Routledge Handbook of Indian Politics by Atul Kohli

Author:Atul Kohli
Language: eng
Format: epub
ISBN: 9781135122744
Publisher: Taylor and Francis

The Indian labor market

In 2004/05 the Indian labor force consisted of about 450 million persons, growing annually at about 1%. Workforce participation rates have expectedly declined with the growing proportion of youth undergoing education. About half of the workforce is self-employed, and about 11 million are unemployed (Government of India 2007). Slightly less than three-fifths of the workforce are engaged in agriculture, residing in rural areas, producing a little less than one-fifth of GDP. Cultivators constitute about two-thirds of the rural workforce; the remaining third is agricultural labor. Industrial employment forms around 18% of the workforce, producing about 27% of domestic output.3

The worker-population ratio in the economy has remained constant at around 40%, while it is about 28% for women (probably an underestimate). Child labor as a proportion of workers has steadily declined, with rising school enrollment, though it is still pretty large in absolute numbers (8.6 million in 2004/05 representing 6.2% of children in the age group 5–14), with high visibility, as it is concentrated in selected industries and locations, often producing exportable goods.

Despite considerable disparity in wages and earnings across the states, and between rural and urban areas, long-term economic migration rates are low in India (compared to developing countries); much migration is to the metropolitan areas—contributing to labor supply in the urban, informal sector, moderating wage growth and inducing flexibility in the labor market. Long-term migration across the states is reportedly declining, but short-term or ‘circulatory’ migration from rural hinterland to towns and cities in search of livelihood has apparently gone up.

In 2004/05 the unemployment rate—measured by the ‘usual status’ defined as whether a person was employed at all during the last year—was 3.1% (Government of India 2007). The low unemployment level—a spurious measure of ‘full employment’—simply reflects the reality that few can afford to remain unemployed in a poor country with no social security, and there exists severe underemployment or disguised employment.

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