Eighty per cent of India’s labour force works ‘informally’. Providing employment with decent wages and benefits to this segment requires structural transformation of the economy to more high-productivity sectors. I4I Editor Farzana Afridi is hosting an e-symposium to bring together some fundamental issues around the challenge of raising labour and firm productivity in the country.
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The ‘formal’ sector in India employs about 20% of the country’s working population. Amongst the key challenges to providing employment with decent wages and benefits to the remaining 80% who work ‘informally’ is structural transformation of the economy to more high-productivity sectors. While the East Asian economies witnessed the transition from agriculture to manufacturing as part of such structural shifts, the size of India’s manufacturing sector has not budged much from around 17% of the GDP (gross domestic product) for the last few decades (Ministry of Statistics and Programme Implementation, various years). Raising the productivity of firms and labour, which has been low and stagnating (Economic Survey, 2011-12), is a pre-requisite for structurally transforming India’s economy and labour force composition.
In this e-symposium, we bring together some fundamental issues around the challenge of raising labour and firm productivity in India. We begin with an overview of India’s industrial and labour policy (Chaurey) to put in perspective the issues facing firm growth. Mitra then brings the discussion around to the structural bottlenecks including labour market regulations and recent policy changes that incentivise capital-intensive production technologies, potentially restricting employment opportunities. The next three pieces (Bloom and Patnaik, Adhvaryu et al., Afridi et al.) put together some new and exciting research which aims at looking inside the black box of the firm to understand factors inhibiting productivity and ways to alleviate them. In the final piece, Beyer and Rama investigate the relationship between economic growth and employment opportunities in India and South Asia and whether improved labour productivity could address concerns of limited job growth.
We hope you will find all the pieces in this e-symposium thought-provoking!