Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

From Textile to IT: Wave of Job Losses Hits New And Old Economy


Mains Paper 3| Indian Economy: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

From UPSC perspective, the following things are important:

Prelims level: Schemes: TWRFS and RGSKY

Mains level: Understanding the phenomenon of unemployment in the economy



  1. The article elaborates on the series of job losses witnessed by the economy in multiple sectors in the last 2 years.
  2. The author has tried to collate data from various ministries and has tried to connect the dots.


The main reason for job losses is following-

  1. There is hardly any growth in private investment, private consumption and exports. The growth in economy is fuelled by government spending only.


Scenario in textile sector-

  1. Exports and production is down due to slump in both external and domestic demand
  2. Demonetisation and transition to GST has hit small players
  3. Labour issues and cost of production is also causing structural issues in the sector
  4. Most of the units that have been shut in the sector belong to power loom textile
  5. The government does not capture data from the small and medium scale textile sectors, hence the distress in these areas is not visible.

 Important observations

  1. Capital goods firms are struggling as most of the downstream sectors are saddled with excess capacity and low demand.
  2. Labour bureau’s Quarterly Employment Surveys (QES) are also showing downslide in employment growth because of the layoffs in IT/BPO and financial services sector, which were earlier the key drivers of growth in these surveys.

Textile Workers Rehabilitation Fund Scheme (TWRFS)

  • The scheme was introduced in the year 1986
  • Aim: to provide relief to workers rendered jobless due to permanent closure of non-SSI (Small Scale Industry) textile mills in private sector
  • Relief: workers who have suffered job loss are given wages for three years on tapering basis
  • This scheme has been merged under Rajiv Gandhi Shramik Kalyan Yojana in 2017

Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)

  • Introduced in 2005
  • This is an unemployment benefit scheme when the unemployment is caused due to closure of a factory or permanent invalidity arising out of non-employment injury
  • The unemployment benefit is provided for the period of 12 months
  • This also covers medical care for the beneficiary and the beneficiary’s family


  1. New Economy and Old Economy:
    Old Economy includes industries embedded in the industrial revolution and the mass production of physical goods. Eg Energy, automobile, steel etc
    New economyis the result of the transition from a manufacturing-based economy to a service-based economy. Eg. IT and IT-es industry
  2. Capital goods are goods that are used in producing other goods
  3. Meaning of excess capacity and low demand: when a factory is not utilising its full capacity due to low demand then there is bound to be stress in the sector
  4. Private Investment: the investment coming in from private players in the economy to purchase assets eg. Roads built by private players, spectrum sale etc
  5. Private consumption: it is the consumption of goods and services by private households.




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