The Indian story of economic growth and structural transformation has been one of significant achievements as well as continuing challenges. On the one hand, the economy has grown rapidly since the 1980s, drawing millions of workers out of agriculture. And the proportion of salaried or regular wage workers has risen while that of casual workers has fallen. On the other hand, manufacturing has failed to expand its share of GDP or employment significantly. Instead, construction and informal services have been the main job creators. Further, the connection between growth and good jobs continues to be weak.

When we speak of new opportunities, another important set of questions arises. Who is able to take advantage of them, and who is not? Has growth created faster improvements for marginalised groups, enabling them to catch up with more advantaged groups? This year’s report takes a detailed look at the impact that growth and structural change have had on some long-running social disparities. We show that significant progress has been made on all fronts since the 1980s, but also that there is a long road ahead. 

The report makes use of official datasets such as the NSO’s Employment-Unemployment Surveys, the Periodic Labour Force Surveys, the National Family Health Surveys, the Annual Survey of Industries, and the Economic and Population Censuses. The researchers also make use of a unique primary survey carried out in rural Karnataka and Rajasthan, the India Working Survey. This year’s report goes further than our earlier three editions and makes extensive use of regression analysis to offer more precise estimates of the impacts of structural change on employment conditions and outcome gaps.

Small manufacturing firms are considered to be engines of growth and job creation. While most research on small firms focuses on formal sector units, in India informal sector units far outnumber the formal. This is true even for manufacturing units employing 5 to 49 workers, which constitute only 5% of all unorganised units, but in absolute numbers are nine times more numerous than organised units in the same size class. Such firms have the potential to contribute to structural transformation but their capacities vis-a-vis formal firms are not well understood. To address this, the researchers create a unit-level dataset combining Annual Survey of Industries data for organised (formal) units with the National Sample Survey data on unorganised (informal) units. They also discuss problems involved in this exercise and some ways to deal with them. They find that matching organised and unorganised units on observable characteristics reduces the labour productivity differences between them to around 25 percent. The researchers discuss some policy implications of their results.

In this entry, the researcher will analyse neoliberal policies and how they have been popularised through the mass media – with a particular focus on market triumphalism. This is an important issue in contemporary times as neoliberal policies have led to an increase in economic inequality. However, public discourse has argued that these policies are beneficial to the economy and workers. The first section will describe the historical trajectory that shaped neoliberal policies. In the second section, the researcher will trace the introduction of neoliberal policies in India in the 1990s and how English newspapers popularised them. In section ​“Sandel’s Critique of Market Triumphalism in America”, the researcher will discuss the popularity of market triumphalism through neoliberal policies in the USA and Michael Sandel’s (What money can’t buy: the moral limits of markets. Penguin, London, 2012) influential critique of it.

Azim Premji University, in collaboration with 9 Civil Society Organisations (CSOs), conducted a survey of 3,000 households in 92 low-income settlements across 39 wards of Bengaluru. The survey was done to estimate the continuing impact of COVID-19 induced lockdowns and economic disruptions on employment and livelihoods. The survey also captured information on access to government support as well as coping mechanisms to deal with such a crisis. Workers in a wide range of occupations such as drivers (cab, auto, and others), daily wage workers (construction and others), domestic workers, and factory workers (garment and others) were surveyed. The survey was conducted in the month of November 2021 with the help of Action Aid, Association for Promoting Social Action (APSA), The Center for Advocacy and Research (CFAR), Hasiru Dala, Gubbachi, Reaching Hand, Sangama, Swabhimaan Trust, and Thamate.

We investigate the impact of the COVID-19 pandemic on income levels, poverty, and inequality in both the immediate aftermath and during the long uneven recovery till December 2021 using high-frequency household survey data from India. We find that the average all-India household income dropped between 30 to 38 percent during the months of the nationwide lockdown of April and May 2020. The subsequent recovery remained incomplete and was unevenly spread over the population even twenty-one months after the start of the pandemic. Households, on average, continued to make 16 to 19 percent lower cumulative income in the post-lockdown period, but have mostly recovered after the second wave in the second half of 2021. Poverty more than doubled during the lockdown and was 50 to 80 percent higher in the post-lockdown period in comparison to the pre-pandemic levels. In the post-second-wave phase, poverty was still slightly higher than in the pre-pandemic period, and any progress in poverty reduction that would have been achieved under normal circumstances over the two years was lost. Inequality too spiked during the lockdown, but returned back to the pre-pandemic levels. Using an event study model we find that the initial shock of the lockdown was more severe for the bottom of the income distribution, but the bottom also experienced a faster recovery. On the other hand, the top end of the distribution experienced smaller declines during the lockdown but they have been slow to recover. The bottom deciles in any period typically constituted households working in contact-intensive, informal, less secure occupations that were hit the hardest during the lockdown, but were quick to recover when the economy opened up. The upper end of the distribution constituted households working in less contact-intensive, formal, secure occupations that were shielded from the sudden shock but were slow to recover.

Historical experience suggests that a sustained rise in per capita incomes and improvement in employment conditions is not attainable without a structural transformation that moves surplus labour from agriculture and other informal economic activities to higher productivity activities in the non-farm economy. In this paper, I analyse India’s performance from a cross-country comparative perspective, estimating the growth semi-elasticity of structural change. Using a cross-country panel regression, I estimate the effectiveness of growth in moving workers away from agricultural and informal activities as compared to other developing countries at similar levels of per capita income. I show that the performance in pulling workers out of agriculture is as expected given its level and growth of GDP per capita, but the same is not true for pulling workers out of the informal sector. I also propose the following five indicators that need to be kept track of when evaluating the growth process: the growth elasticity of employment, the growth semi-elasticity of structural change, the growth of labour productivity in the subsistence sector, the share of the organised sector in total employment and the workforce participation rate. Comparing these indicators across periods, states, regions or countries, allow us to understand which sets of policies have worked better than others to effective improvements in employment conditions. When taken together the indicators allow us to set structural change targets as well as to say whether the current pattern of growth is going to be sufficient to meet those targets.

Does there exist a trade-off between labour’s income share and output growth rate? Or does a reduction in wage share in itself reduce the output growth rate? These questions have returned to the centre stage in the midst of India’s present crisis as the government sought the dilution and suspension of labour laws as a counter-cyclical policy instrument. In the absence of any other stimulus or countervailing factors, the impact of such a policy would hinge on the relationship between income distribution and effective demand. This paper attempts to lay bare this relationship for the Indian economy through an empirical analysis of India’s macro data and a theoretical model on the basis of regression results.

1. State of Working India 2019 is being published close on the heels of the 2018 report. The principal reason is that this year’s report aims to intervene in the debate over employment generation in time for the general elections to be conducted in April and May 2019. In this report we present an update on the jobs situation for the period between 2016 and 2018, and also present some ideas for employment generation.

2. The recent controversy over employment statistics should be seen in the context of the fact there is now a fully established politics of unemployment in India. This is a new development that needs to be understood. The politics of unemployment is typically a feature of middle-to-high income countries, not low-to-middle income countries. Traditionally, the principal economic issue of broad spectrum political significance in India has been poverty, not unemployment.

3. There have been some new developments, which when juxtaposed with older structural and cultural factors, can account for why this is happening in India, a lower middle income country with a per capita GDP one third that of China and half that of Indonesia. The ​‘precocious’ part of the Indian labour market that resembles higher income countries, that has always been there to a limited extent, is now substantial and rapidly rising, and more to the point, it has spread throughout the country, including the rural areas. This has laid the material basis for a widespread politics of unemployment.

4. Without any claim to being a complete list, we discuss seven key factors on the supply side of the labour market and two crucial demand side factors that together contribute to the crisis. On the supply side we have high growth rates and aspirations, the youth bulge, the education wave, the dominance of ​‘general’ degrees, sub-standard degrees, and continued relevance of caste and gender based rigidities. On the demand side we have the collapse of public sector employment and inability of the private sector to create adequate good jobs due to contractualisation and automation.

5. The foregoing factors are clear to all observers of the Indian economy. The question is, of course, what can be done? Several long-term and short-term measures which face these structural conditions as they exist currently, are needed. Public action and spending should be strong elements of all these measures.

6. The report details four policy measures for addressing the crisis. In Chapter Three, Strengthening Towns through Sustainable Employment: A Job Guarantee Programme for Urban India, we propose a programme that calls for providing 100 days of guaranteed work at D500 a day for a variety of works in small towns. It also provides for 150 contiguous days of training-and-apprenticeship at a stipend of D13,000 per month for educated youth. In Chapter Four, Creating Good Jobs through a Universal Basic Services Programme, we argue that a well-executed UBS would go a long way in restoring public goods to their rightful place in society, creating decent work in the process. Chapter Five, How to Revive Indian Manufacturing: On the Need for Industrial Policy, by Jayan Jose Thomas discusses the renewed interest in, and continued relevance of industrial policy. Srinivas Thiruvadanthai in Chapter Six, Using Fiscal Policy to Alleviate the Job Crisis, argues that there is ample fiscal space to address the criss via public spending.

7. India is at a crucial juncture in its economic development where timely public investment and public policy can reap huge rewards. At the same time, being in denial about the current realities and missing this window of opportunity can have large negative consequences in social and economic terms. Let us act together to ensure that it is the first eventuality that comes to pass.

Microenterprises have been the engines of job growth in the majority of dynamic economies. India is home to thousands of microenterprise clusters as well as millions of distributed entrepreneurs who can become job creators. Fostering of such mass-entrepreneurship is key to addressing India’s employment challenge.

Case studies of clusters in general, and of women entrepreneurs in particular, show that if key factors such as collective action, infrastructure, credit, and market linkages are in place, returns to entrepreneurship are vastly improved. Inspirational stories are also emerging in the use of fourth industrial revolution technologies to improve access to markets and enter global value chains in a way that awards greater agency to women entrepreneurs.

Our aim in this report is to provide information and analysis that can assist policy-makers and the microentrepreneurial ecosystem at large to develop tools required to help this sector flourish. The study looks at non-farm microenterprises that employ less than 20 workers. We analyse various dimensions such as geographical distribution, demographics, gender (employment and enterprise ownership), industrial distribution, labour productivity, and wages. The analysis is based on Economic Census and National Sample Survey data.

India is one of the world’s fastest growing economies. To be a stable and prosperous democracy, this growth must be accompanied by the creation of meaningful, secure and remunerative employment. Realising this goal requires a grounded and comprehensive overview of the state of labour markets, employment generation, demographic challenges and the nature of growth.

The State of Working India (SWI) is envisioned as a regular publication that delivers well-researched, analytically useful information on India’s labour market, by bringing together researchers, journalists, civil society activists, and policymakers interested in labour and employment issues.

The report is based on the research of CSE staff, as well as on background papers which are available online. SWI conceives of India’s ongoing structural transformation as composed of two processes — movement of workers from agriculture to non-farm occupations (the Kuznets process) and from informal activities to formal ones (the Lewis process). But it adds crucial considerations of social equity and ecological sustainability to this standard framework. In the 21^st century, Lewis and Kuznets have to meet Ambedkar and Gandhi.

When the pandemic hit, the Indian economy was already in the most prolonged slowdown in recent decades. On top of this, there were legacy problems such as a slow rate of job creation and lack of political commitment to improving working conditions which trapped a large section of the workforce without access to any employment security or social protection.

The pandemic has further increased informality and led to a severe decline in earnings for the majority of workers resulting in a sudden increase in poverty. Women and younger workers have been disproportionately affected. Government relief has helped avoid the most severe forms of distress, but the reach of support measures is incomplete, leaving out some of the most vulnerable workers and households. 

The Centre for Monitoring Indian Economy’s (CMIE) Consumer Pyramid Household surveys have emerged as an important source of regular labour market data for India. Given the differences in methods in data collection between the CMIE and official employment sources, it becomes exceedingly important to establish some comparability between the government and the CMIE datasets. With the release of the official labour surveys, Periodic Labour Force Surveys for 2017 – 18, we now have an overlap between the official datasets and CMIE datasets. In this paper, we examine the extent of comparability of labour force estimates from these two datasets. We find that employment estimates for men are broadly comparable. However, for women, there is a consistent divergence with CMIE estimates of women’s workforce participation lower than that of NSS-PLFS. We explore the points of divergence in the measurement of women’s work and hypothesise some potential reasons for this difference. We find that irrespective of the reference period used in the PLFS estimation of employment statuses, there is no convergence with the CMIE employment estimate for women’s employment. Moreover, the mismatch in CMIE-PLFS estimates occurs across all types of women’s employment and irrespective of what reference period of employment (in official data) is used.