Labour Market Institutions and New Technology: The Case of Employment Service in India

This paper traces the evolutionary history of labour market intermediation in India, culminating in the introduction of the National Career Services, an Information Technology-based career service ecosystem. Further, it analyses the performance of the NCS and the challenges therein. Traditional labour markets functioning under asymmetric information had worked under institutional norms and practices that reduced the search-and-match costs in the labour market. While these norms solved the problems of search, these were neither efficient nor just outcomes. Formal institutional interventions in the colonial period were aimed at the need for war exigencies. Post-independence, an elaborate and decentralised system of labour market intermediation was established through employment exchanges across the country. However, employment exchanges, after their initial successes, gradually weakened. Structural infirmities associated with employment exchanges, alternative agencies, both public and private for meeting the intermediation needs, declining role of government as a key employer and changing nature of labour market were key factors that affected the performance of employment exchanges. A major restructuring of the employment service, through the NCS ecosystem, promises a revival of the public-funded labour market intermediation services. However, the challenge lies in the NCS becoming an efficient intermediary that is both inclusive and accountable.