Research Report

August 2013
lorent
JmZ
Photo
:
Towards greater labour market
flexibility: Issues and Options Florent
Hemal Shah
JmZPhoto:
Takshashila Scholar
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Indias massive informal sector also has negative consequences on the informally-employed
workforce. Only about 7 percent of the workforce is covered by social security (lanning
!ommission" #$$%&. 'he rest of the () percent have no direct access to unemployment insurance"
skills or training programmes" which also makes them less employable. *ages are lower as the
minimum wage legislation would be too e+pensive for small informal businesses to implement"
making poverty a widespread issue. In fact" as shown on 'able %" the share of informal ,obs in the
formal sector companies is on the upward trend (apola and -ahu" #$%#&.
'o put this in perspective" evidence has found that the average si.e of the informal economy as a
percentage of gross national income in #$$$ was /% percent in developing countries" )0 percent in
transition countries and %0 percent in O1!2 countries (-chneider" #$$#&. In general" richer
countries tend to have small informal economies" and vice versa. 3n economy with a 4%$"$$$
higher per capita 52 is associated with having 0 percent less output a!ributed to the informal
economy (6-3I2" #$$7&.
Table (9 -istribution of informal workers in India
Informal workers in Informal workers in
Total percent of
6ear informal workers in
Informal sector 4ormal sector
the economy
(%%%:&& 672% %76% *2706%
#&&!:&' 673% 6738% *2768%
#&&%:(& 472% 70*% *272*%
9ata 5rom Pa2ola an" Sahu #2012&: 27 41
Our current labour regulation framework is8
%9 Archaic8 'he current legislation that governs employment regulation is the Industrial
2isputes 3ct (I23& %(/7" the clauses for which were conceived under the :ritish ;a,
#9 Restrictive8 In %(7<" changes to I23 were made so that firms employing )$$= people need
to seek government permission to e ect lay-o s" retrenchments and closures. 'his was
further restricted to firms %$$= workers in %(0#" making hiring or firing new workers
e+tremely di cult even if they are ine cient (-harma" #$$<&
)9 Convoluted8 >urther arising from the I23 of %(/7" there are about /7 6nions laws and %77
-tate regulations that overlap (?ant" #$%#&
3 growing formal sector thus seems to have more benefits @ for businesses and workers @ as
opposed to the current trend of a growing informal sector. Aowever it is di cult to e+pect
businesses to formalise considering Indias poor institutional and regulatory setup.
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T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
'hough many studies have looked into this issue" it may be worth revisiting the age-old debate of
labour market reform to e+plore the scope of modernisation and fle+ibility with reference to the
current political economy.
Aistorically" reforms suggested by analysts and businessmen have been drastic in nature" mainly
pertained to the formal sector" and failed to consider stakeholders with vested interests in an
infle+ible labour market. *hile those interests are not entirely unreasonable" it might be interesting
to collate a few reforms that have a workable Bgo-between approach for most stakeholders @
employers" employees" trade unions and the government. 'his paper a!empts to bring forth a
workable approach @ or a middle ground @ by taking into account the perceived short-term interests
of those in favour of status quo and those who tend to favour immediate reform. 3 middle approach
could further this decades-long impasse assuming that marginal progress is be!er than a stalemate.
#9 TH/ 7//- 4OR , +OR3,0L/ ,88RO,;H
'he push for labour market reform is not new. 3 host of international and Indian economists"
,ournalists" and analysts have wri!en and discussed this sub,ect for years. 2iscussing the benefits
of a fle+ible labour market" >allon and Cucas (%((%& argue in their paper that employment in
organised (formal& manufacturing would have been %7.7 percent higher in the absence of ,ob
security regulations. 'his agenda was brought forth in the *ashington !onsensus and reinforced
subsequently" to promote labour market fle+ibility as part of Dmarket fundamentalism.E
-harma (#$$<& also argues for the benefits of fle+ibility" but notes that the Indian labour (informal&
market is already very fle+ible. Fonetheless labour laws could be made more simple and friendly as
they currently promote litigation rather than the resolution of problems related to industrial
relations. -harma (#$$(& studies district-level panel data on informal manufacturing enterprises in
India and finds that a ma,or policy reform in %((% removed license controls on specific informal
manufacturing industries in India. 'his led to a contraction in the si.e of the informal sector and an
increase in value added per worker" suggesting that entry deregulation could lead to productivity
enhancing labour reallocation from the informal to the formal sector if labour laws are fle+ible.
On the other hand" several macro studies have contested the claims above. ;oy (%((0& found that
,ob security regulations for the period %(<$-<% and %(()-(/ have not been responsible for
slowdown in employment growth.
8
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;eal wage growth was also not responsible for poor ,obs growth (Fagara," %((/G apola" %((/&.
5oldar (#$$$& shows that employment in organised manufacturing sector grew at /.$) percent per
annum during the first half of %(($s despite the same statutory labour regulations.
2ebroy (#$$7& captures the current e+tent of convoluted labour legislation and nature of
restrictions. Ae also discusses the #7$$-pages long recommendations in #$$# by the -econd
Fational !ommission on Cabour" which pushes for innumerable changes in labour market
regulation. 'he restrictions imposed by !hapter H-: of the Industrial 2isputes 3ct (%(/7& are
mentioned in almost all studies as highly restrictive to businesses in the formal sector" and a ma,or
disincentive for informal businesses to formalise.
3 more recent study by 2ebroy (#$%#& further reviews the unchanged state of labour regulation in
India but throws in a di erent perspective by acknowledging that big changes may be politically
di cult to bring about given political constraints. Ae also notes that rigidity in labour laws is ,ust
one of the many problems that discourage formalisation. Cabour market reform has not been an
uncontroversial task. 5iven that" a less-sensitive angle would be to e+amine the e+tent to which
di erent Indian states have made amendments where possible to labour legislation and observe the
results of those changes.
:esley and :urgess (#$$/& show that states that amended the I23 in a pro-worker direction
e+perienced lower output" employment" investment and productivity in formal manufacturingG
informal manufacturing output also increased. Aowever" there have been some criticisms levelled
against their failure to account for sub,ectivity in grading the states (2ebroy #$%#& and failing to
account for labour laws other than the I23 (:ha!achar,ea" #$$<&. 'he latest labour bureau report
(Iuly #$%#& also guardedly acknowledges that states with more pro-labour legislation have not seen
a fall in unemployment ratesG whereas states like 5u,arat" Aaryana and Aimachal radesh being
more fle+ible have seen positive results. It should also be noted there is a lack of robust labour
market data and" therefore" rigorous empirical research.
Opinion pieces and writings in the popular press have also accompanied these scholarly works.
Aowever" not much has been done mainly because reforms that are drastic in nature are not always
feasible to implement.
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T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
In light of this" it may be worthwhile identifying labour market reforms which are realistically
doable8 e+ploring components of the labour market that could be usefully reformed" with lesser
resistance" finding more ways to boost ,ob creation" taking cues from di erent state reforms"
developing the informal sector" and eventually e+plore the future prospect of formalising the
informal economy to increase productivity. >inding a go-between" workable" approach is probably
the second-best step in the right direction considering Indias urgent need to boost livelihoods in the
face of economic and political challenges" like8
2.1 Rising fiscal deficit8 3lthough post %((% saw employment rates declining" there was still good
news in terms of rising growth rates. In #$%%-%# growth rates fell as low as a decade ago (/.(
percent&" even lower than the #$$0 financial crisis. 'he ?elkar report (#$%#& on fiscal consolidation
also warns of adverse consequences in light of the widening fiscal deficit (<.% percent of 52 in
#$%#-%)&.
2.2 Exploiting the demographic dividend8 'he stakes to reform sooner rather than later will be
particularly high in the coming decade to e+ploit the opportunities from the demographic dividend. 3s
Indias birth rate falls and life e+pectancy stabilises" the portion of the population that is of working age
will grow. 'his will yield the Ddemographic dividendE @ a period in which the burden of supporting the
dependent young and old will be relatively light" leaving more income to plough back into investment.
2.3 Exploiting the New Manufacturing olic!8 63 introduced the this policy to harness the
demographic dividend" aimed at increasing the share of manufacturing in 52 from a %< percent
(the figure is above /7 percent in !hina& to #7 percent and to add %$$ million ,obs by #$##. 'his is
a classic case of pu!ing the cart before the horse @ those ,obs wont be created if tough labour
restrictions remain in place. 3nalysis by !risil" an Indian consulting group" concludes that" without
ma,or reforms the share of manufacturing in 52 will only reach %7 percent (!risil Insight" #$%#&.
2." Constant pressure to redistri#ute8 *hile the failure to complete the reforms e+plains in part
why growth has slowed it also represents an opportunity8 >inishing the ,ob now would eliminate
barriers to business development" helping to pull the economy out of its slumping tra,ectory. 'he
question is whether the changes are possible in the face of rising inflation" massive corruption
scandals" and populist blowback led by opportunistic politicians.
1
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oor outcomes from the Fational ;ural 1mployment 5uarantee 3ct is a case in point (*right and
5upta" #$%%&. 'he presence of about two do.en parties in the coalition with varied interests also
adds to the di culty.
2.$ %endenc! to preserve the status &uo8 In #$$0" economist aul Handenberg wrote a paper for
the International Cabour Organisation on the possible adoption of Bfle+icurity in India. >le+icurity
is a combination of fle+ibility in labour laws to enable industry to manoeuvre itself out of a
depleting fund situation by hiring and firing employees by means of individual contracts (and lesser
regulation&. 'his is combined with adequate social safety nets for the millions of workers who are
dependent on such ,obs. 'his idea" which has been -candinavias success story for long" was
quickly dismissed by the Cabour :ureau as unworkable in the Indian conte+t. 'his is because it
would only apply to < percent of the total workforce of India" and not to the other () percent in the
informal sector @ highlighting the lack of compelling narrative for such discussions in India. 'he
discussion should rather be about how to bring the () percent under the system and apply a concept
like fle+icurity.
2.' (tri)ing trade unions8 Hirtually" all ma,or Indian political parties have a trade union wing.
D'his means political parties (more so in a coalition& are reluctant to legislate on labour fle+ibility"
since this would antagonise their own trade union wingsE (2ebroy" #$%#&. >or instance" in >ebruary
#$%# and #$%)" millions of trade union members organised a national strike (3ll India :andh& to
demand permanent ,obs and elimination of contract labour.
)9 8OLI;6 ;O7SI-/R,TIO7S
>or decades" the 6nion government has not been able to make a case to make labour markets more
fle+ible due to several bo!lenecks8 trade union resistance" problematic legal drafting of
amendments" tendency of the 6nion government to pass the buck on to -tates" passing reforms
through small enclaves" or problems with inspections (2ebroy" #$%%&. 'he policy recommendations
below are an a!empt to address these issues by taking a more workable approach @ through a
middle ground @ to sensitively initiate the development of the labour market to pave the transition
to fle+ibility and security in future. 'he reforms narrative must increasingly shift to the informal
sector to boost social security reforms" sustainable livelihoods creation" -tate competition" and
engaging with trade unions e ectively.
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T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
3.1. *ncreasing contesta#ilit! in the la#our mar)et+
How can competition and choice boost social security and livelihood opportunities?
*hile the formal sector is characterised by a rigid labour market" the () percent of the Indian
workforce in the informal sector work under e+tremely fle+ible conditions. Aowever" social
security coverage is minuscule or non-e+istent. In India" social security in the formal sector is
organised around the following key laws8
Table #: 2inistry of Labour < /mployment =#&()>
%. The /mployees? State Insurance ,ct@ (%! /hich co6ers 5actories an"
esta-lishments /ith 10 or more em2lo1ees an" 2ro6i"es 5or com2rehensi6e me"ical
care to the em2lo1ees an" their 5amilies as /ell as cash -ene5its "uring sickness an"
maternit1: an" monthl1 2a1ments in case o5 "eath or "isa-lement7
#. The /mployees? 8roAident 4unds < 2iscellaneous 8roAisions ,ct@ (%'# /hich
a22lies to s2eci5ic sche"ule" 5actories an" esta-lishments em2lo1ing 20 or more
em2lo1ees an" ensures terminal -ene5its to 2ro6i"ent 5un": su2erannuation 2ension:
an" 5amil1 2ension in case o5 "eath "uring ser6ice7 Se2arate la/s e.ist 5or similar
-ene5its 5or the /orkers in the coal mines an" tea 2lantations7
). The /mployees? ;ompensation ,ct@ (%#) /hich re;uires 2a1ment o5 com2ensation
to the /orkman or his 5amil1 in cases o5 em2lo1ment relate" in<uries resulting in "eath
or "isa-ilit17
/. The 2aternity 0enefit ,ct@ (%$( /hich 2ro6i"es 5or 12 /eeks /ages "uring
maternit1 as /ell as 2ai" lea6e in certain other relate" contingencies7
7. The 8ayment of .ratuity ,ct@ (%*# /hich 2ro6i"es 1% "a1s /ages 5or each 1ear o5
ser6ice to em2lo1ees /ho ha6e /orke" 5or 5i6e 1ears or more in esta-lishments
ha6ing a minimum o5 10 /orkers
3 cursory look at the most unionised state of India" *est :engal" suggests that three of their largest
trade unions (!I'6" IF'6!" 3I'6!& focus their work around security for workers in the informal
economy (-en" #$$(&. >igure / shows the composition of labour force" by industry" employed in the
informal sector. -caling up security for informal sector workers could reduce the fierce resistance
of some of these trade unions in addition to developing their work life in the informal sector.
1
2
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3.1.1 *dentif!ing di culties to scale up social securit! in the informal sector+ 3lthough
informal workers" especially contract employees" are supposed to be covered by social security
schemes under the 1mployees rovident >und Organisation (1>O&" implementation is often a
problem because of several reasons8
3 statutory body under the Jinistry of Cabour and 1mployment" the 1>O provides and regulates
social security schemes such as the 1mployees rovident >und (1>&" 1mployees -ocial
Insurance (1-I& and 1mployees ension -cheme (1-&. Aowever" there is not much incentive for
small" unregulated (informal& enterprises to adopt 1>O schemes mainly due to cost and
administrative burdens.
4igure !9 8ercentage of workers in informal employment to the
total workforce in each segment@ (%%%:&&
,griculture
Informal
workers
%%9!"
4ormal
workers &9$"
Trade@ Hotels <
Restaurants %9*" (9)"
;onstruction
%)9'
"
$9'
"
TOT,L +OR34OR;/ %)9&"
*9&
"
2anufacturing $9)" ()9*"
7on:agriculture
!9)
"
('9*
"
Transport@ Storage@ etc *9*" #(9)"
4inancial SerAices $$9&" )!9&"
;ommunity@ Social <
$'9%" )!9("
8ersonal serAices
''9*
"
!!9)
" 2ining < Buarrying
/lectricity@ .as@ +ater $9&" %!9&"
&"
(&
"
#&
" )&"
!
&
" '&"
$&
" *&" &"
%&
" (&&"
Data from Unni (2002)!
:usinesses are increasingly moving to the !ost-to-!ompany approach of monetising all benefits to
include in salaries" as opposed to providing benefits over and above the gross salary. 1mployers are
required to pay e+penses of %.%< percent of salary or /./< percent of contributions (-abharwal"
#$%#a&. :enefits and contributions also leave low-wage employees with only over 7$ percent of
their monthly salary" as shown in 'able ). D'his high salary deduction feels particularly brutal at
lower wages and the biggest pushback for higher net salaries comes from employees who often
have informal employment choicesK 1>O costs %$-#$ times more e+pensive than any public or
private government securities mutual fund in the world"E e+plains -abharwal (#$%#b&. Ae
recommends starting with the %# percent employee contribution and gratuity to fi+ that.
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T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
Joreover" the perceived value for money is fairly less for low-wage workers as the 1> has often
been criticised for poor customer service. 'he 1-I" on the other hand" is also blighted with poor
hospital facilities and lack of sta (-abharwal" #$%#b&. 3 look at the 1-I budget for #$%%-%# and
estimates for #$%#-%) show that contributions have been steadily increasing" but e+penses have
been increasing too (1-I!" #$%#&.
'here has been a net surplus at the end of all years" which shows a growing capacity to
accommodate more people in the formal sector in future. Aowever" poor service is unacceptable
especially when their accounts continue to show a net surplus (;s. 0777.07 crores in >L #$%#-%)&.
Table )9 Salary d eductions for /m ployees with .ros s 2onthly +ages of Rs9 '@'&&
/mployer /mployees
2onthly
Total 2onthly Total
=" cost> =" cost> ="> =Rs9>
.ross Salary %:%00
-eductions
Pro6i"ent Fun" 3768 12 1%768 62
PF 0.2enses 1761 1761 *
0PS 733 733 4%
0S! 478% 178% 67% 3%
Pro5essional Ta. 371 371 18%
+a-our =el5are 0736 0736 0782 40
Statutor1 4onus 733 733 4%
>ratuit1 471 471 26%
Total -eductions !%9( #@*&'
7et Salary #@*%'
A"a2t e" 5rom Sa-har/al #2 012-&: The Economic Times: 9ec 2: 2012
!ollusion between businesses and labour inspectors is another adverse consequence of poorly
managed social security schemes. 3 primary survey conducted in ?arnataka highlighted several
issues8 creating bank accounts for provident funds proved di cult" unregistered firms often dont
give their e+ employees contributions back" or dont deposit the contributions to the > o ce
(;a,eev" #$$(&. Aere collusion becomes an optimal strategy8 small" unregistered firms do not en,oy
economies of scale and often have to cut back on contract wages and benefits. Jore often than not"
they maintain more than one log @ one for the labour inspector and other for the company. In such
cases" the inspector often colludes with the company in e+change for a bribe. 'herefore" for
fle+ibility to work" implementation of e+isting laws is important in order to set a precedent for
future laws.
1
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3.1.2 Encouraging contesta#ilit! and monitoring in social securit! provision+ 'o reduce rent-
seeking" improve value for money in contributions" and increase social security coverage for
informal workers" competition in the pension sector is key. *ith the e+tension of the Fational
ension -ystem (F-& to all Indian citi.ens" including the unorganised sector @ and the ension
>und ;egulatory and 2evelopment 3uthority (>;23& as regulator of the pension sector @
employers should be encouraged to allow employees to opt into the scheme of their choice.
'he F-" unlike the 1>" runs on a defined contribution mechanism whereby a pensioner gets back
the amount proportional to his contribution" rather than a fi+ed return. 'he F- also en,oys a
higher rate of return than the 0.#7 percent under 1>. F- scheme is web-enabled and removes the
human interface that could invite rent-seeking" thereby inviting choice and contestability" and
incentivising 1>O to reform alongside (3sher" #$%%&.
In addition" the government should look into investing and encouraging formal sector organisations
modelled after private companies" like 'eamCease -ervices" Ja >oi ;andstad" Janpower and so
forth" in the informal sector. >or instance" besides e+tending a traditional human resources service"
such organisations are also dedicated to improving their people supply chain by identifying and
matching contract labourers @ temporary sta @ a sensitive sub,ect amongst the trade unions.
!ontract labour is often e+ploited in Indias formal sector @ formal businesses employ short-term
informal labourers absent social security provisions. 'he presence of such organisations would
ensure that contract labourers get a fare wage for their services in addition to social security" as
temporary ,obs are still be!er than no ,obs.
'here is an increasing need for these organisations to set up shop in the informal sector. 'he
government should incentivise small privately run organisations on a similar model to ensure safe
contractual labour coupled with social security in the informal economy. 'his could help narrow the
wage and benefits gap with the formal sector and also encourage informal workers to move to the
formal sector" where productivity is higher (as cited before&. Joreover" 3adhaar-linked benefits
system could play a role in not only safe delivery of social security payments but also encourage
financial inclusion.
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T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
3.1.3 ,easi#ilit! of formalisation and #oosting livelihood opportunities+ 'he Jinistry of
>inances #$%) 1conomic -urvey acknowledges that" Dwhile industry is creating ,obs" too many
such ,obs are low-productivity non-contractual ,obs in the unorganised sector" o ering low
incomes" li!le protection" and no benefits.E >ormalisation is a desirable step" but without adequate
skills and training amongst transitioning workers it would mean coming under e+pensive social
security packages" especially where employers dont o er the F- option. >ormalisation would
also mean the application of innumerable labour statutes" which could increase costs substantially.
'he financial inability of small informal employers to provide social security and comply with
labour regulations would result in either unemployment or mechanisation" or both. Joreover"
ma,ority formal sector ,obs are in the public sector rather than the dynamic private sector" as >igure
7 shows.
Aowever" these data may not be perfectly reliable due to wide ,ob di erentials and lack of tracking
of active and inactive members in the 1>O (ai and Joorty" #$%)&. 'here is an imminent need for
be!er dataG professionalism in the 1>O and Cabour Jinistry should be a priority on this front.
4igure '9 -istribution of Cobs in 4ormal Sector
=in Lakhs>
300
2%0
*$9**
*9! $9!$
9&' %#9! %9)
200
!9'#
Pri6a
te
1%0
100 (%&9' (%'9'% (%)9(! (&9&* ((9 (&9&# (*$9*!
Pu-li
c
%0
0
1**1 1**8 2000 200% 2006 2008 200
9ata 5rom Pa2ola an" Sahu #2012&
-mall firms should be brought into the formal sector when statutory costs decline and service
quality of social security mechanisms improve. It is important to remember that enterprises often
consider the formality-informality trade o seriously8 formalisation would entail entry costs and
operating costs (Coay.a" %((7&.
1
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1ntry costs of doing business in India involve %# procedures" #7 days" /( percent of income per
capita and paid-in minimum capital of %/$ percent - as opposed to 7 procedures" %# days" /.7
percent and %).) percent respectively in the O1!2 (*orld :ank" #$%)c&. Operating costs @
comple+ ta+es" labour regulations" property rights" contract enforcement @ are also high.
'hese factors e+plain why a whopping ma,ority of enterprises in India choose to remain informal.
:ut there are also costs related to informality8 penalties and corruption" limited access to public
services" missed opportunities on e+pansion" limited access to finance and cooperation with formal
enterprises (Ishengoma and ?appel" #$$<&.
-o is formalisation a solution in India at this stageM !ontrary to most studies" Ishengoma and
?appel (#$$<& argue that considering the formality-informality trade o and the current business
and regulatory environment in developing countries" Dthe opportunity costs of informality seem to
be much lower than the cost of operating formallyKtotal formality may mean closing up the
business unless the business environment within which firms operate is improved.E
*hile -tates should be urged to act on boosting incentives to formalise" they should also allow
individual states to boost livelihood opportunities in the informal sector with some provision of
social security as argued above. 'his brings out the small di erence between ,obs and livelihoods.
'here may not be a necessary link between employment and poverty reduction Dunless the
employment provides assurance of sustainable livelihoods.E (!-;" #$$0&. Informal ,obs" often in
the form of sustainable livelihoods" are frequently understood as substitutes to formal sector ,obs in
some countries. 'hey should rather be looked upon as supplements mainly because the formal
sector does not have the capacity to ensure adequate means of livelihoods (!-;" #$$0&.
5u,arat !hief Jinister Farendra Jodi recently highlighted how we have power plants but no coal
@ and therefore no livelihoods @ because of policy paralysis. 3lthough the Caw Jinister intends to
fi+ this" it is not directly possible as it is on the -tate Cist rather than the 6nion Cist (:ha!" #$%)&.
2i erent -tates have some degree of independence to undertake reforms to create and preserve
livelihoods. -tates like 5u,arat have been proactive in creating more choice and opportunities for
farmers by amending restrictions on the 3gricultural roduce Jarketing !ommi!ee 3ct to allow
them to sell their produce to wholesalers" e+porters" industries and large trading companies.
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T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
'hat amendment also encourages contract farming" unlike other states like Jaharashtra where
farming activity is restricted" and output could be sold only via government-organised mandis.
5u,arat has also been upbeat in making small amendments to labour regulation that has resulted in
reducing rural and urban unemployment. It has even managed to keep its informal sector smaller
than the national average (Airway and -hah" #$%%&.
3 bigger problem that restricts livelihood opportunities is also the lack of skills that are relevant to
the market place. *elfare programmes like the J5F;153 have resulted in massive e+penditure
of ta+payer money and widening the fiscal deficit" but only creating a class of mostly young people
without skills to contribute to Indias economic progress or their own development (;amakrishnan
and 3sher" #$%#&.
On the other hand" 'eamCease (#$$(& recognises how Deducated unemployment and shortage of
competently skilled labour co-e+ist"E and therefore the importance of training labour in di erent
skills and professions to avoid a mismatch as industry grows. 3dditionally" there is also a perceived
preference for white-collar ,obs in India" ignoring the importance of vocational skills that may be
more suited to some workers circumstances.
'he -tate of 5u,arat has entered into an agreement with 'eamCease to set up the first ever
vocational education university that aims to address the skills gap via its ## community colleges
that o er short associate degree programmes in con,unction with employers and increased access to
technology.
-uch initiatives could also benefit from scaling up knowledge economy aspects of skills
development and talent building8 Din which generation and application of knowledge" in all its
varied aspects" are used as an integral part of generating income and wealth in the economy" and in
household consumption and production activitiesE (3sher" #$%)&. 3nother way to boost such
practices is to e+pand the number of internship opportunities o ered to young students or
graduates. 'his would enable organisations to reduce the time and cost of matching in the long run
and tackle both educated unemployment and skills shortage (3sher" #$%)&.
It may therefore be safe to conclude that if labour laws and regulatory practices are not made
compatible with economic and social structures prevailing currently @ and with evolving structures
@ welfare cannot be advanced.
1
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3.2. olitical econom! of economic freedom+
Can federal freedom encourage friendlier regulation for workers and businesses?
3nother point of leverage for boosting productive livelihood opportunities is by making markets
more fle+ible. *hile there are many ways of doing this" our aim will be to identify the low hanging
fruit that could be e+ploited to make a marginally significant di erence. *hile keeping within the
decree of 6nion labour regulation" there are some spaces for individual -tates to make amendments
and conte+tualise labour market laws in ways best suited to them in terms of increasing livelihoods"
boosting productivity" fle+ibility" and maintaining stakeholder security. ositive outcomes from
such an e+ercise would enhance the a!raction of informal employers and workers to transition to
the formal sector.
3.2.1 Moving legislation from Concurrent to (tate -ist+ Indias labour legislation is a sub,ect in
the !oncurrent Cist" which means that both the 6nion and the -tate could enact laws pertaining to
the relevant category.
'here are8
%. Cabour laws enacted and enforced by the 6nion government
#. Cabour laws enacted by 6nion but enforced by both 6nion and -tate governments
). Cabour laws enacted by the 6nion but enforced by the -tate government
/. Cabour laws enacted and enforced by the various -tate governments which apply to
respective -tates (Jinistry of Cabour and 1mployment" #$%%&
'his simply means that as far as the -tate governments are concerned" they can make amendments
to some 6nion statutes" and also add new -tate statutes to a certain e+tent. 'he ?erala Cabour Caws
3ct of #$$#" that is the simplification of returns and registers of small establishments" is one
e+ample (2ebroy" #$%%&.
'he #$$/-$7 1conomic -urvey by the Jinistry of >inance also notes that" DCabour being a sub,ect
in the concurrent list" -tate-level labour regulations are also an important determinant of industrial
performance. 1vidence suggests that -tates" which have enacted more pro-worker regulations" have
lost out on industrial production in general.E -tate empowerment over labour legislation would
mainly serve a twofold purpose.
19
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
On the one hand" states could safely e+periment with incentives that suit their respective political
economy in terms of boosting livelihood opportunities. On the other hand" they could incite
competition with other states to perform be!er if the results are positive.
'he following items appear under the -eventh -chedule (3rticle #/<& of the !onstitution" under the
!oncurrent Cist8
##. 'rade unionsG industrial and labour disputes.
#). -ocial security and social insuranceG employment and unemployment.
#/. *elfare of labour including conditions of work" provident funds" employers liability"
workmenNs compensation" invalidity and old age pensions and maternity benefits.
-tates could easily e+ercise small reforms they have endeavoured to make by amending the
-eventh -chedule to move labour to the -tate Cist. 'his will ensure that labour laws and regulatory
practices are made compatible with economic and social structures prevailing in the -tates. It
would also give them capacity to react to evolving structures to advance the welfare of workers.
'here is already some evidence on this8 the #$%# Cabour :ureau survey documents that inter-state
di erences throw light on some having increased labour force participation and reduced
unemployment rates. D-ome of the -tates having pro-labour-rights policies have not performed
well in terms of unemployment rate. 'he report is however not intended to arrive at any finding on
the trade-o or complimentarily betweenOof the pro-labour rights and pro-labour reform policies. It
may perhaps be advisable for the -tate 5overnments to take cognisance of inter-state di erences in
framing labour-market policies.E
3.2.2 *ncreased competition8 'he 'eamCease (#$$(& labour ecosystem inde+" aggregating labour
demand" supply and regulation" further shows why -tate governments should not miss out on the
opportunity to di erentiate themselves in the space available for labour ecosystem amendments to
boost livelihood opportunities. 'his inde+ shows 3ndhra radesh and ?arnataka beating 2elhi and
5u,arat for the top spots on overall labour ecosystem" but several others who are improving on the
di erent variables of their sub-indices that include strikes and lockouts prevention" labour
participation rate" and inspector ra,.
2
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It is thus important to note that -tate initiatives in making amendments highlight the political will
to boost fle+ibility for employers and ,ob opportunities for employees. Jore importantly"
successful initiatives to leverage opportunities via 6nion legislation show how individual -tates are
be!er at dealing with their political economy issues. 'he continuous change in rankings on
'eamCeases labour ecosystem inde+ and sub-indices easily indicate how competition drives
di erent -tates to do be!er than their peers. In addition" considering the challenges that the 6nion
faces in initiating and implementing market-friendly legislation" it would make sense to make a
case to move labour from the !oncurrent Cist to the -tate Cist.
3.2.3 Evidence of improving emplo!ment and enterprise+ :esley and :urgess (#$$/& show that
states that Damended the I23 in a pro-worker direction e+perienced lower output" employment"
investment and productivity in formal manufacturing.E Informal manufacturing output also
increased. -tates like 3ndhra radesh" ?arnataka" ?erala" ;a,asthan and 'amil Fadu" were
considered to have more fle+ible regulation than 5u,arat" Aaryana" Jaharashtra or un,ab.
Aowever" as mentioned before" :esley and :urgess (#$$/& failed to account for sub,ectivity in
grading the states (2ebroy" #$%#& and for labour laws other than the I23 (:ha!achar,ea" #$$<&.
3 more recent study by Aasan and Iandoc (#$%$& improves on those criticisms (by incorporating
:esley and :urgess #$$/" :ha!achar,ea #$$< and 5upta" Aasan and ?umar" #$$(& but also
concludes that Indian states with more fle+ible labour regulations tend to have larger-si.ed firms.
'he study also finds that average wages in labour productivity are much lower in small firms than
large firms.
2ebroy (#$%%& also documents the various -tates @ 3ndhra radesh" 5u,arat" ?arnataka" Jadhya
radesh" and Jaharashtra @ who wish to make labour laws more fle+ible to allow choice and
opportunities for employees.
'his includes fle+ibility in work hours" night shifts for women" or freedom to fi+ minimum wages.
:ut these initiatives would require changes in 6nion legislation and have thus been shot down.
-imultaneously" -tates have also a!empted the same for employers. Initiatives have been taken to
reduce the number of inspectors in 6!ar radesh" 3ndhra radesh" un,ab" 5u,arat" ?arnataka"
Orissa" and ;a,asthan.
21
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
*hile the 6nion government was debating to introduce Holuntary -elf-!ertification (H-!& in the
%%
th
>ive Lear lan" 5u,arat had already gone ahead with it (Airway and -hah" #$%%&. H-! allows
firms to register their compliance of labour regulation and avoid the inspector ra, and unnecessary
litigation in e+change. 'hese certificates could be issued by Dthird party inspections with regulatory
compliance certified by e+ternal recognised agencies.E (2ebroy" #$%%&. un,ab" ;a,asthan and
Jaharashtra are also trying to capitalise on H-! but there is often a tendency to pass such reforms
in small enclaves" like special economic .ones" to prevent rocking the boat too much.
5u,arat has also amended the I23 to allow retrenching workers but only at a higher compensation
of /7 days pay. *orkers can also be hired on Dfi+ed termE @ di erent from contract workers @ to
satisfy work needed to be done for short periods. 3nother popular reform that has increased
fle+ibility for production units is to limit the number of registers to two (Airway and -hah" #$%%&.
:ut that same proposal to limit the number of registers to two" returns to one" and permit use of
electronic formats" has been si!ing in the ;a,ya -abha since #$$7 but no action has been taken so
far (2ebroy" #$%%&.
Aowever" -tate freedom could also be used adversely. 'here are instances where reduction of -tate
intervention could boost ,ob opportunities8 especially restrictions like the -hops and 1stablishments
3cts that prevent employing women outside of Bregular work hours adversely a ecting
establishments like call centres (2ebroy" #$%#&. -ometimes" -tate freedom could also lead to
Boversimplification (2ebroy" #$%#&.
>or e+ample" the >actories 3ct for which -tates have the leeway to make rules" has seen Dobtuse
and unwarrantedE intervention" with obsolete ideas @ some states decree that factories must be
whitewashed and plastic paint wont doG earthen pots filled with water are required over water
coolersG red-painted buckets with sand are required over fire-e+tinguishers.
In some -tates" factories are not allowed to use modern computerised records necessitating the use
of manual muster rolls (2ebroy" #$%#&. 'his could be for the fear of substituting technology for
,obs. Aowever" eliminating such rigid rules and instead training people to use technology could
result in boosting good quality ,obs productivity rates" which is the need of the hour.
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3.3 olitical econom! of resistance and dialogue+
How can trade unions accept reasonable reforms?
-everal 6nion reform initiatives" especially reforms to simplify business practices like maintaining
a limited number of registers" have met with strong resistance from the trade unions. >igure 7
shows the growth of union membership over time. One e+planation is that unions see reforms as
dilution of their rights. 3nother e+planation is that such perceived dilution @ emanating through the
lanning !ommission or the rime Jinisters !ouncil on 'rade and Industry" as opposed to the
Jinistry of Cabour and 1mployment @ invites further resistance on their part (2ebroy" #$%%&. In
#$%%" #"(/)"##% man-days were lost due to strikes and lockouts" however this figure fell down to
%(0"770 in the first quarter of #$%) (Cabour :ureau" #$%)&.
4igure $9 Trade union membership surAey: #&(#:
() =maDor unions onlyE in millions>
!&
3373
)&
2embership in
#&&
#&
1871
;laims filed by unions in 2arch
#&()
1472
(&
676
*71
37*
3
7
4
37
2
&
02S ,IT1; H2S I7T1;
9ata 5rom 'inistr1 o5 +a-our an" 4usiness Stan"ar" #2013&
It is also interesting to note three things contrary to conventional wisdom8
One" instead of strikes" lockouts have become more common (;oy %(0/ in :ha!achar,ea #$$<& to
the e+tent that workers end up agreeing to downsi.e the workforce without government
interference (3nant et al" #$$< in :ha!achar,ea" #$$<&. *hile this is not an optimal solution" it is
an indication that a healthy power balance needs to be brought about between workers and unions.
'wo" employer unions also e+ist. Aowever" due to lack of transparency in filing returns" it is not
possible to determine the si.e of employer unions (2ebroy" #$%%&. 3dditionally" there has been a
rise in trade unionism in the informal sector.
23
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
Fational unions like the IF'6!" 3I'6!" AJ-" :J- and !I'6 are mainly manufacturing sector
unions but there is a marked transition @ Dan increased switch to services and the rural sectorE @ in
the union category (2ebroy" #$%%&. >or instance" -1*3" a 5u,arat-based informal workers trade
union en,oys high -tate-level membership.
'hree" -tate-level unions form a much bigger chunk of the pie at 0( percent" the rest comprising of
national unions (2ebroy" #$%%&. 'hus it makes sense to shift the political economy of dialogue from
formal unions at the national level to informal unions in the -tate (2ebroy" #$%%&. In general" it
a rms the argument that labour and its related issues should be moved to the -tate Cist to ensure
structural e ciency in regulation.
3.3.1 .alancing trade unions and flexi#ilit!+ Jost studies and papers often argue mainly about
the detriment of restrictions @ on hiring and retrenching in firms with over a hundred workers @ to
the health of the economy. *hile this may be true" it has also been politically di cult to scrap that
portion of !hapter H-: of I23 because trade unions have historically defeated such moves.
Instead" it would make sense to look at where labour market could be made fle+ible but at a lower
cost to the trade unions to increase their likelihood of consent now and in the future.
One good approach to adopt was proposed by 2ebroy (#$%#&" where e orts to segregate I23s
layo " retrenchment and closure provisions could provide some labour market fle+ibility. 'he three
concepts reflect increasing degrees of severity" and unbundling them could make them more
acceptable to the trade unions. Cayo s and retrenchment are more palatable to the trade unions and
political parties than closures thereby making it easier to sell reforms. It is speculated that if
compensation for layo s and retrenchment were increased from )$ days pay per year worked to /7
days" political resistance may diminish. In *est :engal" this compensation is higher for layo s @
7$ percent of basic wages plus other benefits for the first ($ days and 77 percent thereafter until
disposal (-en" #$$(&.
Joreover" it is interesting to note that from #$$7 data industrial disputes occurred more because of
violence and indiscipline as opposed to layo s and retrenchments (2ebroy" #$%%&. In the la!er case
workers can approach labour courts where dispute se!lements take an average of three to five
years" some even span beyond %$ years. 2ebroy (#$%%& thus argues that it is possible to sell the idea
that o ering reasonable severance packages through I23 are far superior (and palatable& than
haggling over layo s and retrenchments. -everance pay policies in India are already DmodestE by
international comparisons (3sher and Jukhopadhya" #$$7&.
2
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'hat brings forth the scope to trade o higher severance pay for three important opportunities @
greater operational fle+ibility for businesses" greater professionalism in policy design and
implementation by Cabour Jinistries" and lower transaction costs for new companies (3sher and
Jukhopadhya" #$$7&.
3.3.2 Encouraging #e%er &ualit!/ li)e0minded unionism+ 6nions comprising of similar industry
units are more credible and easier to engage with. On the other hand" unions with members from
di erentiated industries and varied interests gives way to unchecked multiplicity whereby demands
made by members result from herd mentality" and lack credibility. !hanges to the 'rade 6nions 3ct
%(#<" such as 3mendment 3ct #$$%" could reduce unnecessary unionism that hampers productivity8
DFo union shall be registered unless at least %$ per cent (sub,ect to a minimum of seven& or one
hundred workmen" whichever is less" engaged or employed in an industrial establishment or
industry" with which it is connected" are the members.E 1arlier" any seven members regardless of
connection to industry could apply to register a union. 'hat was believed to be the main cause of
union multiplicity (-en" #$$(&.
'he #$$% 3mendment 3ct did see some immediate outcomes. >or instance" the number of new
registrations in *est :engal significantly and consistently dropped compared to previous years.
2ata from -en (#$$(& shows that there were %$"#7/ registrations cancelled in #$$% @ filtering out
those registrations which probably did not meet the criteria of the 3mendment in terms of industrial
homogeneity. *hile there has not been much research on the direct implications of such outcomes"
the main aim of such reforms are to ensure Dorderly growth" reduce multiplicity and promote
internal democracy in the industrial organisation and the economy.E (:usiness ortal of India"
#$%)&.
3.3.3 Ma)ing #argaining unnecessar!+ Jarginal investment in employee welfare and satisfaction
could help foster be!er relations between employers and employers reducing the need for
bargaining. -en (#$$(& highlights employer strategies of union avoidance by providing incentives
that could make unionising unnecessary in the first place.
In fact" many large companies especially in the construction business in India tend to avoid unions
altogether.
'hree successful approaches include community development" work benefits" and timely breaks @
to keep employees happy and satisfied thereby eliminating their need to ,oin unions or spend time
bargaining.
25
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
-ome companies have undertaken community development measures by partnering with local
governing bodies" like the panchayats (-en" #$$(&. 3ctivities include renovating railways stations"
bathing ghats" or se!ing up social welfare activities like eye camps. -ome companies also use the
benefits approach @ for instance" a multinational soft drinks and agricultural food processing
company has adopted the route of employee satisfaction. 'hey went beyond statutory requirements
by providing transport" common uniforms for managerial and support sta " common dining hall"
and e+tra cash for buying furniture or other household items. :ut these were combined with longer
working hours (-en" #$$(&.
'he nature of composition of work times" breaks and benefits could also bring about positive
results. 3n interesting e+ample is that of a lubricant company that changed its working hours with
similar employee gratifications8 DInstead of a half-day on -aturday" it introduced a five-day week"
with hours from 0.)$ a.m. to 7.)$ p.m. (apparently" nine hours&. :ut this was softened by including
a one-hour lunch break" providing breakfast" then lunch and finally tea in the evening. 'his ensures
that all employees put in a full eight-hour workday.E (-en" #$$(&. 6nions in large firms with
increased benefits are seeing a decline especially in the case of young and white-collar employees"
who do not indicate a strong urge to unionise.
2
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!9 ;O7;L1-I7. R/2,R3S
Cabour market reform is an important yet politically sensitive ma!er in most countries. >le+ibility
and security for employers and employees boosts livelihoods and the rate of good quality formal
sector ,obs. Aowever" there are several stakeholders @ employees and trade unions @ who have a
vested interest in keeping the labour market infle+ible. Jany of them think that a globalising world
means a weakening of their rights @ for the last two years trade unions have been going on national
strikes to demand permanent ,obs and declare an end to contract labour.
'his paper identifies several potentially compatible reforms that could enable the political class to
make a strong case for labour market reforms to all the stakeholders. ;eforms are discussed in three
areas of the labour market that could help on this front @ social security and livelihoods" federal
freedom to amend legislation" and engaging with trade unions resistance8
One" e+tending social security coverage to the informal sector could be made possible by o ering
the less e+pensive Fational ension -ystem to employees. 'he F- would serve as a competitor to
poor quality services of the 1> and 1-I thereby forcing them to reform" bring prices down and
improve service delivery. 'his would also enable to bring down costs from the formality-
informality trade-o for businesses. !reating sustainable livelihoods in the informal sector is a
stepping-stone to economic progress and future e+pansion of the formal sector" where productivity
is often higher.
'wo" there is increased evidence that competition between di erent Indian states could spur
reforms with positive outcomes. Aowever" the presence of labour legislation in the !oncurrent Cist
serves as a bo!leneck for -tates to e+ercise complete freedom in amending laws with respect to
their prevailing political economy. Joving such legislation to the -tate Cist would not only add
conte+t specificity through -tate control" but also make labour laws less convoluted.
'hree" engaging with trade unions is perhaps the most sensitive area of reform. It requires
understanding the latest trends in unionism" encouraging organisation for credible demands" and
designing benefits for employees that making bargaining and unionising unnecessary in the first
place.
27
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
'his is not a laundry list of reforms but a combination of suggestions to push the dynamics in the
labour market to force regulatory practices to adapt to evolving structures @ as without adaptability
welfare cannot be advanced.
In the face of sluggish growth rates" a rising fiscal deficit" and a forthcoming demographic
dividend" Indias political elite must remember that boosting good quality ,obs is a ma!er of top
priority. On the other hand" simply discussing reform of the labour market in terms of Blabour law
reforms has not brought any results over the years @ almost <$ years of reform concentration in the
formal sector has not brought many results. 1ven if it is the intention of the government to reform
in this area" selling those reforms in a way that compensates the Breform losers is an e+tremely
di cult task. It is time we start a nuanced discussion on how to develop the labour market8 to think
about small reforms" which are compatible with the current political economy" and include the
informal sector in the reforms dialogue.
,;37O+L/-./2/7TS
I wish to thank 2r. Jukul 3sher" my mentor for this paper" for his tireless support and
encouragement" the 'akshashila editorial team for assistance and 3 an ?olandaiveedu for
critiquing my ideas. -pecial thanks to everyone who took the time to read my work and o er
valuable commentsG including to Jr Johandas ai for diverting our a!ention to the possible
implications of unreliable data on formal sector ,obs.
R/4/R/7;/S
3sher" J. and . Jukhopadhya (#$$7&" D3n 3nalysis of -everance ay olicies in India and
-ri Canka"E ;a,iv 5andhi Institute for !ontemporary -tudies" aper Fo.7#.
3sher" J. (#$%%&" D2oes the new >;23 bill need refinementME 2F3" 3pr #7" #$%%.
3sher" J. (#$%)&" D*hat makes countries growM Implications for public policies in India"E
'akshashila Institution" Few 2elhi" Jarch 0-%$" #$%).
:esley" '." and ;. :urgess (#$$/&" D!an labour regulation hinder economic performanceM 1vidence
from India"E 'he Puarterly Iournal of 1conomics" %%( (%&" (%-%)/.
:ha!" 3 (#$%)&" D:I leaders have moulded me8 Farendra Jodis victory speech"E F2'H" Iune
$(" #$%).
2
8
TO+,R-S .R/,T/R L,0O1R 2,R3/T 4L/5I0ILIT6: ISS1/S ,7- O8TIO7S
:ha!achar,ea" 3. (#$$<&" DCabour Jarket ;egulation and Industrial erformance in
India"E 'he Indian Iournal of Cabour 1conomics" /((#&" #%%-#)# (Iune #$$<&
:usiness ortal of India (#$%)&" DIndustrial 3cts and Cegislations8 'rade 6nions 3ct"E
5overnment of India.
!risil Insight (#$%#&" DIndias Fational Janufacturing olicy8 achievable goalsME !;I-IC
!entre for 1conomic ;esearch" 3pril #$%#.
!-; (#$$0&" D1mployment and -ustainable Civelihoods"E (chapter #& in Doverty reduction
strategy paper for Qambia"E !ivil -ociety for overty ;eduction" 2ec %7" #$$0.
2ebroy" :. (#$$7&" DIssues in labour law reformE in ;eforming the Cabour Jarket" ed.
2ebroy" :. and ?aushik" .2. 3cademic >oundation" Few 2elhi" #$$7.
2ebroy" :." and C. :handari (#$$0&" DIndia Cabour ;eport #$$0"E 'eamlease -ervices.
2ebroy" :. (#$%%&" DIndias labour market @ Caws" regulations" and reforms"E *orld :ank 5roup.
2ebroy" :. (#$%#&" DIndias segmented labour markets" inter-state di erences" and the scope
for labour reforms"E in 2ebroy" :." C. :handari" -. 3iyar" and 3. 5ulati (#$%#&" 1conomic
>reedom of the -tates of India" !ato Institute" #$%).
1-I! (#$%#&" D>inancial estimates and performance budget for the year #$%#-#$%)"E
1mployees -tate Insurance !orporation" Few 2elhi #$%#.
>allon" . ;." and ;.1. Cucas (%((%&" D'he impact of changes in ,ob security regulations in India
and Qimbabwe"E 'he *orld :ank 1conomic ;eview" 7()&" )(7-/%)." (-eptember %((%&.
5oldar" :. (#$$$&" D1mployment growth in organised manufacturing in India"E 1conomic and
olitical *eekly" %%(%-%%(7.
5upta" ." ;. Aasan" and 6. ?umar (#$$(&" D:ig ;eforms but -mall ayo s8 1+plaining the *eak
;ecord of 5rowth and 1mployment in Indian Janufacturing"E Junich ersonal ;epec 3rchive"
#$$(.
Aasan" ;." and ?.;. Iandoc (#$%$&" D'he 2istribution of >irm -i.e in India8 *hat !an
-urvey 2ata 'ell 6sME 3sian 2evelopment :ank" Fo. #%)" 3ugust #$%$.
Airway" I." and F. -hah (#$%%&" DCabour and employment under globalisation8 'he case of
5u,arat"E 1conomic R olitical *eekly" Hol.SCHI Fo. ##" Jay #0" #$%%.
29
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
Ishengoma" 1." and ;. ?appel (#$$<&" D>ormalisation of informal enterprises8 1conomic
growth and poverty"E 5'Q" 1schborn #$$<.
Iagannathan" ;. (#$%#&" D63nomics may be killing ,obs and ,ob quality tooE" >irstpost"
Fovember $<" #$%#.
?ant" 3. (#$%#&" D'he heart of the ma!er"E 'he 'imes of India" Iune #(" #$%#.
?elkar" H." I. ;a,araman" and -. Jisra (#$%#&. D;eport of the !ommi!ee on ;oadmap for >iscal
!onsolidaton"E Jinistry of >inance" 5overnment of India" -eptember #$%#.
Cabour :ureau (#$%#&" D;eport on employment and unemployment #$%%-%#"E Jinistry of Cabour
and 1mployment" 5overnment of India" Hol.%" #$%#.
Cabour :ureau (#$%)&" 5overnment of India.
Coay.a" F.H. (%((7&" D'he 1conomics of the Informal -ector8 3 -imple Jodel and -ome
1mpirical 1vidence from Catin 3merica"E 'he *orld :ank" *ashington 2!.
Jahambare" H. and ;. Fadkarni (#$%%&" D1mployment in India8 6neven and *eak"E !risil
;esearch" 3ugust #$%%.
Jinistry of >inance (#$$7&" 1conomic -urvey #$$/-$7" 5overnment of India" #$$7.
Jinistry of >inance (#$%)&" D-ei.ing the demographic dividend"E in 1conomic -urvey #$%#-
%)" 5overnment of India.
Jinistry of Cabour and 1mployment (#$$(&" DFational olicy on AIHO3I2- and the *orld of
*ork"E 5overnment of India #$$(.
Jinistry of Cabour and 1mployment (#$%%&" DCabour laws and other regulations for the 'welfth
>ive Lear lan (#$%#-%7&"E 5overnment of India" #$%%.
Fagara," ;. (%((/&" D1mployment and wages in manufacturing industries8 'rends" hypothesis
and evidence"E 1conomic and olitical *eekly" Hol - SSIS Fo. /" Ianuary ##" %((/.
ai" J. and ;.?. Joorty (#$%)&" T'he myth of ,obless growth"T >inancial 1+press" 3pril $(" #$%).
apola" '. -. (%((/&" D-tructural ad,ustment" labour market fle+ibility and
employment"E Indian Iournal of Cabour 1conomics" )7(%&" )-%<.
3
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TO+,R-S .R/,T/R L,0O1R 2,R3/T 4L/5I0ILIT6: ISS1/S ,7- O8TIO7S
apola" '.-. and . . -ahu (#$%#&" D5rowth and structure of employment in India8 Cong-'erm and
ost-;eform erformance and the 1merging !hallenge"E Institute for -tudies in Industrial
2evelopment" Few 2elhi.
lanning !ommission (#$$%&" D;eport of the *orking 5roup on -ocial -ecurity for the 'enth
>ive Lear lan"E 5overnment of India" October #$%%.
lanning !ommission (#$$%&" D;eport of the working group on social security"E
5overnment of India" October #$$%.
;a,eev" J. (#$$(&" D!ontract Cabour 3ct in India8 3 pragmatic view"E Indira 5andhi
Institute of 2evelopment ;esearch" Jumbai" #$$(.
;amakrishnan" H. and J. 3sher (#$%#&" DJ5F;153 badly needs overhaul"E 'he Aindu" Oct %7"
#$%#.
;oy" :. (%(0/&" D*est :engal8 Cabour on the 2efensive"E 1conomic and olitical *eekly" Hol -
SIS Fo. ##-#)" Iune $#" %(0/.
;oy" -.2. (%((0&" DCags in 1mployment 3d,ustment and Inter-Industry 2i erentials8 3n 3nalysis
6sing 2ynamic Inter-related >actor 2emand >unctions"E Indira 5andhi Institute of 2evelopment
;esearch" 2iscussion aper Fo %/(" Jumbai.
-abharwal" J. (#$%#a&" D*orlds most e+pensive fund"E >inancial 1+press" 3pril $7" #$%#.
-abharwal" J. (#$%#b&" D%$$ percent ,ob creation has happened in informal ,obs as labour laws
confiscate half of gross salary"E 'he 1conomic 'imes" 2ec #0" #$%#.
-chneider" >. (#$$#&" D-i.e and measurement of the informal economy in %%$ countries around
the world"E Iuly %7" #$$#.
-en" ;. (#$$(&" D'he 1volution of Industrial ;elations in *est :engal"E International
Cabour Organi.ation" *ashington 2!.
-hah" A. (#$%#&" D5uest post8 India needs fewer labour restrictions" not more"E >inancial 'imes"
Jarch $0" #$%#.
-harma" 3.F. (#$$<&" D>le+ibility" 1mployment and Cabour Jarket ;eforms in IndiaE"
1conomic and olitical *eekly" /%8 #$70-0<" Jay #7" #$$<.
-harma" -. (#$$(&" D1ntry regulation" labour laws and informality"E 1nterprise 3nalysis 6nit"
'he *orld :ank.
31
T,3SH,SHIL, R/S/,R;H R/8ORT #&():S&(
'eamCease (#$$(&" DIndia Cabour ;eport #$$("E 'eamlease -ervices" :angalore.
6nni" I. (#$$#&" D-i.e" !ontribution and !haracteristics of Informal 1mployment in India"E 'he
5u,arat Institute of 2evelopment ;esearch" 3hmedabad" India.
6-3I2 (#$$7&" Dromoting pro-poor growth8 rivate sector development"E O1!2" #$$<.
*orld :ank (#$%#&" DHibrant cities and fle+ible labour laws critical for Indias employment
growth"E *orld :ank press release" *ashington 2!" Fovember 7" #$%#.
*orld :ank (#$%)a&" *orld 2evelopment Indicators" *orld :ank 5roup #$%)" *ashington 2!.
*orld :ank (#$%)b&" *orld 2evelopment ;eport #$%)8 3 :e!er Investment !limate for
1veryone" *orld :ank 5roup #$%)" *ashington 2!.
*orld :ank (#$%)c&" D2oing :usiness8 Jeasuring :usiness ;egulations"E *orld :ank
5roup #$%)" *ashington 2!.
*right" '. and 5upta" A. (#$%%&" TIndiaNs boom bypasses rural poor"T 'he *all -treet
Iournal" 3pril #$%%.
TH/ T,3SH,SHIL, S;HOL,RS 8RO.R,22/
The Takshashila Scholars Programme aims to select an" /ork /ith talente" 1oung in"i6i"uals
/ho /ish to un"ertake high ;ualit1 2u-lic 2olic1 research o5 rele6ance to !n"ia7 Takshashila /ill
-e a/ar"ing scholarshi2s 5or in"e2en"ent: 2art$time research 2ro<ects lasting u2 to 6 months7
The Takshashila scholarshi2 is aime" at talente" 1oung in"i6i"uals a22ro.imatel1 -et/een the ages
o5 2% an" 3% /ith goo" research an" anal1tical skills: a "emonstrate" a-ilit1 to communicate com2le.
issues /ell: an" committe" to -etter scholarshi2 on 2u-lic 2olic1 in !n"ia7 !n"i6i"uals looking to "o a
Ph9 in 6arious 5iel"s relate" to 2u-lic 2olic1 an" international relations are encourage" to a22l17
Scholars come 5rom a -roa" range o5 aca"emic an" 2ro5essional -ackgroun"s7
?esearch to2ics 5ocus on !n"ia@s 2u-lic 2olic1: inclu"ing -ut not limite" to geo2olitics: 5oreign 2olic1:
national securit1: inclusion an" go6ernance7 9ri6en -1 a 5ocus on !n"ia@s national interest: Scholars
/ork on emergent 5iel"s an" to2ics: /hich ha6e recei6e" ina"e;uate research attention to "ate7
Takshashila Scholars /ork closel1 alongsi"e a 2eer grou2 o5 talente" 1oung researchers "ra/n
5rom a /i"e range o5 e.2ertise A engineering: me"icine: la/: economics: humanities an" more7
The1 /ork /ith Takshashila@s Fello/s: /ho are "ra/n 5rom an international net/ork o5 aca"emic
e.2erts: 2ractitioners an" e.2erience" 2ro5essionals7 Scholars also ha6e o22ortunities to
2u-lish at Pragati The Indian National Interest Review7
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