The Changing Labour Market Dynamics in India: Issues and Challenges

Abstract

For any economy, to understand and examine the changing labour market, availability of reliable and consistent database is a must. The underlying changes in labour market are subject to myriads of endogenous and exogenous factors like wars, financial crises or pandemic. For instance, the recent Covid-19 pandemic left millions of labour unemployed. For the Indian labour market, besides these, a number of other factors exist that makes it difficult to comprehend. Today, ‘unemployment rate’, is a subject of most public debate, not only because it is high but also the way or the ‘methodology’ used to define it. For instance, the employment estimates by Periodic Labour Force Survey (PLFS) and NSSO Employment Unemployment Survey (EUS) are simply not comparable, so making it impossible to comprehend the changing labour market dynamics. Given this, it is difficult for any incumbent government to frame labour welfare policies or to strike a balance between labour market flexibilities and social securities. The problem accumulates further in terms of inconsistency in various employment data. During or post the pandemic crisis, it is difficult to assess its impact on the labour market in general or on informal sector (constituting 94 per cent workforce) in particular. So is the impact of other factors such as new technology (AI, IOT, ML Deep Leaning, etc.), shifting informality, demographic transition and so forth, cannot be examined with no or inconsistent official labour estimates. CMIE database, turning a last resort, is not free from criticisms. In the paper, an attempt is made to understand and evaluate the Indian labour market in respect of these growing complexities.