India's Elusive Quest For Inclusive Development - An Employment Perspective

The Indian Journal of Labour Economics (2022) 65:579–623
https://doi.org/10.1007/s41027-022-00393-7
ARTICLE
India’s Elusive Quest for Inclusive Development:

An Employment Perspective
K. P. Kannan1
Accepted: 23 August 2022 / Published online: 7 October 2022

© The Author(s), under exclusive licence to Indian Society of Labour Economics 2022
Abstract
This paper is an attempt to assess India’s performance in generating the required
quantity and quality of employment for its growing population since independ-
ence in 1947. But the exercise is set in a longer period that covers India’s popula-
tion growth since the turn of the twentieth century (1901) in relation to its abil-
ity to generate employment. The half-a-century preceding independence, despite a
slow population growth, was a disaster in generating employment and any signs of
structural change. Detailed analysis of the issue since independence shows that there
was indeed a demographic burden more than the world average as well as its com-
parator Asian countries such as China and Indonesia. While employment generation
with reference to growth—employment elasticity—was quite impressive during the
first four decades of independence, it almost collapsed ever since the adoption of
neoliberal economic reforms in 1991, thus entering a phase of ‘jobless growth’, a
phenomenon that is shared by China in a more vigorous form. This has led to what
may be called an exclusion of working age people from not just employment but
from labour force indicating the emergence of ‘discouraged workers’ in a larger set
that we called underutilized labour. But what about those who are included in the
workforce? Does it ensure an escape from poverty for those at the bottom? Our esti-
mates show that the pace of reduction in the incidence of poverty is so slow that a
significant share of households is still below the international definition of extreme
poverty. We attribute this to the quality of employment characterized by a high inci-
dence of informal sector employment as well as low wages measured by the share of
workers not receiving a recommended subsistence wage. The absence of any kind of
social security to an overwhelming share of workers adds to this situation of abso-
lute poverty. Finally we examine the question of poverty from the point of manifold
inequalities by dividing the households in the economy in terms of their employ-
ment, educational, rural–urban, and social group statuses for estimating predicted
probability of being poor. The results bring into sharp focus the huge variation in
The author would like to thank G. Raveendran and Md Zakaria Siddiqui for the several discussions,
comments, and suggestions during the preparation of this paper. A word of thanks is also due to
Rejith Paul for computational assistance.
Extended author information available on the last page of the article
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Vol.:(0123456789)
580 The Indian Journal of Labour Economics (2022) 65:579–623
predicted probability that shows households with low education, disadvantaged

social group status, casual nature of employment, and living in rural areas at the
bottom end of the scale. These results bring out the imperative for creating more
employment with better quality.
Keywords Quality of employment · Exclusion · Inclusion · Employment elasticity ·

Labour underutilization · Poverty · Inequality
1 Introduction
This article is a revised version of my Radhakamal Mukerjee Memorial Lecture

delivered at the 62nd Annual Conference of the Indian Society of Labour Economics
(ISLE) held at the Indian Institute of Technology, Rourkee, on 12 April 2022. Rad-
hakamal Mukerjee, one of the tallest social scientists, India, has ever produced, was
a ‘polymath of prodigious productivity’; that’s how Ashwani Saith (2016) described
him when he delivered this memorial lecture in 2015. T. S. Papola (2015), someone
with a very long association with the ISLE, including as its President, dealt with
Radhakamal Mukerjee’s life and work and the significance of his inter- and trans-
disciplinary contributions when he delivered the Radhakamal Mukerjee memorial
lecture in 2014. It was a much-needed exercise since studying social science has
become so segmented across and within its constituent subjects of economics, soci-
ology, politics, and other behavioural sciences.
Radhakamal Mukerjee is said to have loved the ‘large picture’ that allowed him
to move easily between subjects and disciplines in his long journey to understand
Indian society and its economy. Drawing from this spirit of looking at events on a
broad canvas, I intend to focus on the relationship between economic growth and
employment in India since independence in general and the period since the intro-
duction of neoliberal economic reforms in particular. It is the result of this enquiry
that prompted me to characterize the Indian experience as an elusive quest for inclu-
sive development.
India’s growth story, especially since neoliberal economic reforms, has indeed
been an impressive one. It is also part of a larger story of ‘Resurgent Asia’ as Deepak
Nayyar (2019) has brought out in the path-breaking work on the rise of Asia in the
world economic stage. He noted that India’s growth performance during 1991–2016
was the second highest, after China, among the Asian-14 that he selected as leading
this resurgence. At the same time, India’s rise is quite below potential, and the lead
in Asian resurgence is mainly due to China preceded by the other East Asian coun-
tries. However, when one goes into the details of India’s rising economic power,
there are disturbing trends and new challenges. The glaring one is the persistence
of absolute poverty and deprivation, and the other is the glaring deficiency in the
quantity and quality of employment. Of course, these two are closely interlinked
problems reflecting two sides of the same coin. From a growth point of view, India’s
aggregate growth performance at an annual rate of 7 percent for three decades, from
1991 to 2021, is outranked by 1.8 times the growth rate at 3.9 percent during the
13 ISLE
The Indian Journal of Labour Economics (2022) 65:579–623 581
earlier four decades, from 1951 to 1991.1 However, as we shall see in detail, the
employment situation has given enough reasons to be worried about.
The adverse impacts of instantaneous policy reforms as well as exogeneous
shocks such as the ongoing Covid-19 pandemic were all felt first in the employment
situation of mostly informally employed workers and their families. The demoneti-
zation of currency in 2016 followed by the hasty implementation of a GST system
in 2017 disequilibrated the fragile but extensive informal economy leading to loss
of jobs and thus livelihoods of large numbers of people. This was followed by the
global Covid-19-induced pandemic in early 2020 that witnessed a massive exodus
of informal workers from urban centres back to their villages in search of safety.
Much of these shocks were ultimately absorbed by the rural economy resulting in a
widening of the rural–urban gap. Policy attention continues to be disproportionately
directed at the urban economy.
Employment is more than an economic variable, and it is critical to ensure a
decent standard of life. It also imparts a measure of dignity and self-worth that could
lead to social and cultural wellbeing. I have therefore taken this occasion to ask
myself a series of questions as per the following.
1. What was the initial condition at the time of independence in terms of the rela-
tionship between population growth and work force growth, i.e. the demographic
dimension?
2. How does India perform when we connect growth with employment in compari-
son with global trends as well as its Asian comparators?
3. Is there an exclusion from the labour market and, in the context of the debate on
‘missing women’ in the labour force, what are its gender dimensions?
4. Does inclusion in work force ensure an escape from poverty? If not, what are its
dimensions and who are the working poor?
5. How serious is the problem of quality of employment?
6. How do geographical, social, educational, and gender differentiations influence
inequalities in employment-related outcomes?
These are not new questions and had been investigated by many scholars focus-
ing on one or more of them. Following Radhakamal Mukherjee’s preference, my
attempt here is to look at this large picture over a long period of time and then focus
in some detail over the last four decades that covers the entire period of neoliberal
economic reforms. In particular, I intend to highlight the various dualisms that char-
acterize India’s economic situation posing several old and new challenges.
1
These growth rates are calculated on the basis of National Accounts data for Net Domestic Product
released by the Central Statistical Organization and adjusted at 1999–2000 prices.
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1.1 The Demographic Burden
When viewed from a global perspective, there is no doubt that India has gone
through a relatively more burdensome demographic process than the world at large.
From the beginning of the twentieth century to the present, a long-duration view
shows that the world population grew at an annual rate of 1.34 percent. In con-
trast, India experienced an annual rate of 1.47 percent. During the half-century
(1901–1951) before the country’s independence, the growth rate was marginally
below the world average—0.90 percent compared to 0.96 percent. However, dur-
ing 1951–2020, India’s population growth rate of 1.61 percent exceeded that of the
world at large at 1.26 percent. And this resulted in India’s share of world popula-
tion increasing from 14 percent in 1951 to 17.3 percent in 2020 (see Table 12). Had
India been able to maintain its population share in 2020 at the same level as in 1951,
India’s population would have been 1091.3 million instead of 1346.2 million. This
means an extra 256 million people were added for its failure to maintain the popu-
lation growth at the same rate as that of the world at large. From the point of addi-
tional demographic burden, what this means is that India had to shoulder an addi-
tional population that is close to the total population of Indonesia (273 million) in
2020!
Higher population growth in independent India could be viewed as a develop-
mental irony because the increase in population results from a decline in mortal-
ity that was made possible by the modest economic growth and equally mod-
est state intervention in health and other welfare measures. Indeed, the process of
demographic transition is on its way, although much slower than say, in China, its
legitimate comparator in economic performance. Another legitimate comparator is
Indonesia which also had a better performance in lowering population growth rate
although recent trends show a relatively better performance for India. In fact, there
seems to be a regional pattern in Asia in which East Asia (China) has attained rela-
tively early demographic transition, followed by South East Asia and South Asia at
the bottom. This is evident from the annual growth rate in the working age popula-
tion for the last three decades ending with 2020 (see Table 1).
This demographic experience is a primary determinant of the size of the labour
force. However, there are other powerful factors, including social norms and prac-
tices governing labour force participation rate of women. A larger scenario compar-
ing the country’s experience with that of the global and the regional, including two
countries with large populations, shows that the difference is more pronounced for
women than men. That constitutes, in my view, a social challenge for India and the
other countries in South Asia, to attain the levels reached in other parts of Asia.2
A comparison of population growth and the growth in the number of workers
throws up the difficult period that India has gone through before independence.
Available data for 1911 to 1951 tell us that while the population grew by 52 percent,
2
As per ILOSTAT, LFPR for women (out of working age population of 15 years and above) in 2020 is
46 for the world as a whole with south-east Asia at 54.6 and south Asia at 21.1. In China it stood at 61.8,
Indonesia at 53.2 and India at 18.6.
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Table 1 Annual growth rates in Population (15 and above), Working Age Population (WAP 15–64),
Labour Force (LF), Work Force (WF), and Unemployed in selected regions/countries
Region Category 1991–2001 2001–2011 2011–2020 1991–2020
World Population 1.40 1.24 1.14 1.26

WAP (15–64) 1.83 1.67 1.34 1.62
Labour Force 1.63 1.30 0.73 1.23
Work Force 1.51 1.31 0.63 1.17
Unemployment 3.70 1.15 2.19 2.35
China Population 0.86 0.58 0.50 0.65
WAP 1.45 1.31 0.61 1.14
Labour Force 1.10 0.60 0.15 0.63
Work Force 0.96 0.52 0.10 0.54
Unemployment 5.99 2.43 1.21 3.26
India Population 1.89 1.52 1.10 1.52
WAP 2.44 2.12 1.77 2.12
Labour Force 2.28 1.24 0.01 1.21
Work Force 2.28 1.26 -0.30 1.12
Unemployment 2.24 0.97 4.41 2.46
South Asia Population 2.00 1.59 1.24 1.62
WAP 2.60 2.22 1.85 2.24
Labour Force 2.44 1.49 0.53 1.52
Work Force 2.44 1.51 0.25 1.43
Unemployment 2.47 1.14 4.90 2.75
Indonesia Population 1.51 1.35 1.23 1.36
WAP 2.34 1.62 1.63 1.87
Labour Force 2.52 1.59 1.70 1.95
Work Force 2.15 1.69 1.81 1.88
Unemployment 11.56 -0.08 -0.37 3.69
SE Asia Population 1.63 1.28 1.13 1.35
WAP 2.39 1.81 1.50 1.91
Labour Force 2.31 1.84 1.04 1.76
Work Force 2.15 1.95 1.04 1.74
Unemployment 7.25 -0.99 1.02 2.42
Source: Computed from ILOSTAT data
the growth in workers was only 16 percent. Given the large-scale dependence on
primary production and the labour-intensive character of non-agricultural activities,
one can then imagine the state of affairs from an employment point of view. Based
on Census figures, Radhakamal Mukherjee pointed out that the share of industrial
workers to total workers was a mere 11 percent in 1901, which fell to 10 percent
by 1931 (1945: 2). Alice Thorner’s estimate of the workforce in agriculture and
related activities at 75 percent in 1901 and 76 percent in 1951 also suggests the gen-
eralized nature of economic stagnation from an employment point of view (Thorner
1962: 1157). For the next forty years beginning with independence (1951–1991),
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the gap reduced to 134 percent and 125 percent for population growth and work-
force growth, respectively. Yet the gap between the working age population and the
work force was not fully closed. Interestingly the next thirty years (1991–2021),
the growth in workforce by 67 percent marginally exceeded that of the WAP that
registered an increase of 65 percent. One can see here that demographic transi-
tion has undoubtedly set-in in India from a broad employment perspective, though
much later than its comparators. This is evident from a comparison of the trend in
annual growth in total population and the working age population for the last decade
(2011–2020) given in Table 1. However, China and Indonesia as well as the South
East Asia are better positioned than India and South Asia.
Despite a slow process of demographic transition, India’s absolute demographic
burden continues to pose challenges in meeting the employment requirement. And
this is evident in the absolute increase in WAP from 383.5 million in 1983 to 865
million in 2019. During the same period the those who are without work and not in
education increased from 102.3 to 303.8 million.
2 Connecting Growth with Employment
From the point of the challenge of inclusive growth, let alone development, an
employment perspective would suggest that we connect workforce growth with
overall economic growth. And that is done by measuring employment elasticity with
reference to growth. Historical data are hard to come by for a comparative exer-
cise, and therefore, I have taken the readily available and comparable data for thirty
years, beginning with 1991 which coincides with the beginning of neoliberal eco-
nomic reforms in India. The emerging global picture is one of declining employ-
ment elasticity suggesting the intensification of capital in every unit of output (see
Table 2). But given the trend in new technological changes, one should include in
this intensification of capital the investment in human capital that drives techno-
logical changes based on computers and information and communication technol-
ogy. Barring China, India has the lowest employment elasticity for 1991–2020 and
each decade. By this calculation, the last decade was one characterized by ‘job loss
growth’ given the negative sign of the elasticity (see Table 1). This declining ability
of economic growth to create employment in India certainly calls for much deeper
investigation and reflection beyond, I suppose, received economic theories and cat-
egories and into dimensions such as hierarchical social segmentation and exclusion
that a Radhakamal Mukerjee method would certainly approve of.
A word about China is called for. China’s employment elasticity is puzzling, to
say the least. Despite controlling the population growth rate drastically, resulting in
a working age population growth rate that is only half of India’s, the employment
absorption is considerably lower than India’s. What it suggests is the highly capi-
tal-intensive and technologically driven nature of China’s growth, disregarding the
important human dimension of employment.
13 ISLE
Table 2 Employment elasticity with reference to economic growth
Region/Country Total employment Wage employment
1991–2001 2001–2011 2011–2020 1991–2020 1991–2001 2001–2011 2011–2020 1991–2020
World 0.51 0.35 0.24 0.38 0.53 0.62 0.60 0.59

Indonesia 0.60 0.31 0.41 0.42 0.91 0.62 0.68 0.72
India 0.38 0.19 −0.06 0.19 0.43 0.42 0.57 0.47
China 0.09 0.05 0.02 0.06 0.20 0.32 0.33 0.28

SE Asia 0.48 0.36 0.25 0.37 0.81 0.72 0.64 0.73
South Asia 0.44 0.24 0.05 0.26 0.50 0.45 0.56 0.49
Employment elasticity is defined here as the ratio between percentage change in work force divided by the percentage change in output. Employment refers to persons
in the age group of 15 to 64 years and the national income data is standardized in PPP dollars. Source: Output (GDP in 2017 PPP dollars) data taken from World Bank’s
world data and data on workers (15–64 years) from ILO stat
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585
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Table 3 Employment elasticity Year Census Year NSS

based on Census data and NSS
data for workers All employment Wage
employ-
ment
1 2 3 4 5
1951–61 0.78
1961–71 -0.04
1971–81 1.08 1972/73 -1983 0.54 0.63
1981–91 0.44 1983–1993/4 0.44 0.63
1991–01 0.44 1993/4–2004/5 0.24 0.20
2001–11 0.16 2004/5–2011/12 0.06 0.24
2011–19 0.22 2011/12–2019/20 0.17 0.14
Source: National income data (NDP) from National Accounts; Data

on employment from Census and NSS and PLFS Rounds
In Table 2 we also present employment elasticity for wage employment.3 This

is uniformly higher than the employment elasticity of all employment. What this
indicates is the reduction in the growth of self-employment and a relatively higher
growth in wage employment that could be taken as a positive sign. However the
wage employment base as a share of total employment is quite low especially for
India (24%) as compared to China (54%) and Indonesia (47%) even in 2020.
From an Indian perspective we are in a position to pursue the question of declin-
ing employment elasticity with reference to aggregate economic growth for a
longer period of close to 70 years based on Census data and close to half-a-cen-
tury (1972–2019) based on NSS data. Here we take wage employment to include
regular as well as casual employment. Although the employment elasticity for total
employment conceals the role of self-employment as a default category, we observe
even here a significant decline suggesting that even the space for creating one’s own
employment is shrinking. Despite this I feel that it would be appropriate to look at
the ability of the growth process to create wage employment during a process of high
growth. And this is represented by the employment elasticity figures given in the
last column of Table 3. Two things need to be noted here. One is the high employ-
ment elasticity for all employment during the pre-reform period (in both Census and
NSS figures). The employment elasticity is also higher for wage employment during
the two decades prior to the economic reforms. The second is the sudden collapse
in employment elasticity—both for all employment as well as wage employment—
beginning with the neoliberal economic reforms of 1991. Another striking feature
is that the pre-reform periods of two decades registered an employment elasticity of
twice that of the first decade of the post-reform period for all employment and three
3
In the ILO classification system casual employment is included under ‘self employment’, Therefore
wage employment in this table refers to only regular employment. The age group taken for estimating
workers is 15 to 64 years.
13 ISLE
times for wage employment. The last decade (2011–20) shows the lowest employ-
ment elasticity for wage employment during the last half-a-century.
It is this phenomenon of a declining trend in employment elasticity that led to a
vigorous debate on ‘jobless growth’ followed by some half-hearted policy interven-
tions. In fact the Government of India and the Planning Commission were alerted
to the problem by a paper by Sundaram (2001) that first reported the declining
employment growth during 1993 and 2000. Realising the political sensitivity of the
issue the Government of India constituted a Task Force on Employment Opportuni-
ties of the Planning Commission to study the problem (Government of India 2001).
That report while acknowledging the sharp fall in employment elasticity advocated
a more vigorous neoliberal economic reforms to further strengthen the formal sec-
tor of the economy to create more employment. Such a recommendation did not
find wholesale approval, largely due to electoral political compulsions, despite the
strong commitment of the Government of India to neoliberal reforms. This led to
the formation of another committee of the Planning Commission known as Special
Group on Targetting Ten Million Employment Opportunities per Year (Government
of India 2002a, b). Acknowledging the collapse in employment elasticity during the
first decade of the economic reforms, it advocated the promotion of the informal or
unorganized sector which has a greater capacity to create employment. The politi-
cal highlighting of this issue continued and the 2004 general elections saw a change
of regime from the National Democratic Alliance led by the Bharatiya Janata Party
to the United Progressive Alliance led by the Indian National Congress that had
initiated the neoliberal economic reforms in 1991. The new government promptly
appointed a National Commission for Enterprises in the Unorganised Sector which
came out with a series of reports on how to improve the conditions of work and
life of the 80 percent of the workers in the informal sector. Its final report titled
The Challenge of Employment: An Informal Economy perspective is an elaborately
workout strategy for “levelling up” the informal sector and the informal workers.
The Commission also came out with detailed estimates of not only the informal
sector workers but also the informal workers in both informal and formal sectors,
thereby flagging the expanding category of insecure workers in the formal sector. It
advocated a social floor for minimum wages, minimum national social security and
minimum conditions of work for informal sector workers. On the enterprise side it
advocated a series of promotional measures for the enterprises in the informal sec-
tor including agriculture for enhancing access to credit, technology, marketing and
skill development. It not only supported the special public employment programme
called the National Rural Employment Guarantee Scheme4—a 2004 poll promise
implemented in 2005—but also recommended a similar one for the urban areas for
addressing the problem of under- and unemployment especially among those will-
ing to do manual work. However, only a select few of the recommendations were
sought to be implemented disregarding the integrated vision and framework that
could have enhanced the employment as well as conditions of work and livelihood
of the labouring poor. However a significant outcome of the work of the NCEUS
4
Later renamed as Mahatma Gandhi National Rural Employment Scheme.
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was the public acknowledgement and recognition of the absence of social security
of the majority of workers in the economy and the importance of the informal sector
for employment and livelihood for an overwhelming majority of workers despite the
impressive aggregate economic growth of India. In a way it was also a reminder of
the emergence of a changing dualism in the Indian economy along formal and infor-
mal sector as well as employment in place of the old traditional (agricultural) versus
modern (industry) sector.
Going by the employment elasticity figures the disconnect between growth and
employment in the economy not only continued but even increased during the sec-
ond decade of this century (see Table 3). Examining the employment situation for
the first decade since the reforms, Unni and Raveendran (2007) called it an “illusion
of inclusion”. Subsequent work by Kannan and Raveendran (2019) flagged the long-
term trend since the reform as one of jobless and then job-loss growth. Mehrotra and
Parida (2021) sought to explain the situation from both the demand and supply side
and called it as one due to the “stalled structural transformation of the economy”.
Kapoor (2019) flagged the problem as one of “job challenge” given the increasing
trend in “discouraged workers”, low quality of jobs for the new entrants, below sub-
sistence wages to significant sections of casual workers and absence of any contract
for increasing numbers of regular workers. Given the leading role of manufacturing
industries in economic development both in terms of growth and employment, the
performance of organised manufacturing sector came in for detailed investigation.
A long-term study covering close to half-a-century since 1981 revealed an impres-
sive growth performance without a commensurate employment growth (see Kan-
nan and Raveendran 2009). An extended ongoing study covering a longer period
of 37 years (1981–1982 to 2017–2018) gives some ground for hope with an uptake
in annual employment growth rate from 0.63 (during 1992–1993 to 2004–2005) to
4.4 percent (2004–2005 to 2017–2018). However the annual growth rate in capital
stock has been 7.4 and 11.3 percent for the above periods, i.e. 11.7 and 2.6 times the
growth rates in employment. The high period of employment growth has been found
to be during 2004–05 to 2011–12. But the recent shocks of demonetization, Covid-
19 pandemic and the higher rate of inflation do not permit an optimistic scenario.
An important study of the organised sector covering both manufacturing and
services by Goldar (2014) led him to conclude that “the rapid growth attained by
organized manufacturing and organized services in the two decades of economic
reforms did not result in any significant increase in employment in these two sectors.
Rather, there was virtual stagnation in employment (except for the very recent surge
in employment in organized manufacturing)”.
In sum, the long-term story of growth and employment in India is an increasingly
‘jobless’ story despite the continuing growth in working age population, labour
force and labour underutilization (LU) that represents a large segment of people,
especially women, seeking work as well as those who may be called ‘discouraged
workers’.
13 ISLE
3 Are There Exclusions from the Labour Market?
A closer examination of the Indian experience in assessing the required quantity

of employment is not the gap between the growth in labour force and workforce
because engaging in some kind of work is the only option for a significant share of
the population without assets or non-labour income. And that is the reason for the
relatively low rate of aggregate unemployment in the country. While the category
of ‘self-employment’ offers a space for those without wage work in creating some
employment to eke out a living there is an increasing trend in exclusion from the
labour force and therefore not counted in the labour market. This indicates that the
ability to create a space for some work is also limited in a context of increasing
population growth and inadequate demand for labour.
But what about those outside labour force and education? They are usually
assumed to be voluntarily opted out of labour force. But that is not necessarily so
and should be reckoned, especially from an economic development point of view,
as loss of both national output as well as income for the households. They may have
reported not seeking or available for work at a given point in time for a variety of
reasons including the low wages that are in vogue. In order to measure those outside
work and education, the International Labour Organisation has recently come out
with this measurement calling it ‘labour under-utilization’ (ILO 2020). Therefore a
four-scale measurement of what is called ‘Labour Underutilization’ (henceforth LU)
has been proposed. LU1 is a measure of Unemployment in the sense of seeking and/
or available for work, LU2 is a measure for Unemployed plus those underemployed
in the workforce and wanting to work more, LU3 is a measure of the Unemployed
plus those outside the labour force (and education) but potentially available, and
LU4 that includes the Unemployed plus underemployed within the workforce plus
those outside the labour force (and education).5
While we recognize the problem of underemployment of workers in India, my
objective here is to measure all those who are outside the workforce and educa-
tion that approximates to LU3 measurement (i.e. those unemployed in the sense of
seeking/available for work plus those outside the labour force and education) pro-
posed by the ILO. I shall then discuss the issues associated with the measurement of
‘potential labourforce’ from those who are outside the labour force and education.
Our denominator for measurement is the working age population (WAP) between
the age of 15 and 59 years. By this measure (see Table 2), the share of men in the
category of labour underutilization (LU) has increased from 4.6 percent to 7.3 per-
cent of the WAP between 1983 and 2020. In 2018–2019, this was higher at 8.2 per-
cent, suggesting the imperative in 2019–2020 to engage in some kind of work—self-
employment—to survive as a result of loss of wage work during the first year of
the Covid-19 pandemic (see Kannan and Khan 2022). But the increase in absolute
numbers from 8.9 million to 32.2 million is not to be missed out induced by earlier
population growth and its impact on the growth of WAP. However, this measure of
5
For a simple exposition of these measures see, ILO (2018a), ‘Avoiding unemployment is not enough’
in ILOSTAT Spotlight on Work Statistics, No.4, August.
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Fig. 1 Source: ILOSTAT 70
60
50
40
30
20
10
0
China South Indonesia South India
East Asia Asia
LU has been exceedingly high for women; from 50 percent in 1983 to 62.4 percent
in 2019 and then to 57.2 percent in 2020 with a corresponding rise in numbers from
94 million to 267.6 million in 2019 and to 244 million in 2020. Against a wider
historical canvas, this number of women not in either workforce or education (LU)
in 2020 exceeds by 1.3 times the working age population of women in 1983 or 2.6
times those out of work and education (LU measure) in the same year!
What should be worrying to the policy makers is the steep decline in work par-
ticipation rate of women from 47 percent in 1983 to 24.5 percent in 2019 and 30
percent in 2020. However, the educational participation has risen from 3 to 13 per-
cent, but it has not been adequate to cover the decline in the combined participa-
tion from 50 to 38 percent. Interestingly, despite a greater decline in demand for
women’s work than men, the former have continuously improved their educational
qualifications.6
From a comparative perspective of China and Indonesia as well as South East
Asia, women’s labour force participate rate in India is low (see Fig. 1). But what
should be quite alarming is the rise in their share of non-participation as a percent-
age of WAP. Our argument is that this could be due to an increasing share of ‘dis-
couraged persons’ for a variety of reasons such as low wages, especially in the pri-
mary and informal sector that are often below a minimum subsistence wage, low
status attached to certain manual work in a hierarchical society, higher aspirations
for jobs commensurate with increasing educational qualifications and so on. At the
same time we need to recognize that social reproduction functions may also keep a
segment of women away from the labour force. But this cannot be stretched too far
since we find that the labour force and educational participation rate of women in
the reproduction age group of 18–35(out of the working age population in that age
group) was found to be 48.8 percent in 1983 compared to a combined participa-
tion rate (labour force plus education) of 50.7 for the age group of 15 to 59. This
declined to 40.6 and 44.2 in 2019–2020. Given such a small difference in combined
participation rates, the argument of staying out of the labour force (and education)
does not carry much water. Therefore the ‘discouraged worker’ hypothesis seems to
6
The share of women with a secondary or higher level of education in total WAP (15–59 years)
increased from 6.6 percent in 1983 to 37.1 percent in 2020. For men these percentages are 16.3 and 47.0
respectively.
13 ISLE
have a stronger validity. Since existing National Sample Survey data do not permit
a decomposition of those outside the labour force and education as to the causative
factors, further investigations in the form of probing questions as well as an assess-
ment of the factors affecting the demand for employment of women are called for.
Therefore our estimates of potential labour force under LU should be reckoned as
‘maximum potential labour force’.
However, we have strong reasons to believe that the increase in the share of LU in
a context of neoliberal economic policy regime has to do with decreasing employ-
ment opportunities for the less educated. It gets reinforced when there is a steady
increase in average years of education, the less educated gets filtered out even from
low skill and low wage employment. This is borne out by a decomposition of the
WAP of women in terms of less educated (below secondary level) and educated
(secondary and above) (see Table 14). The work participation rate for the educated
has declined from 22 in 1983 to 17.5 percent in 2019, only increasing to 21 percent
in 2020. But what is quite dramatic is that these women who have completed sec-
ondary education are vigorously continuing in education with 22 percent in 1983 to
25 percent in 2020 such that their combined participation rate has remained between
43 and 46 during these 37 years. In other words, this has meant a marginal decline
in LU from 56 to 54 percent. A much higher proportion of those in the LU educated
category are also actively seeking work than the less educated. This is the main rea-
son for educated unemployment rate being higher than that of the less educated.
What then emerges is that the additional exclusion of women from the work force
and education since 1983 has fallen entirely on the less-educated women. Given
the absolute decline in the workforce between 2011–2012 and 2017–2018 that
fell entirely on women, we characterized it as a phenomenon of ‘job loss growth’
(Kannan and Raveendran 2019).7 The recovery in this respect has not substantially
altered the situation given the increase in the share of those women out of work and
education in 2018–19 and 2019–2020.
But education has played a crucial differentiating role in excluding women from
work force. Here, we should also not miss the challenge of absolute numbers of
the educated. By differentiating the working age population as educated (second-
ary level and above) and less educated (below secondary level) we find that during
the 37 years under consideration, the number of men in the educated LU category
increased from 2.3 million to 18.2 million. But for women, it jumped from close to
7 million to 85.1 million! However, the burden of less educated is somewhat less for
men—from 6.7 million to 13.9 million—but considerably higher for women, rising
from 86.5 million to 159 million!
7
The absolute decline in employment in 2017–18 could be a fall out of the demonetarization of cur-
rency (Rs.500 note) and the consequent disruptions in the economy since 2016. This decline has been
restored in 2018–19.
ISLE 13
3.1 ‘Missing Women’ as a Separate Category
This estimate of the LU needs to be differentiated from the question that appeared
as ‘missing women in the labour force’. Several papers have already been pub-
lished. While the LU estimates include those officially classified as ‘unemployed’,
the missing women category refers only to those outside the labour force (workers
plus unemployed) and hence outside the labour market and those in education. To
get an idea of the ‘larger picture’, a la Radhakamal Mukerjee, we have attempted
an estimate of the missing women for the 37-year period differentiated by educa-
tion. Here again we took 1983 as the benchmark to find out those who are out of the
labour force and education. The point that missing women in the labour force due to
increased participation in education is only partly valid. It is not valid at all for the
educated category of women (see Table 15).
For the educated category of women, the combined participation rate (i.e. labour
force participation plus educational participation) has remained the same at around
49–50 percent, while it declined from 50 percent in 1983 to 34 percent in 2018–2019
(and 41 percent in 2019–2020) for less-educated women. Compared to 1983 there
was hardly any missing women in the educated category. In fact, some of these ‘miss-
ing women’ to the tune of 0.95 million got included in the labour force in 2019–20.
However, for the less-educated women the ‘missing women’ in 2018–19 compared
to the 1983 LFPR was 45.54 million in 2018–2019 and 26.3 million in 2019–2020.
Therefore, the ‘missing women’ phenomenon in the Indian labour force has fallen
solely on the less-educated women. These results, of course, call for further probing
to understand their household and social group characteristics; further decomposition
shows that the missing women are entirely from the rural sector of the economy.
The sum and substance of the challenge of the quantity of employment in India is
undoubtedly related to its slow demographic transition since independence from
the supply side as well as a low demand for labour especially the less educated.
Such a process ‘excluded’ a significant share of its incremental population in par-
ticipating in the workforce and labour force; much more for women than men.
3.2 The Class of Working Poor as a Manifestation of Inadequate Inclusion
The bottom line on linking growth with employment in a poor but growing economy
is the need to reduce and then eliminate poverty. India’s ability to absorb the grow-
ing labour force as work force may seem to be high (see Table 1) as in other similar
developing countries. However, this is because poorer segments of the population
have no alternative but to engage in some kind of work as a matter of survival. How-
ever, detailed empirical work carried out earlier (see Sundaram and Tendulkar 2002)
shows a consistent decline in the incidence of poverty (measured by the national
poverty line) between 1983 and 1999–2000. This decline is also seen when the data
decomposed by household type such as self-employed and wage labour in both rural
and urban areas for the period between 1993–94 and 1999–2000. This decline has
been attributed to the economic reforms and consequent acceleration in aggregate
13 ISLE
Table 4 Incidence of Extreme Rural

Poverty in India by Household
Labour Type 1993–94 2018–19
SE Agriculture 34.8 41.8

SE Non-agriculture 36.9 31.0
Agr Labour 61.2 50.4
Other Labour 44.9 35.5
Others (Misc.) 26.7 31.3
Total 42.3 38.7
Urban
Self-Employed 17.2 12.6
Regular 8.3 6.8
Casual Labour 37.6 29.2
Total 15.7 11.8
Rural + Urban 34.8 29.2
growth followed by a shift of labour from agriculture to non-agriculture. It works

through an increase in real wages both in rural and urban areas as well as an increase
in the average years of education. The authors view the apparent decline in WPRs
as a matter of labour market tightening. However, the bottom group is that of the
casual labour households in both rural and urban areas given their poor asset base,
unsteady employment, and often the lowest wage rate.
There is no doubt that there has been a decline in the incidence of poverty in
India including for the most vulnerable group of agricultural labourers and their
households. But the decline is with reference to a national poverty line that has been
below that of the international extreme poverty line until recently. Poverty and its
determination have been a subject of much debate and controversy in India, although
it seems to have receded in recent times going by the international ‘extreme poverty’
line of 1.9 PPP$ per capita per day.
I have therefore made a fresh attempt to measure the decline in the work-
ing poor (based on household labour status) for a longer period of 25 years by
comparing 1993–94 and 2018–19. Since the national poverty line has under-
gone changes in weights of its components as well as use of price indices lead-
ing to controversies, I have taken the two international poverty lines of One Pur-
chasing Power Parity Dollar per capita per day for ‘Extreme Poverty’ (equal to
Rs.218.2 per capita per month) and PPP$2 (Rs. 436.4 per capita per month) for
‘Poverty’ for 1993–94. These have been revised as equivalent to PPP$1.9 (Rs.
1216.31 per capita per month) and PPP$3.2 (Rs. 2048.51 per capita per month)
for 2018–2019.8 A limitation of these international poverty lines is that they are
8
Since 2017–18 detailed surveys on household consumer expenditure in the country have not been car-
ried out by the National Sample Survey Organisation. The results of the 2017–18 survey was withheld by
the Government of India and hence not made available so far. We have therefore taken the total consumer
ISLE 13
Table 5 Incidence of Poverty Rural

in India by Household Labour
Type 1993–1994 2018–2019
SE Agriculture 87.4 85.1

SE Non-agriculture 87.6 76.6
Agr Labour 96.2 88.5
Other Labour 91.9 74.9
Total 89.1 80.5
Urban
Self-Employed 66.4 45.3
Regular 52.1 32.1
Casual Labour 88.3 71.6
Total 62.3 41.5
Rural + Urban 81.6 66.6
Table 6 Incidence of Extreme Poverty by Household Labour Type and Education

Rural
Sec & Above Below Sec

1993–1994 2018–2019 1993–1994 2018–2019
SE Agriculture 18.5 31.8 36.1 44.9

SE Non-agr 15.0 19.5 38.7 34.8
Agr Labour 42.0 35.3 61.7 52.5
Other Lab 21.0 17.9 45.8 41.0
Others (Misc.) 7.1 18.8 31.1 34.9
Total 17.2 25.1 44.1 42.6
Urban
Self-Emp 4.5 6.5 20.4 16.6
Regular 2.2 3.2 11.1 9.9
Casual Labour 22.3 17.4 38.3 31.6
Others (Misc.) 3.1 5.4 18.4 14.8
Total 3.5 5.3 19.6 16.4
not decomposed for rural and urban areas as in the Indian case of measurement
of poverty. This could somewhat overstate the estimates of the two poverty inci-
dences for rural areas. While this is important to keep in mind, we should also
Footnote 8 (continued)
expenditure reported by the households in 2018–19 as well as in 1993–94 from the employment-unem-
ployment schedule.
13 ISLE
Table 7 Incidence of Poverty by Household Labour Type and Education

Rural
Sec & Above Below Sec

1993–1994 2018–2019 1993–1994 2018–2019
SE Agriculture 74.4 77.4 88.4 87.4

SE Non-agr 68.8 65.6 89.1 80.2
Agr Labour 90.1 80.4 96.3 89.7
Other Lab 72.3 55.5 92.7 80.9
Others (Misc.) 52.5 51.8 81.4 76.6
Total 69.2 67.6 90.5 84.2
Urban
Self-Emp 40.4 30.2 73.0 55.2
Regular 31.0 19.4 61.8 43.5
Casual Lab 77.2 58.0 88.8 74.3
Others (Misc.) 30.0 17.1 66.4 44.8
Total 35.1 24.8 70.9 53.2
note that the incidence of poverty in rural areas has always been higher than that
in urban areas in national measurements of poverty in India. The findings are
given in Tables 4, 5, 6, 7. There is no doubt that this pace of decline, as we shall
see later, is at a snail’s pace leaving behind a significant backlog in poverty at
both thresholds.
First and foremost is the overall decline in the incidence of poverty in terms of the
international norms of extreme poverty and poverty. For all the households, extreme
poverty declined from 34.8 to 29.2 percent during the 25-year period that we have
taken here, i.e. 0.22 percentage points per annum. Against the higher threshold for
poverty, the decline was from 81.6 to 66.6 percent, i.e. 0.6 percentage points per
annum.
Second, this overall incidence camouflages the crucial difference in ‘place of resi-
dence’ as between urban and rural. For various reasons, urban residence results in
a significantly lower incidence of both extreme poverty and poverty. It is also evi-
dent that the rural–urban gap has also increased. In 1993–94, the incidence of rural
extreme poverty was 2.7 times higher than the incidence in urban poverty, but this
gap increased to 3.3 times in 2018–19. For the higher threshold of poverty this gap
increased from 1.4 to 1.9 times. To what extent the incidence of poverty is condi-
tioned by not only rural–urban residence but also by education, employment status
and social identity in an unequal society like India are also crucial issues that we
will examine a little later while discussing the challenge of inequality. At this stage,
it is safe to conclude that urban India experienced a much faster decline in poverty
than rural areas.
Third, from a labour status point of view, casual wage labour households have
the highest incidence in rural (agricultural labourers plus other labourers) than
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Table 8 Incidence of Extreme Poverty (Per capita per month Rs. 218.2 for 1993–94 and Rs. 1216.31 for
2018–19) and by Educational Status of Households
Category
Year Rural Urban
Sec & Above Below Sec Sec & Above Below Sec
SCST 1993–94 27.5 55.8 6.8 27.7

Others 1993–94 15.4 38.7 3.2 17.7
SCST 2018–19 31.2 50.1 10.2 24.0
Others 2018–19 22.9 38.3 4.5 14.4
Source: Computed from unit level data from NSS 50th Round cor 1993–94 and PLFS Round 2018–2019
Table 9 Elasticity of poverty
reduction with reference to per PPP$1 and 1.9
capita growth in output from (R + U) −0.11
1993–94 to 2018–19 (R only) −0.06
(U only) −0.17
PPP$2 and 3.2
(R + U) −0.12
(R only) −0.06
(U only) −0.25
Note: Per capita growth in output taken at PPP$ for 1993–94 and
2018–19. Note: Per capita growth in output taken at PPP$ for 1993–
94 and 2018–19
urban areas. Therefore, the employment route to poverty reduction for this class
of working poor poses a greater challenge than other classes of labour.
Last, but certainly not the least, is the educational factor. All categories of
labour households with a threshold level of education of secondary level and
above demonstrate a greater propensity to reduce the incidence of poverty. In the
urban areas except a miniscule share of households (3.5–5.3 percent) all of them
have crossed the extreme poverty threshold. For the higher threshold of poverty
only a quarter of the households with education are poor in 2018–19, while for
the less educated it is a little more than half. For the rural areas, households in
the educated category also show a much lower incidence than those in the less-
educated category. The gap seems to have narrowed down except for the urban
areas for the higher threshold of poverty.
While this empirical profile gives us an idea of the unequal distribution of
the working poor households, the picture would get much more nuanced when
a more crucial factor, or so I find, is introduced, i.e. the social group identity
of the households. We shall come back to this more elaborate structural-cum-
institutional profile of the working poor in the country a little later while talking
about the challenge of inequality. At this stage, it is enough to note the difference
13 ISLE
between the bottom group of Scheduled Castes and Scheduled Tribes (SCST) and
Others for a quick comparison between 1993–94 and 2018–19.9 What is striking
in the results presented in Table 8 is the low incidence among educated house-
holds in urban areas compared to rural areas for both the educated and less-
educated households. However, an increase in the incidence of extreme poverty
among educated households between 1993–1994 and 2018–2019 raises some
fresh issues that need further investigation. One plausible reason could be the
effect of poorer households (with at least one member acquiring secondary or
above level of education) moving to the educated category without a perceptible
improvement in employment status. These dimensions have been probed through
a logit model later with results that are quite significant from a differentiated pic-
ture of India’s socio-economic reality.
4 Growth Effect on Poverty Reduction
One way to determine the extent to which economic growth in the neoliberal era is
responsible for reducing poverty is by estimating the elasticity of poverty reduction
with reference to growth. Our exercise shows that for every percentage growth in
output the percentage reduction in extreme poverty is a mere 0.11 percent and 0.12
percent in poverty (see Table 9). But the striking aspect of this reduction is in the
differential impact as between rural and urban. For extreme poverty the elasticity
of poverty reduction for urban areas is three times that of rural areas; for poverty
it is a little more than four times. Data limitations prevent us from a comparison of
all four social groups considered here. However, data available for 2018–19 show
that among the four broad social groups—SCST, Muslim, OBC, and Others (called
Socially Advantaged Group) SCST group experiences the highest incidence of pov-
erty among 6 out of 8 categories. In the remaining two categories—urban educated
and less educated—Muslim group experience the highest incidence (see Table 16).
In this detailed grouping, not only is there a hierarchal ordering of poverty across
social groups but also a sharply poor rural economy viz-a-viz the urban economy.
5 The Challenge of Quality of Employment
Quality of employment is certainly too broad an idea. It is also associated with the
stage of development of an economy in terms of productivity, poverty, and the struc-
ture and institutions in the economy governing labour not to speak of the political
economy of power as between employers of labour and the workers. In the Indian
context, there is a substantial body of studies that highlights the conditions of work
of those who belong to what is now widely called informal or unorganized sector of
the economy. Workers in agricultural sector constituted till recently (2018) a major
9
Data for 1993–94 do not permit a detailed social grouping along SC, ST, Muslim, OBC, and Others
since OBC category is clubbed with Others.
ISLE 13
share of total workers find themselves in a world of their own with very little reg-
ulatory legislation on conditions of work. However the non-agricultural sector of
the informal economy also characterized by extreme forms of adverse conditions of
the quality of work. Some worst features of the quality of work have seen a decline
such as in child labour and forced/bonded work, but many other features remain as
a challenge. These features such as lack of adequate work, long hours of work, lack
of basic facilities at work sites, health and occupational hazards, various forms of
wage-cutting as in putting out systems, labour market discrimination along gender
and social group identities, and lack of social security provided by employment have
been examined in great detail by the erstwhile NCEUS (2008) before recommending
appropriate measures to improve the conditions of work.
Of course, these features of the labour market and work conditions mainly, if not
only, manifested in the informal sector are quite endemic to most developing coun-
tries especially those at the bottom of the per capita income ladder. Such a situation
has presumably led the ILO to come out with a concept of Decent Work as an objec-
tive that countries could strive to attain. The operational content of the ILO’s decla-
ration got elaborated in terms of access to employment, social protection, workers’
rights and social dialogue. Taking this idea of Decent Work as a broad frame, we
highlight certain dimensions that are amenable for quantification depending on the
availability of data. This is summarized in Table 17.
Within this rather poor record in attaining a modicum of decent work conditions
in an otherwise fast-growing economy, we flag here three dimensions that pose a
formidable challenges in the Indian social and governance context. These are: (a)
the size of the informal sector and informal employment and changes therein, if any,
(b) the extent of social security available to workers, and (c) the issue of low wages
that does not meet a subsistence threshold recommended for adoption at the national
level.
Informality: The first point to note is the emergence of a new dualism in the
Indian economy that is different from the earlier depiction of dualism as one of
agriculture vs industry or traditional vs modern sectors. In this new dualism that
is distinctly manifest after the structural transition of the economy from a predomi-
nantly agricultural one to a non-agricultural one, there are two dimensions. One is
the sectoral dualism as between informal and formal sectors, and the second is the
dualism as between informal employment and formal employment. There is a large
congruence between informal sector and informal employment, but there is a grow-
ing tendency of informal employment in the formal sector as the figures in Table 10
show. The formal sector is characterized by higher capital intensity, technology, and
modern organizational forms, and the informal sector is an obverse mirror charac-
terized by low capital-labour ratio, employment size (less than 10 workers), sim-
ple technologies, and risky organisational forms such as proprietary or partnerships.
This cuts across the earlier dualistic features, but these are more striking in the non-
agricultural sector of the economy (see NCEUS 2008).
Let us first examine briefly the sectoral characteristics. If we take all employment
(including agriculture) the formal sector registered an annual growth rate of 3.18
percent between 1999–00 and to 208–19. However, it constitutes only one-fifth of
the total employment given the low initial base. The informal sector has shown a
13 ISLE
Table 10 Percentage shares of total employment in terms of formal and informal sectors and type of employment in India (Men + Women) 15 years and above
Economy Year Sector Type Total Total employment (Million)
Formal Sector Informal Sector Informalemp Formal emp
All Sectors 1999–00 14.1 85.9 91.3 8.7 100.0 386.48

2018–19 20.9 79.1 88.9 11.1 100.0 472.75
CAGR 3.18 0.63 0.92 2.39 1.07
Non-agricultural 1999–00 31.4 68.6 80.4 19.6 100.0 155.95
sector 2018–19 32.1 67.9 83.1 16.9 100.0 278.11
CAGR 3.21 3.04 3.27 2.28 3.09
Men Only
All sectors 1999–00 16.4 83.6 89.5 10.5 100.0 268.65
2018–19 20.5 79.5 88.5 11.5 100.0 360.56
CAGR 2.76 1.29 1.50 2.03 1.56

sector 2018–19 30.1 69.9 83.4 16.6 100.0 226.22
CAGR 2.74 3.24 3.35 1.92 3.09
Women Only
All sectors 1999–00 8.8 91.2 95.4 4.6 100.0 117.84
2018–19 22.1 77.9 90.0 10.0 100.0 112.19
CAGR 4.69 -1.08 -0.57 3.96 -0.26
ISLE
sector 2018–19 40.9 59.1 81.9 18.1 100.0 51.89
CAGR 5.10 2.08 2.94 4.01 3.12
Source: Computed from unit level data from NSS XXth Round and PLFS 2018–19
599
13
lower growth resulting in a marginal decline in its share of employment from 86 to

79 percent during a period of nearly two decades. When the non-agricultural sector
alone is considered, the emerging picture is not so encouraging since its employ-
ment size has declined only by a thin margin, from 69 to 68 percent. As for informal
employment in the economy as a whole, there has been a marginal reduction from
91 to 89 percent but an increase when the non-agricultural economy alone is con-
sidered from 80 to 83 percent. This suggests a higher rate of growth of informal
employment than formal employment in the non-agricultural economy.
Therefore, from the point of the quality of employment, informal employment
has an overwhelming presence in the Indian economy with a marginal decline when
all sectors are considered but no change when the non-agricultural sector alone is
considered.
What about its comparators such as China and Indonesia? As per an ILO estimate
China’s informal employment in total employment in the economy is 54.4 percent,
whereas Indonesia it is 85.6 percent as against India’s 88.2 percent. If the non-agri-
cultural sector alone is considered the figures are China 53.5, Indonesia 80.2, and
India 78.1. In terms of employment in the informal sector, the employment share is
48.4 percent for China, 79.7 for Indonesia, and 81.7 for India. For the non-agricul-
tural sector, these shares are 47.3, 71.8, and 65.9, respectively.10 India and Indone-
sia are in a similar position as far as informality in employment is concerned, but
the case of China is interesting given the political regime’s claim of China being a
socialist economy.
Informality in employment has a strong gender dimension, but the recent trends
in India may appear that women workers are doing better than their male counter-
parts given their higher share of employment in both the formal sector and formal
employment. However this conceals the decreasing share of women in the workforce
driven by the loss of employment opportunities in the primary sector resulting in
a net reduction in total workers. In an earlier paper (see Kannan and Raveendran
2019) we had pointed out that the new employment opportunities have already gone
to the educated women with the less-educated (less than secondary level) women
losing out and joining the category of LU presumably as ‘discouraged workers’. One
may also interpret this as a sign of increasing aspiration of the younger women in
population who are continuously striving to enhance their educational attainments
and seeking employment opportunities in non-agricultural sectors, especially in the
service sector. Thus there is a dynamic process of exclusion of less-educated women
and inclusion of relatively more educated women into the workforce.
While there are scholars (see, e.g. Ghose 2012; Ghose, et.al. 2008) who welcome
the mere transfer of employment from the informal to the formal sector—and we
would also welcome it given the higher level of wages and a possibility for some to
transit to regularity of employment—we find that for a longer period of two decades
for which such detailed data are available, the shares have not increased for the non-
agricultural sector. Of course the absolute numbers have increased but that is not
10
The years for which these data pertain to are: 2013 for China, 2012 for India and 2016 for Indonesia.
For details see, ILO (2018b).
13 ISLE
Table 11 Percentage Shares of Wage Workers by Availability of Social Security in India (1 = Provident

Fund/Pension, 2 = Gratuity, and 3 = Health care and maternity)
Social Security Male Female Person
2004–2005 2018–2019 2004–2005 2018–2019 2004–2005 2018–2019
All workers (Formal + Informal Sector)

Any one 7.4 7.9 6.8 8.7 7.2 8.1
Any two 4.4 6.4 3.6 7.0 4.2 6.5
All three 17.3 11.2 15.2 12.3 16.9 11.4
Total 29.1 25.5 25.6 28.0 28.3 26.0
None 69.1 66.3 72.8 67.3 69.8 66.5
Not known 1.9 8.2 1.6 4.7 1.9 7.5
Total 100.0 100.0 100.0 100.0 100.0 100.0
Workers in Formal Sector
Any one 12.9 15.7 11.0 12.6 12.5 14.9
Any two 8.1 13.2 6.5 10.7 7.7 12.6
All three 34.2 24.1 28.0 19.5 33.0 22.9
Total 55.2 53.0 45.5 42.8 53.2 50.4
None 44.2 41.3 53.8 52.8 46.0 44.1
Not known 0.5 5.7 0.8 4.4 0.6 5.4
Total 100.0 100.0 100.0 100.0 100.0 100.0
Workers in Informal Sector
Any one 1.9 1.5 2.1 2.4 1.9 1.7
Any two 0.7 0.8 0.5 1.1 0.6 1.0
All three 0.6 0.5 0.7 0.9 0.7 0.6
Total 3.2 2.8 3.3 4.4 3.2 3.3
None 93.5 86.9 94.3 90.3 93.6 87.4
Not known 3.3 10.2 2.5 5.3 3.2 9.5
Total 100.0 100.0 100.0 100.0 100.0 100.0
st
Source: Computed from unit level data from NSS 61 Round and PLFS 2018–19
the point. Since the informality of employment is characterized by the absence of

employment and/or social security, a mere sectoral transfer is no guarantee of decent
work conditions. It is precisely this dimension of employment that the NCEUS
addressed in great detail and worked out an elaborate programme for “levelling up”
the informal sector both in productivity and providing collective social security and
decent working conditions (see, NCEUS 2009).
5.1 Social Security
Informality in employment is not only associated with the absence of employ-

ment security but also social security provided by the employment status. There-
fore the lack of social security in employment is a clear indicator of the low quality
of employment. We have already noted that around half the total employment in
ISLE 13
India is in the category of self-employment where there is no one to provide social

security other than the worker. It is in this context that the NCEUS recommended a
national minimum social security package covering all workers in the informal sec-
tor that basically sought to socialize the cost of social security to the workers in the
informal sector for their economic contribution. It had noted that social security can
be visualized broadly—often referred to as social protection—by ensuring (a) basic
social security that is in the nature of public provisioning for basic health care, basic
education, child care, old age care and so on, and (c) contingent social security to
meet unanticipated adverse events as well as eventualities (death). There is inter-
national recognition and campaign for this kind of broad-based social protection to
form a social floor. The extent of warranted coverage and budgetary costs with refer-
ence to India has also been worked out (see, e.g. Srivastava 2013). Focusing on con-
tingent social security, the NCEUS worked out a package that was estimated to cost
around 0.5 percent of the GDP as on 2006–09 (NCEUS 2006 and 2009). However,
such a comprehensive system has not been found favour with successive political
regimes and what one finds instead is a plethora of schemes with targeted coverages
subjected to revision from time to time (see Kannan 2014 Ch. 6 for a critique).
Based on availability of data we are now in a position to examine the extent of
the availability of social security for wage workers (mostly regular workers) and
compare the progress between 2004–05 and 2018–19. The percentage of workers
with one or more of the listed social security (see Table 11) has declined from 28.3
to 26.0 percent between 2004 and 2019. A sectoral breakdown suggests that it is
overwhelmingly associated, expectedly so, with formal sector employment. But it
also finds a decline from 53.2 to 50.4 percent that is quite close to the share of for-
mal employment in the formal sector. Definitionally, informal sector employment is
characterized by the absence of social security, but the coverage of 3.3 percent could
be due to self-provision of social security in the higher levels of self-employment
(such as professionals) and/or the provision of some social security by a few small
establishments.
5.2 Minimum Wages
Wages for employment no doubt constitute an important factor in determining the

quality of employment because of its consequential outcomes in terms of the stand-
ard of life of the worker and his family. It is also important from a macroeconomic
point of view given its crucial role in determining aggregate consumption and its
impact on subsequent growth of the economy. Although there is no single official
document articulating a wage policy, several official commissions and committees
and legislative instruments have spelt out the various aspects including minimum
wages, timely payment of wages and non-wage benefits, collective bargaining, and
reducing wage inequality. These issues discussed in several academic studies have
also been subjected to an assessment recently (see, e.g. Papola and Kannan 2017 and
ILO 2018). The most important, from our point of judging the quality of employ-
ment, is that of minimum wages.
13 ISLE
The history of minimum wages in India shows a complex process character-

ized by different methods of fixing, variations across regions, industry, skill, and
gender. However the need for a national floor level minimum wage applicable to
all workers in the economy has been a demand for more than three decades. The
National Commission on Rural Labour recommended a national minimum wage
along with some broad guidelines on its fixation. Subsequent two commissions—
Second Labour Commission (2002) and the National Commission for Enterprises in
the Unorganized Sector (NCEUS 2006 and 2009)—also recommended the fixation
and implementation of a national minimum wage below which no minimum wage at
the regional or industry or any other level should be fixed. However the no statutory
national minimum wage has so far been fixed by the Government of India. There
is a recommended national minimum wage which acts as an advisory to the state
governments.
To illustrate the consequences of the non-fixation of a statutory national mini-
mum wage and its implementation, we propose to measure the share of workers in
both rural and urban areas who do not get the recommended (non-statutory) mini-
mum wage. This, we argue, could be taken as one of the measures of the non-inclu-
sive nature of India’s economic development from an employment perspective. The
most recent exercise in determining a national minimum wage based on subsistence
requirements is that of a committee appointed by the Government of India (2019)
known as the Satpathy Committee. It recommended a national minimum wage of
Rs. 375 in 2017–18 to be implemented by dividing the country into four regions for
price adjustment of this value. By applying this threshold of Rs.375 to the data on
employment in the two Periodic Labour Force Surveys, we find the proportion of
workers getting a wage below this level works out to 58 percent (205 million) for
men and 54 percent (56 million) for women in 2017–18. After adjusting for infla-
tion these percentages have risen to 62 and 75 in 2018–19, i.e. 225 and 85 million
workers, respectively. Such proportions of workers not able to secure a subsistence-
based national minimum wage are shocking, to say the least. As a country, succes-
sive regimes in India consistently failed to ensure a minimum wage to its workers
as recommended by its various expert committees. This picture of low earnings of
a majority of workers stands in stark contrast to India’s record as a fast-growing
emerging economy with a trend growth rate of around six percent per annum for
more than three decades.
The prevalence of low wages that are less than a recommended minimum wage
is not the only problem in wages. It is also a question of inequality in wages that
have strong associations with gender, social identity, education and location. We
have taken this up in the next section dealing with inequalities. The outcome of
low wages is the prevalence of poverty especially among those with unfavour-
able initial conditions as the ones mentioned above. This dimension of poverty
is also taken up in the section on inequalities. In that sense both the quality of
employment and inequalities in the outcome of employment have to be seen
jointly as a composite challenge. Underlying these challenges is that of the dual-
istic nature of the economy that is now increasingly manifested as formal and
informal in both organization of production and of employment. In Radhakamal
Mukerjee’s seminal work, The Indian Working Class (Mukerjee 1945), this kind
ISLE 13
of categorization of the work force was not in vogue, but he was conscious of this
dualism. He spoke about the work force in agriculture including the landless and
distress migration to the cities (as well as export of labour through labour sourc-
ing by overseas British capital) and the conditions of work and life of those who
migrated to the cities for employment. While much of the book is devoted to the
industrial working class, their problems, and remedial solutions, he prefaced this
by a broader survey of the economy from the point of employment. He cham-
pioned the country’s planned industrialization and envisioned a transfer of poor
labourers from low productivity economic activities to high productivity ones. In
that sense, he was foreseeing a ‘Lewisian transfer of surplus labour’ much before
its theoretical formulation. To quote:
“Planned industrialization in India will, in the first place, integrate the small
cottage and decentralized industries with the bigger factories and workshops,
bringing craftsmanship up to mass production standards and rehabilitating the
former in both the urban and rural economy of the land. This would make tran-
sition to full industrialization easier and at the same time combat the social
dangers that are associated with large-scale industrial production concentrated
in a few great industrial cities and towns. Secondly, it will bring about a close
connection between agriculture and industry through the processing of agri-
cultural products and raw materials” (1948 edition: 16-17).
When he concluded his first Chapter, Radhakamal Mukerjee spoke, so I think,
as more of a visionary than a mere economist. He wrote:
“With new orientation and coordination between the city and the village in the
future, we shall find that the science and technique of the city will utilize the
resources and raw materials and replenish the wealth of the village more than
it will exhaust, and its life will stimulate the minds and enlarge the vision of a
far greater number of people than it will wrap or repress” (p.17).
In this book, he dealt with the question of Minimum Wages for industrial workers
at length. He and his students conducted many studies, including his collaboration
with the King George Medical College, Lucknow, to determine the calorie require-
ments for a working Indian. The core message is that what he recommended in terms
of calorie requirement (3000 cal) was far above that was later considered by suc-
cessive Indian governments and even in the latest Committee on Minimum Wages.
Radhakamal Mukerjee recommenced a national minimum wage but excluded agri-
culture and ‘agricultural industries’, as he called it. The saga of getting a statutory
sanction for a national minimum wage is a long and continuing one in India, reflect-
ing a certain stubborn political economy whereby the lives of the labouring poor
receive the least priority in the political agenda of ruling regimes. In 2018, when the
earlier mentioned Satpathy Committee recommended a national minimum wage of
Rs. 375 per day at 2017–18 prices, the Government of India followed it by fixing,
like a cruel joke, a non-statutory minimum wage at Rs.178 per day!
13 ISLE
Fig. 2 Money Wages per day (Rs) for 160 Groups
6 The Challenge of Inequality as Manifested in Wages and Poverty
Most discussions and debates on inclusion focus on nominal inclusion and not sub-
stantive inclusion in the sense of reducing inequalities. India’s challenge is one of
manifold inequalities. And these are also reflected in employment and labour market
conditions. They are structural and institutional. Structural inequalities in employ-
ment have to do with uneven development of the three basic sectors of the economy,
and they also manifest across regions in a vast country. They are characterized by
labour status as between regular, casual, and self-employment in the labour market.
In both these, there is sharp inequality between rural and urban areas. Institutional
inequalities are manifested in gender as well as social group identity. Elsewhere I
have attempted to show that all these inequalities coalesce into social inequality
understood in the hierarchical structuring of Indian society into broad social groups
of castes and communities. I have called this ‘durable inequality’ a la Charles Tilly
(1999) by its enduring hierarchical nature. It was important to bring out the increas-
ing nature of this social inequality except in an important and potentially powerful
indicator, i.e. educational attainment (Kannan 2021).
Given this overall background of manifold inequalities, I would like to focus here
on two inequalities that have a direct bearing on the standard of living of the people.
One is the inequality in wage rates and the other is the unequal outcome in the inci-
dence of poverty of households belonging to different labour status groups.
A telling and manifest example of inequality in the labour market is that of
wages. Standardising wages in terms of wage rate (i.e. wage per day) we may exam-
ine the spread of the wage rate in this segmented labour market. An earlier detailed
study of wages (Papola and Kannan 2017) revealed that there has been some mod-
est decrease in disparity in wages for casual workers as between rural and urban,
men and women and in relation to regular workers. However a fuller picture will be
that based on a number of segmenting factors. The important ones that we identified
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Fig. 3 As = Secondary and above, BS = Below Secondary i.e. upto Middle level of education or less,
RL(NA) = Regular labour Non-Agriculture, CL = Casual labour, AL = Agricultural labour, SE = Self-
employment, SE(A) = Self-employment in Agriculture, SE (NA) = Self-employment in Non-Agricul-
ture Rural, CL(NA) = Casual labour in Non-Agriculture in Rural, SAG = Socially advantaged group,
OBC = Other Backward Classes, SCST = Scheduled Castes and Scheduled Tribes
13 ISLE
in the abovementioned study are location (rural/urban), education11 (4 levels), gen-

der (male/female), social group12 (5 groups), and labour status (regular/casual) that
works out to 160 group. This exercise resulted in the emergence of a ‘long tail of
wage inequality’ that reflects the entrenched low wages of a large number of groups
of workers. BY updating this ‘long tail of wage inequality’ for three different time
points—2004–05, 2011–18 and 2017–18—what we get is a picture of inequality
that is rising during this 13-year period (see Figs. 2, 3).
Wage inequality for 160 Socio-Economic Groups

Year Inter-Quartile Range Gini Co-efficient
2004–05 76 0.18
2011–12 176 0.20
2017–18 240 0.21
Sourced: Computed from unit-level data from 61st Round for 2004–05, 68th Round for 2011–12 and
Periodic Labour Force Survey (PLFS) for 2017–18
Of the two measures of wage inequality among these 160 socio-economic-labour
status groups the inter-quartile range inequality has increased substantially meaning
a huge widening of the gap between the bottom 25 percent and the top 25 percent.
The Gini coefficients also show a widening of inequality albeit on a smaller scale.
The second dimension of inequality that we highlight is that of the incidence of
poverty between 1993–94 and 2018–19 across different employment status groups
in rural and urban India differentiated by educational attainments (see Tables 4, 5,
6, 7). Our hypothesis is that since an overwhelming proportion of workers earn their
income through their labour, it is expected that the incidence of poverty will also
follow this unequal distribution of wages. To illustrate, we have constructed a pov-
erty profile for 2018–19 by dividing the households by location, employment sta-
tus, education and social group identity. Rural households are divided into 5 labour
status groups13 × 2 educational groups × 4 social groups14 that results in 40 groups.
For urban households 3 labour status15 × 4 social groups × 2 educational groups for
urban areas make up for 24 groups that gives a total of 64 groups. The shape of
the poverty distribution is like a ladder ranging from poverty incidence of 50 to 59
percent at the bottom and a mere two to five percent at the top. Therefore, if and
when it happens, the so-called trickle-down goes through several layers of filtering
11
The educational levels are Least Educated (Primary or Below), Middle Level (Above Primary but
below Secondary), Secondary and above but below graduate, and Graduate and above.
12
The social groups are Scheduled Tribe (ST), Scheduled Caste (SC), Muslim, Other Backward Castes
(OBC), Others (referred to as Socially Advantaged Group).
13
For Rural households the groups available in the PLFS 2018–19 are: (1) Agricultural Labour, (2) Cas-
ual Labour (Non-Agriculture), (3) Regular Labour (Non-Agriculture), (4) Self-Employed (Agriculture)
and (5) Self-Employed (Non-Agriculture).
14
Here we combine the SC and ST into one group; the others being Muslim, OBC and Others.
15
For Urban households the groups available in the PLFS 2018–19 are: (1) Regular labour, (2) Casual
labour, and (3) Self-Employed. Such detailed classification of households are not available for 1993–94
50th NSS Round.
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Fig. 4 Average Predicted Probability of Poverty along with 95% confidence intervals for respective
Socio-Economic groups 2018–19. Source: Calculated using estimated logit regression presented in
Table 18. Note: GR = Graduate and above working as regular worker, GC = Graduate and above work-
ing as Casual worker, GS = Graduate and above working as Self-employed, SR = Secondary educated
and regular worker, SC = Secondary educated and casual worker, SS = Secondary Educated and Self-
Employed, MR = Middle or less educated and regular worker, MC = Middle or less educated and casual
worker, MS = Middle or less educated and Self-employed worker
mediated by pre-existing structural and institutional inequalities. The most powerful

seems to be the place of residence (rural or urban), social group identity, and educa-
tion. From a policy point of view, a focus on rural economy appears to be more criti-
cal since the disadvantaged in the other two factors are disproportionately located
in rural areas. At the top of this ladder are 12 groups of households with an extreme
poverty incidence of 10 percent or below are mostly urban and educated (9), regu-
lar work or urban self-employed (11). There is only one educated SCST household
group engaged in urban self-employment at the top. At the bottom with a majority
of households in extreme poverty (50 or more percent) are four less-educated rural
households engaged in casual work. All except one group belong to the SCST cat-
egory. The second one related to rewards for work and this is explored in a more
detailed fashion by an exercise on wage inequality.
7 Probability of being Poor: A Logistic Regression
What we have represented in the bar chart is the outcome of the incidence of pov-
erty when the population is divided into a certain socio-economic combination to
reflect the location of residence, social group identity, education and the employ-
ment status. Given the large-scale sample it could be argued that a rigorous econo-
metric exercise would bring out, in a cardinal scale, the likelihood as well as
probability of being poor in comparison with a reference group with the best per-
formance. A logistic regression model was therefore adopted to assess the dispar-
ity in likelihood and probability of poverty across comprehensive socio-economic
13 ISLE
groups that is often imagined or assumed during popular discussions but is rarely
represented in such comprehensive scale. Every other group was assessed in rela-
tion to often assumed most advantageous group i.e. socially advantaged group resid-
ing in urban areas belonging to households that are classified as graduates or above
and having a regular employment status (classified as Urban-Others-Graduate or
Above-Regular). The category ‘Others’ refers to all those who do not belong to SC,
ST, Muslim, or OBC and thus consists of Upper Caste Hindus, Sikhs, Christians,
and other minor groups. In other words, this group serves as reference category or
benchmark. Through regression coefficient one can trace severity of disparity across
socio-economic group; however, it lacks quantitative interpretation. In order to make
it more instructive and intuitive we have used predicted probabilities as well odds
(likelihood) ratio of poverty for each socio-economic group. The results are given in
Tables 18 and 19.
For example, as per odds ratio presented in Table 19 none of the group has value
lower than one which implies that our reference group has odds ratio of 1 by default
and hence stands as the most advantageous group in reality because every other
socio-economic group has value higher than 1. Rural SCST group employed as cas-
ual workers with low educational attainment (middle level or less) faces the highest
odds ratio of poverty, i.e.78.6, implying that this group is 78.6 times more likely to
face poverty compared to the most advantageous socio-economic group. In other
words, this group faces highest probability of being poor (50%) while advantageous
socio-economic group (1.3%). The second most disadvantages group is Rural self-
employed SCST with lower education. These results may not be surprising, but they
indicate the cardinal nature of disparity that exists in Indian society. The scale of
disparity is simply mind boggling. A group faces 50% chance of poverty, while the
group with least disadvantages faces negligible probability of poverty.
To make the results more tractable and comprehensible average predicted proba-
bilities of poverty and respective confidence intervals are presented in Fig. 4. House-
holds with different educational and employment status compared for given sector
and social groups. The red line drawn at intercept value of 0.25 indicating national
average predicted probability.
Compared to the national average, the probability of being poor for an over-
whelming number of groups (68) is quite low. The exceptions are three SCST sub-
groups working as casual workers and one Muslim sub-group working as casual
with not more than middle level of education. This could be reckoned as a reflection
of greater employment and wage opportunities in urban areas than the rural.
The situation in rural areas is quite different from that of the urban. Social group-
based disparity in probability of being in poverty compared to the national aver-
age is, in general, more severe in rural areas compared urban areas. However, an
important exception here is the socially advantageous group called Others. Only one
sub-group with no more than middle level education and working as casual workers
has a probability higher than that of the national average. OBC and Muslims tend
to have very similar probabilities of poverty in rural India hovering around 29 per-
cent with some difference within groups based on education and employment status.
These two groups lie between two extremes. Dalit and Adivasi living rural India face
poverty with average probability of 35 percent notwithstanding differences within
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Box 1 Understanding Performance of Poverty through a Logit Model
To assess the performance of poverty across socio-economic groups, a relative approach was adopted.
Socio-economic group is thought of as combination of four categorical variables namely
1. Region of residence: Rural or Urban,
2. Social group identity: SCST, OBC, all Muslims and Others,
3. Employment status: Regular, Casual, and Self-employed. Employment status of a household was
derived from weekly recall period or Current weekly status. The employment status of the most
educated working member of the household was used to represent the employment status of the
household, and
4. Educational status: Three levels of educational attainment ((i) Below Secondary identified in the
data set as not more than middle level education, (ii) Secondary level identified as those who have a
secondary or above level of education but below graduate degree, and (iii) those who have graduate
level or higher. Household education level is represented by the most educated working member’s
educational status
Combination of these groups would produce 72 (2 × 4 x 3 × 3) socio-economic groups. These 72 socio-
economic groups then were used as explanatory variable in a logit model with binary variable of pov-
erty taking value 1 if household is poor and zero otherwise. From PLFS survey we could eventually
get about 89,659 households with complete information that we could analyse out a total of 101,579
households surveyed. This is because not all households had workers. Household that had no working
member were excluded from this analysis
In order to make results more instructive and intuitive we have also presented estimates of average
predicted probabilities odds(likelihood) ratio of poverty corresponding to coefficients for each socio-
economic group. The results are given in Tables 018 and 019. Predicted probabilities were derived
using estimated model through Stata’s ‘margins’ function which part of post-estimation tools in Stata
In producing and interpreting average predicted probabilities, I have followed Williams (2012) which
provides comprehensive guide for production and interpretation of regression results through margins
function. For instance, to calculate predicted average probability of poverty for households belong-
ing to SCST category, we use the estimated regression to predict the probability of each household
by keeping the value of all variables same it was for the original regression but for social group.
For the purpose of predicting average predicted probability of poverty for SCST households we
treat all households in the data as if it belonged to SCST category. Then by averaging the predicted
probabilities of each household we get the population level average predicted probability of poverty
for households belonging to SC/ST category. Similarly, to get the average probability of poverty
for casual worker households we will keep value of every variable same as it is in the original data
except for working status. We will treat every household as casual worker household irrespective
of its actual working status. In summary, this method gives us a scenario of a hypothetical situation
when entire population has a given value of a particular variable. This is a very helpful tool as it
allows to estimate predicted values with high statistical power or lower margin of error
Households belong to Scheduled Castes (SC) and Scheduled Tribes (ST) were clubbed together since
their status in an overwhelming number of socio-economic indicators were found to be at the bottom
(see Kannan 2022). OBC means Other Backward Classes. Households without a working member could
belong to pensioners and or receiving income from assets or remittances from non-resident family mem-
bers. Some households with destitute members unable to work might also be found in this category
owing to educational and employment status that is quite visible from the top left
panel of Fig. 2. On the other extreme is the ‘Others’ who face average probability of
less than a quarter of what Muslims and OBCs face and one-fifth of what Dalits and
Adivasis face, i.e. 7% obviously with some differences dictated by education and
employment status. In Urban areas social gradation is less starker starting from 17
13 ISLE
percent for Dalits and Adivasis, 14 percent for Muslims, 11 percent for OBCs and
finally less than 7 percent for Others ignoring within group differences.
Education and employment-based gradation is also quite stark. In case of edu-
cation, middle of less-educated households face probability of poverty close to
national average i.e. 25 percent, while for secondary and graduate and above lev-
els education predicted probabilities are around 17 percent and 7 percent. Similarly,
probability of being in poverty for casual worker households is highest (31 percent),
while self-employed households face 10 percentage point lower poverty (21 percent)
and regular workers about 9 percent.
Interestingly, thing about this analysis is that it actually indicates which social
groups are in which employment and educational categories because probabilities
almost mimic the same situation irrespective of how we slice the data. For exam-
ple, whether we look at probability of regular workers, graduate and above educated
or others in terms of social group average probabilities hover around 7–9 percent
implying that most ‘Others’ households do have regular jobs and have qualification
that is graduate or above level.
Similar, Adivasis, low education status, and casual employment status tend to be
same households because probabilities for all this groups hover around small range
of 25–31 percent.
Such results indicate limited effectiveness with which Indian democracy has
benefited the socially disadvantaged, especially the bottom groups of SC and ST,
despite several constitutional safeguards. The fact that employment and educational
statuses are by and large still anchored to social statuses of households signifies that
despite 75 years of nation building, the distance to travel further is long and perhaps
arduous. In all likelihood the neoliberal market road would exacerbate this inequal-
ity than reduce it (Box 1).
8 Concluding Remarks
What we have highlighted in this paper is also a record of the past 75 years since
India’s independence from British colonialism. From an employment perspective,
the challenge of inclusive development clearly brings out the challenge of creating
both the required quantity and quality of employment. The particular challenge in
the former is the low and declining opportunities for women to participate in gain-
ful employment activities. The problem of quality is perhaps much graver than the
quantity, given the low, if not declining, opportunities for regular work with reason-
able earnings to ensure a standard of living above subsistence. Even this notion of
subsistence is satisfied for this category of workers only when we consider the inter-
nationally determined level of extreme poverty. If it is raised to a level of poverty,
the challenge for India seems to be quite daunting with two-thirds of its households
living below PPP$3.2 per capita per day or a monthly consumption expenditure of
between Rs. 8200 and 8500 per household in 2018–2019.
Such an outcome especially during a heightened and impressive economic
growth of the last three-and-a-half decades is manifested in increasing inequality
that is hardly taken up as a policy variable by successive regimes. The need for
ISLE 13
the development of underdeveloped sectors such as agriculture and allied activi-

ties along with the sprawling small-scale industrial and service sector activities is
quite evident. All these boil down to a great degree to the need for a sustained rural
development process. But neoliberal economic policies work through a process of
‘betting on the strong’, and that happens to be through the urban-centred private
corporate entities on the one hand and an urban-oriented, educationally advancing
and asset-holding population, a disproportionate share of which come from socially
advantaged groups. Such an outcome has exacerbated economic and social inequali-
ties and strengthened the dualisms between formal and informal employment on the
one hand and urban and rural areas, on the other. Instead of a course correction,
political regime after regime has only sharpened and strengthened neoliberal eco-
nomic policies unmindful of its distributional consequences.
Much of the initial and the evolving gaps in social, economic, and educational
inequalities have a rural setting. However, the evolving picture in the world economy
is likely to pose further challenges in linking growth with employment. The major
one is the onset of what is called the Fourth Industrial Revolution and its likely
impact on employment. Built on the Third Industrial Revolution of electronics and
information technology it is moving into new paradigms of work and employment
relationship through automation, robotics, and artificial intelligence erasing the con-
straints of space and time. It is a continuation of the Schumpeterian process of crea-
tive destruction. While new jobs are being created, existing and old jobs are being
destroyed. The balance is difficult to predict but could lead to social and economic
imbalances across and within countries.16 The International Labour Organisation
has been working on this theme and the publication of the 2021 World Employ-
ment and Social Outlook on The role of digital labour platforms in transforming
the world of work is a pointer to the emergence of this segment in the Fourth Indus-
trial Revolution. How will a country like India, with a rurality of employment (share
of agriculture and non-agriculture in rural areas plus agriculture in urban employ-
ment in total employment) of 69 percent in 2018–19 cope with this challenge of the
Fourth Industrial Revolution?
If political will can be summoned along with an overall rethinking of national
priorities, I think there are reasons for hope.
The first is the rising educational attainments among youth since it is crucial
in seizing new opportunities for gainful employment. For example, while only 14
percent of the adults in the working age population (20–39 years) had educational
attainment of Secondary and above in 1983, it reached 48 percent in 2018–2019.
Secondly, there are several environmental challenges exacerbated by climate
change. In the Indian context, as with most other developing countries, this has
assumed many dimensions and levels from the local, regional, and national. The
concept of environmental sustainability provides a much-needed new framework for
economic planning and policy. The search for a greener economy is grounded in
this framework. The employment potential of moving towards a green economy is
16
Narasimha Reddy’s Radhakamal Mukerjee Memorial Lecture on this theme in 2019 Annual Confer-
ence of the Indian Society of Labour Economics has dealt with these issues.
13 ISLE
also embedded in a Schumpeterian process of creative destruction. The ILO’s 2018

World Employment and Social Outlook titled Greening with Jobs estimates that
there will be a job loss of 6 million in the energy sector alone and a job gain of 24
million globally, thus creating a net job gain of 18 million (ILO 2018c). I think an
environmentally sustainable framework could give the much-needed developmental
push to the rural economies subject to political will. For India, this could reduce
the currently increasing gap between the rural and urban economies. This calls for
considerable research and extension work on the employment potential of moving
towards a green economy given the agro-ecological variations in this vast country
and the need for strengthening and expanding its natural capital base. It will, inter
alia, help increase the land and labour productivity in the primary sector that could
also help in industrial development.
Although dictated by their individual national contexts and challenges, the world
seems to be preparing for a relook at the neoliberal strategies. But in India, politics
seems to have successfully separated itself from economics and consequently the
challenge of inclusive development, despite the contrarian rhetoric.
Appendix
See Tables 12, 13, 14, 15, 16, 17, 18, 19.
Table 12 Population of India India World India’s share (%)

and world (in million)
1901 238.4 1654.0 14.4
1951 361.09 2594.9 13.9
1991 846.43 5368.1 15.8
2020 1346.19 7752.8 17.4
Source: Census of India Reports and UN Population Prospects
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Table 13 India: Percentage MEN WOMEN

distribution of WAP (15–59)
WPR EPR UE LU WPR EPR UE LU
1983 87.8 7.7 2.2 4.6 46.7 3.3 0.6 49.9

1993–94 85.8 9.9 2.0 4.3 43.5 5.4 0.8 51.1
2004–05 84.8 10.7 2.1 4.4 43.1 7.2 1.2 49.6
2018–19 74.9 16.9 5.2 8.2 24.5 13.1 1.5 62.4
2019–20 76.6 16.1 4.5 7.3 30.0 12.8 1.4 57.2
WPR: means Work Participation Rate, EPR: means Educational Par-

ticipation Rate i.e. those engaged in education; LU means Underu-
tilized labour who are out of work and education but including
those ‘seeking work’ (UE). Source: Computed from NSS and PLFS
Rounds
Table 14 India: Percentage distribution of WAP (15–59) by activity status for estimating the Labour
Underutilization by gender (M = Male, F = Female)
Year Education Secondary & above Education less than Secondary
WPR EPR LU WPR EPR LU

M F M F M F M F M F M F
1983 74.2 21.7 18.7 21.9 7.1 56.3 90.4 48.5 5.5 2.0 4.1 49.5
2018–19 64.6 17.5 26.2 26.7 9.2 55.8 84.1 28.4 8.6 5.5 7.3 66.1
2019–20 66.8 21.1 24.5 25.1 8.7 53.8 85.6 35.3 8.4 5.5 6.1 59.2
Abbreviations as in 013. Source: Computed from unit level data from different Rounds of the NSS on
Employment and Unemployment and Periodic Labour Force Surveys (PLFS) for 2018–19 and 2019–20
Table 15 Estimates of ‘Missing women’ or those excluded from the labour force and education (total and
incremental)
Year WAP (Mil- LFPR EPR CPR Out of Change Total Missing
lion LF&E from (OLF&E) (in Women (in
1983(%) Million) Million)*
Secondary and Above

1983 12.4 27.1 21.9 49.0 50.9 - 6.31 -
2018–19 154.5 21.1 26.7 49.8 52.2 -1.3 80.65 − 2.01
2019–20 158.2 24.6 25.1 49.0 50.3 0.06 79.57 0.95
Below Secondary
1983 174.9 48.8 2.0 50.8 49.2 – 86.07 −
2018–19 274.3 28.7 5.5 34.2 65.8 + 16.6 180.70 45.54
2019–20 268.4 35.5 5.5 41.0 59.0 + 9.8 152.28 26.30
*As compared to the share of “Out of LF and E” in 1983. WAP = Working age population (15–59),
LFPR =
Labour Force Participation Rate, EPR =
Educational Participation Rate, CPR = Combined
(LFPR + EPR) Participation Rate, OLF&E means Out of labour force and education. Source: Computed
from unit level data from NSS and PLFS
13 ISLE
Table 16 Incidence of Extreme Poverty and Poverty in India by Social group at PPP$1PCPD and 3.2PCPD in 2018–2019
PPP$1.9 Per capita per day
Rural Urban
AS BS All AS BS All
Social Group
SAG 15.5 27.7 18.3 2.2 6.7 4.2
OBC 27.2 41.5 38.1 5.8 15.3 11.4
Muslim 24.8 41.2 30.86 9.9 22.0 18.8
SCST 31.2 50.1 46.8 10.2 24.0 19.7
All 25.1 42.6 38.7 5.3 16.4 11.8
PPP$3.2 Per capita per day
SAG 56.8 72.7 67.4 14.8 34.7 23.8
OBC 70.0 84.0 80.7 28.1 51.5 41.9

Muslim 69.9 86.6 84.0 40.5 67.2 60.0
SCST 73.7 88.1 85.6 35.8 63.8 55.1
All 67.6 84.2 80.5 24.8 53.2 41.5
Note: SAG = Socially advantaged group i.e. Other than OBC, Muslim, SC and ST, OBC = Other Backward Classes, SCST = Scheduled Castes and Scheduled Tribes.
Source: Computed from unit level data from PLFS 2018–19
ISLE
615
13
Table 17 Selected Decent Work Indicators for India
616
Indicators 2004–05 2011–12 2017–18 2019–20
13
RIGHTS AT WORK
1. Child labour: Economically Active 6.5 2.8 1.3 1.1
Children (in workforce)
Children in the Age Group of 5–14 18.1 9.7 6.4 6.2
ISLE
Not in School (Percent)
2. Women in the workplace (Share of 32.0 27.1 22.7 27.2
women in total workers)
2c. Male–Female LFPR Gap of 42.0 49.0 52.8 47.5
Adults (Percentage Points)
EMPLOYMENT AND INCOME
4. Labour force participation rate (as 63.4 55.5 49.7 53.3
% of adult population)
5. Employment-to-adult population 61.9 54.3 46.7 50.7
ratio (15 years & above)
6. The working poor (% of wage 68.1
workers not getting a recom-
mended National Minimum Wage
of Rs.375/day)
8a. Unemployment: 8a. Total unem- 2.4 2.2 6.1 4.9
ployment rate
8b. Unemployment among the edu- 5.8 3.3 8.5 6.4
cated (i) Secondary & above but
below graduation
8c. Unemployment rate among 8.5 7.6 16.1 15.6
Graduates & above
9. Youth unemployment (15– 6.9 8.3 24.3 19.5
24 years)
Table 17 (continued)
Indicators 2004–05 2011–12 2017–18 2019–20
10. Youth inactivity: Not in LF& 22.3 21.5 22.6 20.4

Education
SOCIAL PROTECTION AND SOCIAL SECURITY
15a. Informality: Share of employ- 86.1 82.0 79.4 80.0
ment in Informal Sector (in enter-
prises and households)
15b. Informality: Share of Informal 92.2 91.8 90.0 89.2
employment (in Informal and For-
mal Sectors) in total employment
15c. Social security: Percentage 69.8 72.0 71.2 71.8
of workers not having any social
security
SOCIAL DIALOGUE
18. Trade union membership rate 20.9 17.7 NA NA
among non-agricultural workers*
Source: Computed from unit level data from NSS 61st and 68th Rounds and PLFS 2017–18 and 2019–20. *From ILO (2018)
ISLE
617
13
Table 18 Binary logit regression coefficient with poverty as dependent variable, 2018–19
618
Social category Work Status Educational Rural Urban

Status
Coeff. Value SE Z value Coeff. value SE Z Value
13
SCST SE MOL 4.05 0.22 18.47 2.99 0.24 12.23
SCST SE SEC 3.71 0.22 16.64 2.00 0.27 7.32
ISLE
SCST SE GRA 3.48 0.26 13.38 1.75 0.37 4.69
SCST RE MOL 3.29 0.25 13.41 2.59 0.24 10.71
SCST RE SEC 2.84 0.24 11.96 1.73 0.26 6.62
SCST RE GRA 2.50 0.26 9.58 0.83 0.29 2.90
SCST CA MOL 4.36 0.22 19.89 3.55 0.24 14.87
SCST CA SEC 3.86 0.23 16.92 3.78 0.47 8.12
SCST CA GRA 3.66 0.36 10.27 3.58 0.61 5.84
OBC SE MOL 3.78 0.22 17.28 2.60 0.23 11.18
OBC SE SEC 3.42 0.22 15.53 2.01 0.24 8.53
OBC SE GRA 3.34 0.24 13.73 1.26 0.27 4.56
OBC RE MOL 3.36 0.25 13.70 2.31 0.24 9.44
OBC RE SEC 2.71 0.24 11.26 1.26 0.24 5.15
OBC RE GRA 2.20 0.26 8.37 0.12 0.27 0.44
OBC CA MOL 3.89 0.22 17.49 2.72 0.24 11.31
OBC CA SEC 3.64 0.23 15.50 2.35 0.26 9.03
OBC CA GRA 3.24 0.44 7.40 2.74 0.55 4.94
MUS SE MOL 3.66 0.24 15.58 2.73 0.24 11.38
MUS SE SEC 3.37 0.24 13.80 2.32 0.25 9.13
MUS SE GRA 2.72 0.37 7.35 1.50 0.34 4.41
MUS RE MOL 3.42 0.30 11.36 2.54 0.26 9.86
MUS RE SEC 3.07 0.30 10.39 1.90 0.27 6.90
MUS RE GRA 2.35 0.35 6.69 0.58 0.37 1.59
MUS CA MOL 3.87 0.24 15.81 3.34 0.25 13.10

Social category Work Status Educational Rural Urban
Status
Coeff. Value SE Z value Coeff. value SE Z Value
MUS CA SEC 3.82 0.28 13.45 2.99 0.31 9.70

MUS CA GRA 1.59 0.74 2.16 0.31 0.99 0.31
SAG SE MOL 3.23 0.23 14.28 1.73 0.26 6.65
SAG SE SEC 2.85 0.23 12.46 0.70 0.27 2.62
SAG SE GRA 2.51 0.27 9.28 0.05 0.31 0.17
SAG RE MOL 3.01 0.29 10.21 1.60 0.26 6.12
SAG RE SEC 2.31 0.26 8.93 0.61 0.28 2.20
SAG RE GRA 1.45 0.32 4.60 0
SAG CA MOL 3.49 0.25 14.07 2.49 0.30 8.27
SAG CA SEC 3.16 0.28 11.45 2.42 0.43 5.70
SAG CA GRA 3.85 0.91 4.24
Source of data: Unit level data of PLFS 2018–19

SE = Self-employed, RE = Regular, CA = Casual. MOL = Middle level or less, SEC = Secondary or above but below graduate, GRA = Graduate or above. SAG = Socially
advantaged group or called ‘Others’ in the text. Mus = Muslim, OBC = Other Backward Classes, SCST = Scheduled Castes and Scheduled Tribes
ISLE
619
13
Table 19 Odd ratio and Predicted probability of binary logit regression corresponding to regression result presented in Table 018 (in %)
620
Soc- Cat Work Ed level Odds Ratio Predicted Probability (PP)

Status
Rural Urban Rural Urban
13
Odds SE Z value Odds SE Z value PP SE Z value PP SE Z value
Ratio Ratio
ISLE
SCST SE MOL 57.44 12.60 18.47 19.93 4.88 12.23 42.5 0.012 34.97 20.4 0.019 10.53
SCST SE SEC 40.77 9.08 16.64 7.40 2.02 7.32 34.4 0.014 24.12 8.7 0.014 6.42
SCST SE GRA 32.36 8.41 13.38 5.76 2.15 4.69 29.4 0.031 9.56 6.9 0.020 3.51
SCST RE MOL 26.97 6.62 13.41 13.27 3.20 10.71 25.7 0.023 11.11 14.6 0.014 10.42
SCST RE SEC 17.14 4.07 11.96 5.61 1.46 6.62 18.0 0.015 11.76 6.7 0.009 7.18
SCST RE GRA 12.13 3.16 9.58 2.30 0.66 2.9 13.5 0.017 7.74 2.9 0.005 5.33
SCST CA MOL 78.60 17.25 19.89 34.72 8.28 14.87 50.2 0.013 40.02 30.8 0.023 13.61
SCST CA SEC 47.57 10.86 16.92 43.64 20.29 8.12 37.9 0.019 20.08 35.9 0.095 3.78
SCST CA GRA 38.88 13.85 10.27 35.95 22.05 5.84 33.3 0.063 5.26 31.6 0.124 2.54
OBC SE MOL 43.66 9.54 17.28 13.40 3.11 11.18 35.9 0.011 33.93 14.7 0.011 12.94
OBC SE SEC 30.55 6.73 15.53 7.44 1.75 8.53 28.2 0.011 26.13 8.7 0.008 11.15
OBC SE GRA 28.30 6.89 13.73 3.51 0.96 4.56 26.7 0.023 11.68 4.3 0.007 6.04
OBC RE MOL 28.83 7.07 13.7 10.03 2.45 9.44 27.0 0.024 11.36 11.4 0.012 9.53
OBC RE SEC 15.04 3.62 11.26 3.51 0.86 5.15 16.2 0.015 10.75 4.3 0.005 8.90
OBC RE GRA 9.06 2.39 8.37 1.13 0.31 0.44 10.4 0.014 7.25 1.4 0.002 6.12
OBC CA MOL 48.95 10.89 17.49 15.13 3.64 11.31 38.6 0.015 26.19 16.3 0.015 10.86
OBC CA SEC 38.03 8.93 15.5 10.51 2.74 9.03 32.8 0.021 15.29 11.9 0.016 7.62
OBC CA GRA 25.57 11.19 7.4 15.43 8.55 4.94 24.7 0.071 3.48 16.5 0.071 2.34
MUS SE MOL 38.96 9.16 15.58 15.34 3.68 11.38 33.3 0.022 15.27 16.5 0.015 10.95
MUS SE SEC 29.11 7.11 13.8 10.13 2.57 9.13 27.2 0.023 11.58 11.5 0.014 8.29
MUS SE GRA 15.20 5.63 7.35 4.48 1.52 4.41 16.3 0.041 3.95 5.4 0.014 4.00
MUS RE MOL 30.52 9.19 11.36 12.68 3.27 9.86 28.2 0.043 6.57 14.0 0.017 8.07
MUS RE SEC 21.45 6.33 10.39 6.65 1.83 6.9 21.6 0.034 6.27 7.9 0.013 6.28
Soc- Cat Work Ed level Odds Ratio Predicted Probability (PP)
Status
Rural Urban Rural Urban
Odds SE Z value Odds SE Z value PP SE Z value PP SE Z value

Ratio Ratio
MUS RE GRA 10.46 3.67 6.69 1.79 0.66 1.59 11.8 0.029 4.08 2.2 0.007 3.44
MUS CA MOL 48.07 11.77 15.81 28.08 7.15 13.1 38.2 0.028 13.5 26.5 0.027 9.83
MUS CA SEC 45.52 12.92 13.45 19.90 6.13 9.7 36.9 0.044 8.48 20.4 0.036 5.65
MUS CA GRA 4.90 3.60 2.16 1.36 1.35 0.31 5.9 0.039 1.51 1.7 0.016 1.05
SAG SE MOL 25.33 5.73 14.28 5.63 1.46 6.65 24.5 0.014 17.69 6.7 0.009 7.25
SAG SE SEC 17.25 3.94 12.46 2.02 0.54 2.62 18.1 0.012 15.06 2.5 0.004 6.27
SAG SE GRA 12.28 3.32 9.28 1.06 0.33 0.17 13.6 0.019 7.00 1.3 0.003 4.41
SAG RE MOL 20.26 5.97 10.21 4.97 1.30 6.12 20.7 0.033 6.22 6.0 0.009 7.03
SAG RE SEC 10.08 2.61 8.93 1.84 0.51 2.2 11.5 0.015 7.74 2.3 0.004 5.83
SAG RE GRA 4.26 1.34 4.60 1.00 5.2 0.011 4.55 1.3 0.003 4.74
SAG CA MOL 32.94 8.18 14.07 12.07 3.63 8.27 29.7 0.026 11.24 13.4 0.025 5.44
SAG CA SEC 23.62 6.52 11.45 11.28 4.80 5.7 23.3 0.031 7.45 12.7 0.041 3.11
SAG CA GRA 47.04 42.68 4.24 37.7 0.207 1.82
Abbreviations as given in the footnote to Table 18
ISLE
621
13
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* K. P. Kannan
[email protected]
1
Centre for Development Studies, Thiruvananthapuram, Kerala, India
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The Indian Journal of Labour Economics (2022) 65:579–623

India’s Elusive Quest for Inclusive Development:

Accepted: 23 August 2022 / Published online: 7 October 2022

Extended author information available on the last page of the article

predicted probability that shows households with low education, disadvantaged

Keywords Quality of employment · Exclusion · Inclusion · Employment elasticity ·

This article is a revised version of my Radhakamal Mukerjee Memorial Lecture

1.1 The Demographic Burden

World Population 1.40 1.24 1.14 1.26

Source: Computed from ILOSTAT data

2 Connecting Growth with Employment

World 0.51 0.35 0.24 0.38 0.53 0.62 0.60 0.59

China 0.09 0.05 0.02 0.06 0.20 0.32 0.33 0.28

Table 3 Employment elasticity Year Census Year NSS

Source: National income data (NDP) from National Accounts; Data

In Table 2 we also present employment elasticity for wage employment.3 This

3 Are There Exclusions from the Labour Market?

A closer examination of the Indian experience in assessing the required quantity

3.1 ‘Missing Women’ as a Separate Category

3.2 The Class of Working Poor as a Manifestation of Inadequate Inclusion

Table 4 Incidence of Extreme Rural

SE Agriculture 34.8 41.8

growth followed by a shift of labour from agriculture to non-agriculture. It works

Table 5 Incidence of Poverty Rural

SE Agriculture 87.4 85.1

Table 6 Incidence of Extreme Poverty by Household Labour Type and Education

Sec & Above Below Sec

SE Agriculture 18.5 31.8 36.1 44.9

Table 7 Incidence of Poverty by Household Labour Type and Education

Sec & Above Below Sec

SE Agriculture 74.4 77.4 88.4 87.4

SCST 1993–94 27.5 55.8 6.8 27.7

4 Growth Effect on Poverty Reduction

5 The Challenge of Quality of Employment

All Sectors 1999–00 14.1 85.9 91.3 8.7 100.0 386.48

CAGR​ 2.76 1.29 1.50 2.03 1.56

lower growth resulting in a marginal decline in its share of employment from 86 to

Table 11 Percentage Shares of Wage Workers by Availability of Social Security in India (1 = Provident

All workers (Formal + Informal Sector)

the point. Since the informality of employment is characterized by the absence of

Informality in employment is not only associated with the absence of employ-

India is in the category of self-employment where there is no one to provide social

Wages for employment no doubt constitute an important factor in determining the

The history of minimum wages in India shows a complex process character-

Fig. 2 Money Wages per day (Rs) for 160 Groups

6 The Challenge of Inequality as Manifested in Wages and Poverty

in the abovementioned study are location (rural/urban), education11 (4 levels), gen-

Wage inequality for 160 Socio-Economic Groups

mediated by pre-existing structural and institutional inequalities. The most powerful

7 Probability of being Poor: A Logistic Regression

Box 1 Understanding Performance of Poverty through a Logit Model

the development of underdeveloped sectors such as agriculture and allied activi-

also embedded in a Schumpeterian process of creative destruction. The ILO’s 2018

See Tables 12, 13, 14, 15, 16, 17, 18, 19.

Table 12 Population of India India World India’s share (%)

Source: Census of India Reports and UN Population Prospects

Table 13 India: Percentage MEN WOMEN

1983 87.8 7.7 2.2 4.6 46.7 3.3 0.6 49.9

WPR: means Work Participation Rate, EPR: means Educational Par-

WPR EPR LU WPR EPR LU

Secondary and Above

OBC 70.0 84.0 80.7 28.1 51.5 41.9

Indicators 2004–05 2011–12 2017–18 2019–20

1.1 The Demographic Burden

2 Connecting Growth with Employment

Table 3 Employment elasticity Year Census Year NSS

3 Are There Exclusions from the Labour Market?

3.1 ‘Missing Women’ as a Separate Category

3.2 The Class of Working Poor as a Manifestation of Inadequate Inclusion

Table 4 Incidence of Extreme Rural

Table 5 Incidence of Poverty Rural

Table 6 Incidence of Extreme Poverty by Household Labour Type and Education

Table 7 Incidence of Poverty by Household Labour Type and Education

4 Growth Effect on Poverty Reduction

5 The Challenge of Quality of Employment

CAGR 2.76 1.29 1.50 2.03 1.56

Table 11 Percentage Shares of Wage Workers by Availability of Social Security in India (1 = Provident

Fig. 2 Money Wages per day (Rs) for 160 Groups

6 The Challenge of Inequality as Manifested in Wages and Poverty

7 Probability of being Poor: A Logistic Regression

Table 12 Population of India India World India’s share (%)

Table 13 India: Percentage MEN WOMEN