Globalization, Labour Market Institutions, Processes and Policies in India

Despite the presence of a large chunk of manufacturing firms in the informal sector in India, we know very little about their characteristics and evolution over time in a period when the Indian economy has been increasingly globalized. What constrains firm growth, productivity and wages in the informal manufacturing sector in India? How different are the characteristics of firms in the Indian informal manufacturing sector across the different types of firms that populate this sector, across household and non-household enterprises? How have firm characteristics including firm size and firm productivity changed in the 2000s, a period of rapid globalization in India? In this chapter, we attempt to address this gap in the literature by conducting a detailed investigation of informal manufacturing firms in India, using rich unit record data on these firms from the NSSO for the years 2000–01, 2005–06, 2010–11 and 2015–16. To be specific, we first look at the evolution of firm size across the three different categories of firms in the Indian informal manufacturing sector—own account manufacturing enterprises (OAMEs), non-directory manufacturing enterprises (NDMEs) and directory manufacturing enterprises (DMEs), first in the aggregate and then by state and industry. We then look at firm size and productivity by different sets of firms’ characteristics (location of the firm, age and gender and social group of the owner) to see if there are observable differences in firm size and productivity across firms of different characteristics. We note the presence of the ‘missing middle’ problem in Indian manufacturing. One important concern about firms in the informal sector is that they pay less wages to their workers than firms in the formal sector. We capture this by examining the differences in wages paid to workers by specific characteristics of firms—by firm type, ownership, social group of owner and firm size. Our findings suggest the need to enhance firm productivity in the Indian informal sector, as a means to improve the living standards of the workers employed in the informal sector. We also notice that there exist significant social and economic barriers to informal firms in increasing their productivity, which is a matter of major policy concern.

This chapter begins by decrying the lack of data on unions and union activity in India and points out that most empirical work uses proxy measurements such as strikes to infer union activity. The chapter overcomes the data hurdle by using data from a specially commissioned survey of manufacturing firms spread over five Indian states. Using this data, the presence of a union in a firm is linked to a variety of firm characteristics using a limited dependent variable (probit) model. The results indicate that unions are located in firms where there are rents to be shared. In addition to this, the results show that the presence of unions seems to be sensitive to the prevailing legal milieu—highlighting an interesting relationship with temporary contract workers. The results also provide empirical support to some of the insights offered by the incomplete contract analysis of labour markets.

Informalization and contractualization of labour in India’s organized manufacturing is analysed using NSS Employment-Unemployment Survey (EUS) and ASI data for 1999–2000 and 2011–12. It is found that between 1999–2000 and 2011–12, there was a significant increase in the employment share of both informal workers (57–72 per cent) and contract workers (20–35 per cent). But, beyond this, there is considerable dissimilarity in trends. The analysis reveals that, in several industries and states, a substantial part of directly employed workers hold informal jobs. Also, while the intensification in contractualization was relatively faster among states with inflexible labour markets, this is not true for informalization. The econometric results suggest that employment protection legislation has caused contractualization of industrial workers, but probably it has not been an important factor driving informalization.

Employment relations across the world are going through a significant transformation after the inducement of economic reforms in many developed and developing countries. In India, significant changes are taking place in the labour market, viz. expansion of platform economy, development of global value chains and embedded labour processes, declining share of labour share in the production processes and replacing standard regular jobs with precarious ones. The most significant of these changes is the rise of precarious workers. In this chapter, we examine the nature of and trends in precarious employment, using data from the three rounds of Employment and Unemployment Survey of the National Sample Survey Organization. We argue in this chapter that quality of job and informal employment are intertwining and complex subjects; hence, there is a need to rely on ‘multiple job quality indicators’ instead of relying on binary proxies, which implicitly assume that all informal jobs are bad jobs and all formal jobs are good jobs. To address the complexity of this issue, we propose a new conceptual framework to distinguish workers into two broad types—formal and informal—based on various dimensions of work-related insecurities. We measure the quality of jobs in terms of high-intensity precarious jobs and low-intensity precarious jobs using a Cluster Analysis. Our results show that work-related security is a serious concern and exposing workers to various forms of market risk and adversities.

Despite sustained demand, the plantation economy, particularly for tea, coffee and rubber, is seen to be in a crisis and hence undermining the livelihoods of workers and small producers involved in the production of these commodities. Based on secondary literature, we elaborate the factors contributing to this ‘crisis’ in the plantation economy and what we see as problematic in the institutional response to this ‘crisis’ and hence in ensuring decent livelihoods for workers. First, we point out that the crisis is an outcome of shifts and slippages in governance regimes and a failure of capital to make sustained investments in the sector. We highlight gaps in governance such as exit of capital without ensuring decent livelihoods or decent living wages for labour in large plantations, casualization of work, reliance on small grower models and concentration of marketing power in tea and coffee value chains that allow little room for value redistribution. Second, we point out that plantation interests cannot be reduced merely to commodity-specific interests. Biodiversity, gender, politics of land grab and sustainability in terms of ecology are emerging as equally important aspects of the plantation question. A value chain approach that emphasizes ‘upgrading’ as a way out to secure better livelihoods ought to therefore also incorporate value creation and destruction of ecologies that currently sustain plantation crops and what this may imply for workers’ and small producers’ livelihoods. The strong productivist logic of some of the interventions in the plantation economy may therefore require a rethink and critical assessment. The chapter therefore develops a critique of the premises underlying some of the policy shifts. Finally, we discuss a few micro-level interventions to suggest possible pathways towards a ‘high road’ to addressing the crisis.

This chapter questions informality in India’s automobile sector, applying commodity chain analysis to explain why the sector is beset by informality, low wages and insecure working conditions. It illustrates how leading firms in India’s automobile industry, with the connivance of the Indian state, exploit the automobile commodity chain marginalizing both subordinate firms and contract/casual workers who make up most of the industry’s workforce. India’s automobile industry structure locks workers and firms into insecure work, with productivity gains consumed by leading firms, further reducing margins of lower-level suppliers and wages of workers. This qualitative study of Haryana’s automobile sector demonstrates why when the demand for vehicles in India is growing, wages and conditions are not improving. It concludes that India’s industrial relations regime has long ceased to reflect the actual balance of power between labour and capital, institutionalizing non-compliance with the labour law, and providing the basis for the industry’s informalization.

This chapter examines the nature of employment relations in the Indian Information Technology (IT) industry. A detailed review of the regulatory foundations of employment in the industry is combined with insights into the evolving and often tenuous nature of employment-related flexibilities of both IT workers and IT firms. Recent trends in unionization and collectivization in the industry are examined in relation to labour market uncertainties. These are done by drawing linkages between labour regulation and an analysis of aspects of employment relationships in IT work, drawn from empirical field research conducted amongst IT workers in Bengaluru, Karnataka.

The quest for voice is a fundamental human yearning in social, political as well as workplace settings, and yet in concrete contexts, there is a concerted stifling of the freedom to speak and the right to be heard. Recent happenings in the information technology firms have drawn attention to the struggle for voice in the context of actions taken by employers in this sector. The objective of this exploration is to decipher the trends underlying employer resistance to unionization in the information technology and software technology sectors and to examine whether the ecosystem of heightened employment insecurity renders mobilization an uphill task for leaders as well as for rank and file personnel. The study concludes that technology itself does not diminish the worker. It is the design of the social relations of employment within the frame of the ‘iron law of alignment’ and ‘deliberative insecurity’ which defines the contextual dynamics which impinges on the quest for voice by software workers. What is evident from this study is that the answer to any violation of human dignity at the workplace is the inevitability of the constitutionally and legally conferred right to collective voice as a counter. Recent developments on this front in the IT sector testify to this conclusion.

Across the globe, the platform economy, comprising online and offline variants, engages freelancers as independent contractors, excluding them from employee status, thereby advancing precarity. Internationally, there are various initiatives to address the vulnerabilities of platform workers. Indian online freelancers hold mixed views about their predicament, considering their gains juxtaposed against their problems. In dealing with these contradictions, some freelancers invoke merit and conformity, deeming regulation and collectivization as irrelevant, while other freelancers, acknowledging merit and conformity, emphasize the importance of external oversight. Enhancing the prospects of Indian platform workers appears to be left to the endeavours of progressive pressure groups within the subcontinent, perhaps aided by the middle-class membership of the workforce. Alongside this, international responses unifying the voice of labour across the North-South divide and placing the platform economy within the purview of non-standard employment at least and standard employment at best are relevant ways ahead.

Ramaswamy presents an analytical discussion of the problem of non-standard employment and labour law in the US Gig economy. The ‘gig economy’ and the emergence of precarious nature of work have been at the centre of legal challenges to labour management practices followed by companies like Uber. Focusing on the employee versus independent contractor distinction in the US labour laws, this chapter draws our attention to challenges posed by new technologies to standard labour law definition of employees and the associated provision of social security benefits. Learning from this complex debate is argued to be critical for India undergoing economic transformation and services-led growth.

This chapter narrates the terrible employment conditions and the prevalence of contract labour system in the construction sector which has generated considerable employment in the post-reform period. The chapter argues on the basis of long years of administrative experience as a labour department official that even though there exist complete and comprehensive laws governing the employment conditions and social security concerning the construction workers, the implementation of the law by state labour departments has been far from desirable. This has invited the intervention of the Supreme Court which has provided directions to the state governments for better implementation of the laws.

Paid domestic work and its specificities have raised many challenges in the understanding of the world of work, be it the specificity of employment relations and conditions, labour regulations and organizations of workers. The employer-employee relationship that characterizes most domestic work relationships is one of wage labour and symbolic contract, with various levels of personal relationships existing side by side. However, the language of employment contract dominates the current policy discussions on regulating working conditions and employment relations of domestic workers. The chapter through analysing the existing employment conditions and practices of workers who are part of a workers’ collective explores the possibility and implications of formal contracts for domestic workers. The chapter argues that though formal contracts have been the focus of the collective, in the current context many workers are hesitant in moving away from personal relations with employers to that of formal relations. Even when workers are members of collectives which promote formal contracts, labour rights and worker identity remain as challenges, owing to their social and economic specificities.

Several reasons make the anganwadi workers’ movement rather unique. The most distinctive challenge of this ‘all-women’ workforce, spread across the country, is the need to be recognized as ‘workers’, to start with! As ‘volunteers’ they are offered an ‘honorarium’, which few would agree is a decent return for the functions they carry out. This chapter is an attempt to profile the precarities that characterize the anganwadi workers, narrate the process of organizing them, describe their ongoing struggle including strikes and legal battles to be considered as being ‘workers’ and achieve other entitlements and describe the varied challenges that confront them. The entire story is also reminiscent of the way the role of women is perceived: women must look after themselves and nurture others with a total sense of commitment but do so completely unconditionally! Can this workers’ movement that has dared to dream beyond the limited ‘bread-and-butter’ goal sustain itself through these challenges? Are there any lessons to learn for other practitioners in the workers’ movement from this experience? These are some of the questions addressed in this chapter.

The basic proposition of the chapter is that to appreciate better the impact of the present phase of globalization on labour rights in India, it is necessary to locate the analysis in the larger context of the labour rights regime as it evolved at the international level. The evolution of labour rights is linked to certain historic epochs in capitalist globalization. The earlier phases of development of capitalism (right from the mid-nineteenth century up to the end of the so-called Golden Age by late 1970s) witnessed a clear recognition and progressive consolidation towards constitutionalization of labour rights by strengthening the capacity of the ILO. The present phase of globalization not only witnessed radical reorganization of industry from the Fordist mass production to dismantling and geographically distributing the units of production through global production networks, but also softening of the labour rights regime at the international level by the 1998 Declaration of the ILO which is seen as moving towards voluntarism. In the light of these developments the chapter analyses the nature of integration of the Indian economy into the global economy, its impact on the quality of employment, the change by way of shift in the attitude of all the wings of the state and the dilution of regulatory machinery towards labour rights. The chapter traces several disturbing trends in the industrial relations system like weakened countervailing forces like unions, the growing pressure of capital for more and more flexibility in labour regulatory system, the eagerness of the states to appease capital, weakening of labour rights regime and so on. Given the voluntarism at the international level, the solution cannot but be mobilization of labour for assertion of their rights. The translation of ‘Decent Work’ and ‘Social Protection Floor’ through mobilization of labour cutting across formal-informal barrier holds some glimpses of hope.

The central argument of this chapter is that Indian trade unions cannot deliver on their promise because union bosses are not the power centres they once were. Younger workers who want skill and mobility and not just more money now hold the reins. The way forward lies not in outsourcing industrial relations to a distant leadership but in employee relations that breaks barriers and promotes team effort. This is fleshed out with two contemporary examples. In the first, management use employee relations strategies to turn around a sub-optimal plant with a troublesome union. In the second a participative structure delivers high levels of productivity and the best of relationships, but a union that no one wanted walks in when management cannot find a participative answer to the wage question.

India had been arguably experiencing ‘jobless growth’ since the early 1990s. This period, nevertheless, has witnessed an accelerated structural change in output wherein a service-centric growth has emerged, eclipsing the agriculture-based growth. Accompanying this transformation in output, the industrial structure of employment also has undergone a transformation whereby the share of agricultural employment has gradually declined. This chapter argues that jobless growth in India could perhaps be understood better within broad contours of structural transformation. Jobless growth in a developing country is a dynamic process of job creation, destruction, relocation and labour market tightening, rather than a mere stagnation of employment growth. Using NSSO data and KLEMS database from 1993–94 to 2011–12, evidence is provided towards inter-sectoral growth differences owing to structural transformation and withdrawal of surplus labour owing to transformation, along with capital labour substitution as the underlying factors that manifest as jobless growth in India.

This chapter aims to understand and document the challenges facing Kerala’s labour market and argues for specific industrial and employment policies to meet these challenges. Kerala’s remarkable achievements in the social spheres, including health, education and land reforms, have helped the state’s population achieve a considerable degree of upward social and economic mobility. Kerala’s economy has been growing at fast rates from the late 1980s onwards, aided to a great extent by the remittances sent to the state by Malayalee workers in foreign countries. However, Kerala’s population has now started ageing, and the state’s economy is dependent on migrant workers from other Indian states, especially for manual jobs. At the same time, the creation of high value-adding jobs in Kerala in the services and manufacturing sectors has not been adequate, particularly in comparison with the rate of supply of educated workers in the state. Given such a context, Kerala now aims to set up a modern industrial sector that builds on the specific advantages enjoyed by the state with respect to natural resources and people. There is great potential in Kerala for the promotion of food- and agro-based industries; specific segments of chemical, electronic and engineering industries; and also industries based on advanced technologies such as biotechnology, nanotechnology and life sciences. There is also great scope for a revival of entrepreneurship in the state, harnessing, in particular, the energies of the large body of Malayalee engineers and professionals worldwide.

Over recent decades, the Indian economy has grown rapidly, particularly since the opening up of the economy in the early 1990s. Despite robust economic growth, the performance of the Indian labour market has been mixed. Contrary to the widely held view that India has experienced ‘jobless growth’, the data reveal strong employment growth in urban areas for men, while a decline in rural parts of the country for women. One of the key challenges is, indeed, the low rate of female labour force participation. In addition, the uncertain process of structural transformation has resulted in fewer workers joining manufacturing with most workers still in agriculture or construction. Overall, informality continues to be a defining feature of the Indian labour market, though aggregate figures mask underlying trends. Labour markets in India and beyond are being buffeted by megatrends, including globalization and technology, which result in both opportunities and challenges. Though various employment-related policies are in place, more needs to be done to promote decent and productive jobs through both comprehensive and targeted strategies. Stronger monitoring and evaluation are needed to ensure that lessons are learnt, and adjustments are made in policies and programmes. Finally, social dialogue, with the participation of employers’ and workers’ representatives, is crucial to arrive upon inclusive and sustainable solutions.

Post-Independence the institutional framework including legal was characterized by high state intervention in the industrial relations system (IRS) as a complement to state intervention in the product market in consonance with the dynamics of economic planning. An elaborate legal framework comprising laws enacted during the colonial period and those legislated post-Independence determines the substantive and procedural rules of IRS. A dynamic IRS is one which carries out reforms of laws and institutions in consonance with the changing times. During the planned economic period, 1947–91, reforms to provide for statutory recognition of trade unions and of dispute settlement machinery were actively deliberated by Committees and the stakeholders. Similarly during the post-marketization of the economy, reforms to provide labour flexibility to employers have been actively deliberated by Committees and the stakeholders. But the State has not carried out any of the three reforms, primarily for ‘political’ reasons, even though it was committed to these reforms. The political reasons include protection of labour wings of ruling political parties or retainment of powers by bureaucrats and judges (as instrumentalities of the state) or apprehended political unpopularity by the ruling parties which could have electoral costs. The chapter seeks to unravel these political dynamics.