Integration Challenges for Migrants” Migration Policy Information Source. p.25.

31. UN (1958), Multilingual demographic dictionary (English Section), New York:

United Nation Department of Economic and Social affair.

69