92% of jobs created over 22 years post-liberalisation were informal

'It is better to be employed and earn something than remain unemployed', say economists.

Of around 61 million jobs created in India over 22 years post-liberalisation of the economy in 1991, 92% were informal jobs, according to an IndiaSpend analysis of
National Sample Survey Office (NSSO) data for 2011-12, the latest available, released in 2014.

Liberalisation was expected to formalise India’s largely informal agrarian economy, with labour moving from agriculture--the largest employer--to the organised industrial sector. The formal and informal sectors are distinguished based on size of workplace and accompanying government regulations on working hours, hiring and firing norms, rights of association, minimum wages, and other aspects.

Liberalisation aimed to effect a decline in poverty and a rise in living standards through better wages and working conditions as labour moved toward formal jobs. Yet, in 2011-12, 51% of all jobs in the organised sector were informal, data show.

The number of informal sector workers increased from 341.28 million in 1999-2000 to 386.02 million in 2011-12, a 13% increase over 13 years. The number of formal workers increased by 81.5% from 20.46 million to 37.15 million in the same time period.

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However, while formal workers comprised 6% of the total workforce in 1999-2000, this increased to just 9% in 2011-12, showing that the jobs that were created in the formal sector were mainly informal, employing workers with low earnings and with limited or no social protection.

Recent studies have confirmed that this trend has continued. A January 2019 report by Delhi-based economic policy think-tank ICRIER found that while total employment in the organised manufacturing sector had increased 78% to 13.7 million in 15 years to 2015-16, the share of contract workers in total employment had increased from 15.5% to 27.9%, and that of directly hired workers had fallen 10.8 percentage points to 50.4% in the same period, as IndiaSpend reported on March 28, 2019. At 8.3%, the average growth rate of contract employment was five percentage points more than that of regular employment.

Business Standard