Speaker: Dr. Anamitra Roy Chowdhury, Assistant Professor, Centre for Informal Sector and Labour Studies, JNU.
This paper empirically investigates two propositions normally forwarded in literature to explain employment stagnation in the organized sector of India - namely, rigid labour laws regulating 'hire and fire' of workers (with factory closures) and militant trade union activity giving boost to workers' bargaining power. Labour laws by making labour adjustment process difficult and enhanced workers' bargaining power by raising the effective cost of labour - supposedly hinder employment creation. Here, we examine - how good is it to identify labour laws for explaining employment stagnation in the organized sector as a whole, since a close reading of the statute reveals that in less than 35 percent of total organized sector employment labour laws apply. Next we investigate whether employment stagnation in industry segments where labour laws apply namely, organized manufacturing - is due to restrictions on 'hire and fire'. We found no evidence to support this hypothesis. Finally, we analyzed the trend in workers' bargaining power through various indicators - which is found to be unambiguously declining. Thus, the two conventional arguments forwarded to explain employment stagnation in the organized sector of India found no empirical support.