The Labour Market in India

This chapter outlines the salient features of the labour market in India. Firstly, 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 10 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).