Question

The information relating to employment in the formal sector is collected by the Union Ministry of Labour through employment exchanges located in different parts of the country. Do you know who is the major employer in the formal sector in India? In 2012, out of about 30 million formal sector workers, about 18 million workers were employed by the public sector. Here also men form the majority, as women constitute only about one-sixth of the formal sector workforce. Economists point out that the reform process initiated in the early 1990s resulted in a decline in the number of workers employed in the formal sector. What do you think?

Answer 1

Yes, economic reforms introduced in the early 1990s increased competition and encouraged firms to become more efficient. As a result, many organisations reduced unnecessary staff, adopted new technology, outsourced some activities and relied more on temporary or contract workers.

This led to slower growth or decline in some kinds of formal sector employment, especially in the public sector. At the same time, employment expanded in many private and service-sector activities, but a large part of it was informal or contractual.

Thus, economic reforms improved efficiency and growth, but they also contributed to changes in the nature of employment, with fewer secure formal jobs in some sectors and greater use of informal or contract labour.