Wages and Employment in the Liberalised Regime: A Study of Indian Manufacturing Sector

Majumder, Rajarshi (2006): Wages and Employment in the Liberalised Regime: A Study of Indian Manufacturing Sector. Published in: Indian Journal of Labour Economics , Vol. 49, No. 4 (December 2006)

Abstract

Expansion of earning opportunities and increment in earning levels are dual objectives of policymakers in developing countries. The structural adjustment programme in India tried to ensure both through higher growth targets, and manufacturing sector has seen the most sweeping changes. It is now being suggested that the current jobless growth is due to high wages. The present paper examines the veracity of this by examining the trends in employment and earnings in this sector over the nineties and analysing the factors affecting them. Most of the employment expansion has been in the unorganised sector where wages have stagnated. Though real wages in the factories have declined employment therein has not increased. Interestingly, both wages and employment have increased in the mid-sized units. The relationship is therefore neither unidirectional nor exhaustive. Proper mix of labour flexibility, resource availability, and scale economies would bring dynamism to the sector and increase both employment and earnings.

• Item Type: MPRA Paper
• Institution: Dept of Economics, University of Burdwan
• Language: English
• Keywords: Wages; Employment; Manufacturing Sector; Liberalisation; India
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General

References

Agarwal, R.N. and Goldar, B. (1995) – “Economic reforms and employment in India Projections for the year 2001-02”, in Indian Journal of Labour Economics, Vol. 38, No. 4. Bhalotra, Sonia R. (1995) - Four Essays on the Urban Labour Market in India, D.Phil. thesis submitted to the University of Oxford. Bhalotra, Sonia R. (1998) – “The Puzzle of Jobless Growth in Indian Manufacturing”, in Oxford Bulletin of Economics and Statistics, Vol. 40, No. 1. Bhalotra, Sonia R. (2002) – “The Impact of Economic Liberalization on Employment and Wages in India”, International Policy Group, International Labour Office, Geneva Bhattacharya, B.B. and Mitra, A. (1993) – “Employment and Structural Adjustment: A look at 1991 Census Data”, in Economic and Political Weekly, 18 Sep. CSO (1990) - Annual Survey of Industries; Summary Results for Factory Sector 1989-90 CSO, Government of India, New Delhi. CSO (1995) - Directory Manufacturing Establishments Survey, 1989-90 Summary Results, CSO, Government of India, New Delhi. CSO (1995a) - Annual Survey of Industries; Summary Results for Factory Sector 1994-95, CSO, Government of India, New Delhi. CSO (2001) - Annual Survey of Industries; Summary Results for Factory Sector 2000-01, CSO, Government of India, New Delhi, from www.mospi.nic.in. CSO (2004) - Statistical Abstract of India 2003-04, from www.mospi.nic.in. Deshpande, L.K. (1992) – “Institutional Interventions in the Labour Market in Bombay's Manufacturing Sector”, in T.S. Papola and G. Rodgers (eds.), Labour Institutions and Economic Development in India, Research Series 97, (Geneva, International Institute for Labour Studies, ILO). Deshpande, Lalit, K., Alakh N Sharma, Anup, K Karan, and Sandip Sarkar (2004) – “Liberalisation and Labour: Labour Flexibility in Indian Manufacturing”, New Delhi, Institute for Human Development. Ghose, A.K. (2000) - “Trade Liberalisation and Manufacturing Employment”, Employment Paper no. 2000/3, International Labour Office, Geneva. Ghose, Ajit K. (2003) – “Jobs and Incomes in a Globalising World”, Geneva, International Labour Office. Goldar, B. (2000) - “Employment Growth in Organised Manufacturing in India”, Economic and Political Weekly , Vol. 35, No. 14, April 1-7. Goldar, B. (2002) - “Trade Liberalization and Manufacturing Employment: The Case of India”, Employment Paper no. 2002/34, International Labour Office, Geneva. Goldar, B.N. (2003) – “Trade Liberalisation and Manufacturing Employment: The Case of India”, Employment Paper 2002/34, Geneva, International Labour Office. Kundu , A. (1997) – “Trends and Structure of Employment in the 1990s: Implications for Urban Growth”, in Economic and Political Weekly, 14 June. Mitra, A. (1993) – “Urban Employment, Migrant Labour and Structural Adjustment”, Indian Journal of Labour Economics, Vol. 37, No. 3. Mundle, S. (1992) – “The employment effect of stabilization and related policy changes in India: 1991-92 to 1993-94”, in Indian Journal of Labour Economics, Vol. 35, No. 2. Mundle, S. (1993) – “Unemployment and financing of relief employment in period of stabilization in India, 1992-1994”, in Economic and Political Weekly, 30 Jan. Nagaraj, R. (1994) – “Employment and Wages in Manufacturing Industries: Trends, Hypotheses and Evidence”, Economic and Political Weekly, 22 Jan. Nagaraj, R. (2000) - “Organised Manufacturing Employment”, Economic and Political Weekly, September 16. NSSO (1995) - Tables With Notes on Survey of Unorganised Manufacture: Non directory Establishments and Own Account Enterprises, NSS 45th Round (July 1989-June 1990) NSS Report No: 396, NSSO, March, 1995, Government of India, New Delhi. NSSO (1998) - Unorganised Manufacturing Sector in India : Its Size Employment and Some Key Estimates, NSS 51st Round (July 1994-June 1995) NSS Report no: 433, NSSO, August, 1998, Government of India, New Delhi. NSSO (2002) - Unorganised Manufacturing Sector in India 2000-2001 - Key Results, NSS 56th Round (July 2000-June 2001) NSS Report no: 477, NSSO, November, 2002, Government of India, New Delhi. NSSO (2002a) - Unorganised Manufacturing Sector in India 2000-2001 - Input, Output and Value Added, NSS 56th Round (July 2000-June 2001) NSS Report no: 480, NSSO, November, 2002, Government of India, New Delhi. Papola, T.S. (1994) – “Structural Adjustment, Labour Market Flexibility and Employment”, in Indian Journal of Labour Economics, Vol. 37, No. 1. Singh, M. (1993) – “New Economic Policy and Challenges before the Labour Economists”, Inaugural address to the 34th Conference of the Indian Society of Labour Economics, Jawaharlal Nehru University, in Indian Journal of Labour Economics, Vol. 36, No. 1. Srivastava, V. (1996) – Liberalization, Productivity and Competition: A Panel Study of Indian Manufacturing, Delhi, Oxford University Press. Tendulkar, S. (2000) - “Employment Growth in Factory Manufacturing Sector during Pre- and Post-Reform Periods”, paper presented at a Conference to honour Professor K.L. Krishna on the theme ‘Industrialisation in a Reforming Economy: A Quantitative Assessment’, Delhi School of Economics, Delhi, December 20-22, 2000.