Urban Labour Markets: Problems and Policies

Urban labour markets (ULMs) have of late received substantial attention in the literature on the employment problem in the third world.1 Chronologically, it was the ULM’s failure to clear — a failure that appeared all the more dismal in the context of the then current Lewis model — that was most highlighted.2 Soon open unemployment was decried as a bourgeois problem, excessive concern with which, besides exposing the class bias of the writers and policy-makers, diverted public attention from the quantitatively greater and qualitatively graver problems of underutilisation of labour and widespread, low-end poverty.3 Simultaneously the shortcomings of ULMs noted, in passing, if at all, in the heyday of high theory, came to occupy the central place. Imperfect knowledge, inadequate mobility, existence of monopoly, trade unions and governments have been recognised as the main factors distorting all markets, including that for labour. It could be easily shown that the incidence of most of them was much greater in the LDCs than in the DCs.4 In addition, modern technology for LDCs was and still remains a Hobson’s choice, thrust on them by colonial powers earlier and continued currently in the absence of appropriate technology. This diagnosis of dualism does not appeal to the radicals who treat all variables endogeneously and trace dualism to prevalence of national and international capitalism.5