Growth sans Employment: A Quarter Century of Jobless Growth in India’s Organised Manufacturing

Abstract

There is unanimity amongst scholars that the organised manufacturing sector registered ‘jobless growth’ during 1980-81 to 1990-91. While the average annual rate of growth of ‘gross value added’ during this period was about 8.66 per cent, the corresponding employment growth was merely 0.53 per cent. The resultant employment elasticity was 0.06. The reasons advanced by the scholars for the near stagnation of employment are, however, varied. One of the views is that the job security regulations, which were introduced in the late 1970s and strengthened in the early 1980s, are the reasons for employment stagnation — a view shared by most offi cial economists and policymakers. Some empirical evidence in support of this view has also been provided by Fallon and Lucas (1993). It has, however, been contested by Papola (1994), Ghose (1994) and Bhalotra (1998). It was pointed out by Bhalotra that the pattern of employment growth in factories of different size classes is not consistent with the threshold effect that one would expect of the job security regulations. Her stand has also been supported by Dutta Roy (1998) through econometric models.

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