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

India has to create more formal jobs: World Bank

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Mains Paper 3: Economy | Development & employment

From UPSC perspective, the following things are important:

Prelims level: World Development Report 2019, Systematic Country Diagnostic (SCD), World Bank

Mains level: India’s informal job sector and urgent need of formalisation


Need for formalisation

  1. The World Bank in its draft World Development Report 2019 said in India the pay-offs in the formal sector are over twice as much as in the informal sector
  2. It made a strong case for creating more formal jobs in India

Need of formalisation

  1. Persistent informality and low-productivity employment pose the greatest challenge to developing countries
  2. Informal workers show resourcefulness in handling the constraints they face, but the businesses they run are too small to raise the livelihoods of their owners
  3. Informal firms add only 15% of the value per employee of formal firms
  4. The size of India’s informal sector has remained around 91% despite economic and technological revolution

Other similar observations

  1. In another draft report titled Systematic Country Diagnostic (SCD) for India released in February, the World Bank said India needs to create regular, salaried jobs with growing earnings rather than self-employed ones
  2. In a report titled ‘Jobless Growth?’ released earlier this month, the World Bank said to keep employment rates constant, India needs to create 8 million jobs per year as it adds 1.3 million to the working-age population every month

Counting informal jobs

  1. The government recently decided to start counting jobs created in the non-farm informal sector
  2. The government has asked the labour bureau under the Union labour ministry to begin counting jobs created in establishments deploying less than 10 people
  3. It means that establishments and shops run by a single owner or with one employee too will be counted as employment generation
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