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Caste Inequalities in Access to Regular Non-farm Jobs and the Likely Implication of the Industrial Relations Code

This paper attempts to highlight the extent of employment insecurity and informality among the formal regular workers in the formal non-farm sector and examines the differential data outcomes across various caste groups. It also highlights the likely implications of the various provisions of the newly enacted Industrial Relations Code, 2020 on the access to the most secured jobs across different caste groups.

In the neo-liberal set-up, deceleration of economic growth and unemployment have emerged as key challenges, obliging the government to pursue reforms to facilitate a suitable environment for boosting up economic growth, attract foreign investment, and create employment opportunities. Amalgamation, simplification, and rationalisation of the industrial relations legislation are some of the key steps in this direction. The Indian labour market has been considered to be rigid on account of the plethora of labour market regulations in place. Streamlining the multitude of labour laws into four broad codes is a welcome step as far as it ensures better implementation of the labour laws in favour of the labour force in India. So in process of the amalgamation of the labour laws, it is important to consider their impact on the social and political construct of the society. The recent amalgamation of the three legislations on industrial relations, namely the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947 into the Industrial Relations Code (IRC), 2020 (Gazette of India 2020) has drawn the attention of the law and development experts, along with other concerned civil society stakeholders about its impact on inclusive socio-economic development and reduction of vulnerabilities across the social groups. The objective of this paper is to highlight the state of employment security across caste groups among the non-farm workers in the organised sector. It also attempts to highlight the implications of the IRC on the access to secured jobs among workers from different caste groups. Using the National Sample Surveys of employment and unemployment, the analysis in this paper is drawn broadly for the regular non-farm workers in the organised sector at usual principal and subsidiary status combined (for the ages 18 or above). The absolute number of workers and population has been adjusted with the projected census population for the corresponding years. The National Commission for Enterprises in the Unorganised Sector (NCEUS 2008) definitions of “formal sector” and “formal worker” have been followed for this study.

Informalisation of Jobs as a Phenomenon

India managed to achieve new highs in its gross domestic product growth during the neo-liberal economic regime. However, in the process, the employment security of the labour force has been compromised. The deceleration in the employment generation potential of the economy, the small share of the formal sector in the total employment opportunities generated, and the growing informalisation of jobs both in the formal and informal sector have emerged as critical problems in this period.

In the absence of an employment policy, the employment situation in India has long been shaped by the side effects of the policies enacted in other sectors. The exorbitant increase in the contractual employment and informalisation of jobs in the formal sector are also the side effects of the neo-liberal regime followed since the 1990s. Over time there has been greater informalisation of employment in almost all sectors of the economy with an influx of unsecured jobs (Mehrotra 2019; Mehrotra et al 2015; Sakthivel and Joddar 2006). Although the latest official data updates show that the percentage of informal employment in India has decreased marginally (Table 1), there has been a simultaneous positive growth in the unprotected forms of employment.

There is a need to throw light on the insecurities among the regular workers in the formal non-farm sector, particularly in the context of the implications of IRC, once it is in effect. As per the definition given by the NCEUS, informal workers do not get any statutory social security benefits from their employers. A decreasing percentage of informal workers in the total regular employment, however, does not mean that workers are certainly engaged in secured employment. Of the total 479 million workers in India in 2018–19, only 99.5 million worked in the formal sector enterprises/establishments, of which only 50% availed social security benefits.

Disproportionate Access to Regular Salaried Jobs across Caste Groups

According to the latest data estimates (Table 2), the percentage of regular salaried workers in the total non-farm employment is about 40%; whereas in the farm and non-farm sector combined, it is reported to be nearly 24%. However, despite the substantially large share of regular employment in the total employment, the quality of jobs being generated therein is under question. Here, the quality of jobs can be measured not only by examining the status of social security benefits availed to the workers but also the nature of employment (secured/ unsecured) being generated. Economic growth in the neo-liberal regime has led to fundamental changes in the economy, which in turn has resulted in a substantial restructuring of employment, with increasing job opportunities in the service sector (Gopalan and Singhi 2015; Himanshu 2008).

The type of employment growth that has been witnessed during the last three decades is considered precarious to inclusive growth and development (Singh 2017; Chadha and Sahu 2002). Within the non-farm sector, nearly 36% of the workers are self-employed; however, there has been a debate among policy experts over the profitability and sustainability of self-employment opportunities being generated in the non-farm economy (Jatav and Sen 2013). Nearly 24% of the jobs were casual in which no formal/written job contract is signed between workers and employers, and thus, both job and social security are absent. The share of the self-employed who provide employment opportunities to other people in their enterprise, is extremely low in total self-employment, indicating a lack of entrepreneurship in India. It also points out the need for facilitating a suitable environment to promote entrepreneurship. Historically, regular wage and salaried workers have enjoyed better employment security and earnings than the self-employed and casually employed workers. This sense of security further has been stronger in the jobs generated in the government sector or government-owned enterprises. However, in the neo-liberal regime, the size of the government sector has shrunk owing to the disinvestment policy and the nature of jobs offered has also gone under transformation in the name of greater flexibility. Even though there has been a huge transformation in the nature of regular jobs offered, still, the workers manage to get paid better and regularly than the self-employment and casual jobs. Access to these better-paying jobs, therefore, becomes instrumental in the economic upliftment of the underprivileged sections of the society to break the cycle of deprivation.

While discussing access to secured jobs, the vicious cycle of deprivation among lower castes needs to be highlighted in the context of selective labour-market exclusion. The benefits of regular non-farm employment itself are unequally distributed among the population groups, particularly when it comes to caste identity (Thorat et al 2021). It has been treated as an archaic system and source of historical disadvantage (Moose 2018). Access to regular non-farm jobs has remained a matter of concern among different social groups in the modern economy of India, especially since the initiation of liberalisation.

Caste is found to be a complex institution, simultaneously weakened and revived by current economic and political forces; it is a contributor to persisting national socioeconomic and human capital disparities, and has major impacts on subjective wellbeing(Moose 2018)

In addition, caste as a social hierarchy has influenced/determined rural inequalities, discriminations in the labour market and business economy; it has also affected the measures of positive discrimination or affirmative action (that is, reservation) in the public/government sector and equal opportunities in the private sector.

Caste privilege not only determines the political economy of access to and control over the decision-making but also the unequal representation in higher management in favour of socio-economically and politically empowered caste groups such as forward castes. Regular jobs are diversified across the occupational groups; however, there is caste-based segregation that accommodates most of the higher caste workers in the upper segments of the occupational hierarchy (Das and Dutta 2007; Madheswaran and Singhari 2016). They have a lack of access to the most secured forms of employment as their caste identity itself puts a barrier to their growth and development in a patriarchal set-up.

Key Concerns of Regularisation of Non-farm Employment

The magnitude of regular employment and its share in the total non-farm employment has been increasing over time in the last one and a half decades (Table 3). Between 2004–05 and 2018–19, nearly 95 million workers were added in the non-farm employment, out of which, 51 million were added as regular workers with an increment of nearly 7% during the same period. The period between 2011–12 and 2018–19 has experienced a regularisation of non-farm workers at a higher pace as compared to the period between 2004–05 and 2011–12, indicating a rapid growth of the service sector and the importance of regular employment in the economy. Caste groupwise disaggregated estimates reveal that a worker belonging to forward castes has a comparatively higher chance to be in regular wage and salaried employment. It hints at better access to regular jobs among forward castes as opposed to other caste groups such as Scheduled Castes (SCs), Scheduled Tribes (STs), and Other Backward Classes (OBCs). Further, such a position seems to have strengthened over time as there has been an increase in the proportion of regular wage and salaried workers among all caste groups, however, the increase has been higher for the forward castes and OBCs.


Approximately one-third of 111.9 million regular workers (25.7 million) within the non-farm sector are still engaged in informal enterprises (Table 4). In other words, it indicates that the job opportunities in the informal enterprises within the private non-farm sector have recently increased substantially. But it would be interesting to know how many of such informal enterprises provide social security benefits to their workers and how many of them offer a longer period of written job contracts along with other essential benefits such as paid leave, relaxed working hours, workplace facilities, accommodation, etc.

Though the absolute formal employment grew tremendously between 2004–05 and 2018–19, yet the percentage growth remains substantially low. The percentage share of the formal sector in total regular employment increased between 2004–05 and 2011–12, however, in the period between 2011–12 and 2018–19 it has decreased marginally. It points towards the increasing vulnerabilities among the regular workers within the non-farm sector. On the one hand, there has been a progressive increase in the number of regular jobs, but on the other, the percentage of the formal sector in the total regular employment has shown a steady decline between 2011–12 and 2018–19 across all caste groups. In addition, both the percentage shares of the formal sector in regular employment and total regular employment in the formal sector have remained significantly high among the forward castes as compared to the other caste groups. Therefore, a worker belonging to a forward caste has a higher chance to be working in the formal sector than a worker belonging to any other caste group.

Of the total regular employment in the formal non-farm sector in India (74.3 million), only 44.2 million workers are categorised as formal workers who have availed social security benefits from their employers (henceforth referred to as formal regular employment in the formal non-farm sector [FREFNFS]) (Figure 1, p 34). The role of government/public sector and auto­nomous bodies (GPSA) is important as they generate 52% of the total FREFNFS during 2018–19. At the same time, the enterprises based on public–private partnerships (PPPs) and other private sector enterprises (OPSE) remain the second and third largest employers constituting 38% and 10% of total FREFNFS, respectively. In the last one and a half decades, the size of FREFNFS increased by 17.7 million. The maximum growth was observed among PPP enterprises (12 million), followed by GPSA (4.8 million) and OPSE (1.0 million). However, the percentage share of GPSA in total FREFNFS has consistently declined over the period indicating a deceleration in the growth of regular employment opportunities within the government/public sector. Contrarily, there has been significant growth in the share of PPCL during the same period that points to the increasing role of public–private bonding and the slithering privatisation of jobs in the economy.

A disaggregated level analysis of FREFNFS by types/duration of job contracts across the types of enterprises further propounded the increas­ed vulnerabilities (in terms of job/employment security) among the workers. There has been a consistent decline in the job opportunities in which the duration of the contract with the employer is relatively longer (that is, more than three years, in this study) (Figure 2). Such jobs are conventionally known to be the most secured ones and therefore the most popular form of regular employment, especially those in the government sector. In other words, there is an indication of deteriorating quality of FREFNFS during the last couple of decades and so; the percentage share of those who do not have any written job contract or those who have a shorter duration of contracts, have been consistently increasing.

Slithering contractualisation of FREFNFS within the government/public sector is a matter of serious concern as this is the only sphere where the workers still enjoy a better level of job security, along with most of the statutory social security benefits, as compared to that in the public–private or the private sectors. However, the availability of social security benefits to the contractual or fixed-term workers does not ensure the security of employment. During the last half a decade, these workers were provided social security benefits under two social security legislations, namely the Employees’ State Insurance (ESI) Act and the Employees’ Provident Funds (EPF) and Miscellaneous Provisions Act. This led to an increase in the share of formal workers in total employment, which certainly distorted the estimation of actual formal employment by ignoring the issue of contractualisation and subsequent growth of shorter job contracts.

Both contractualisation and privatisation may have serious implications for social inclusion and cohesion. As of now measures of positive discrimination are usually adopted only in the government sector jobs that are regular or having longer job contracts. To the extent that provisions of positive discrimination do not apply in the case of contractual jobs, increasing the share of such jobs in the total FREFNFS denies the effective implementation of such provisions. Given the existing levels of inequality among the caste groups, this is important to mention that contractualisation and privatisation will adversely affect the social and economic inclusion of the deprived social groups as they lack in having enough social, financial, and physical capital and power, which are considered crucial to access secured jobs, especially in the government sector. Therefore, increasing contractualisation and privatisation of jobs makes provisions of positive discriminations in both government/public and private sectors effectively void.

Jobs with no formal contracts or shorter period contracts (for example, six months or less than a year) come under unsecured forms of regular employment. The workers under such employments are often identified as contractual workers employed through an external agency (or the labour contractors/intermediaries). Their welfare and concerns are often compromised due to the presence of contractors/agents as an intermediary between the employer and employee (AIOE nd; Das and Pandey 2004; Rajeev 2006). More often, at the workplace, the contractual workers are removed from service without assigning any reason or after giving any prior notice that hampers the employment security among them.

An increase in such types of job contracts has been digressive as far as achieving the target of SDG 8 related to the promotion of full and productive employment and decent employment to all along with inclusive economic growth, are concerned. In addition, the concept of decent work not only speaks about fair income but also security in the workplace, social protection for families along with other crucial benefits important for inclusive growth. Therefore, it can be posited that in the journey of economic reforms, the labour has lost its bargaining power over the security of employment, even in the case of FREFNFS, which has been considered to be the most secured form of regular employment.

Caste Groupwise Inequalities in Access to FREFNFS

Juxtaposing the percentage share of each caste group in FREFNFS across the enterprise type with the percentage share of each caste group in the total population reflects a clear disparity in the access to secured forms of employment among various caste groups. While the percentage share of forward castes in the total FREFNFS is more than their share in the total population, the situation in other caste groups is the exact opposite. While the difference between the share in total FREFNFS and the share in the total population is marginal in the case of SC and ST categories, it is much wider in the case of the OBC category. Therefore, it would not be an exaggeration to say that even after provisions for positive discrimination in the constitution, the on-ground situation does not support the effective implementation of such provisions. Access to secured jobs is still skewed in favour of privileged caste groups.

Over time there has been an increase in the proportion of SC, ST, and OBC population and a decline in the proportion of forward castes in the total population. A similar change is not experienced in the proportion of each caste group in FREFNFS across enterprise types. While the share of forward castes in the total FREFNFS has been declining, the extent of the decline in their share in FREFNFS is much lesser than the decline in their share in the total population. Among the deprived caste groups there has been an increase in the share of OBCs’ and STs’ representation in the total FREFNFS but not to the same extent as the increase in their share in the total population. On the other hand, there has been a marginal decline in the share of SCs in total FREFNFS even though their share in the population has increased. Another important trend observed is that there has been an increase in the share of SCs and OBCs in OPSE. The distribution of FREFNFS across the enterprise types reveals a consistently increasing situation of vulnerability among the SCs (Table 5); their share in total FREFNFS seems to be decreasing in both the GPSA and PPLC, and as a whole between 2004–05 and 2018–19.

Therefore, unlike other caste groups, the forward caste groups still hold a greater share in FREFNFS and have perpetually remain­ed in an advantageous position. As a result, it is noticed across all types of enterprises that the percentage share in FREFNFS has remained disproportionately low among SCs, STs, and OBCs as compared to their share represent in the total population.

Representation of Various Caste Groups in the Most Secured Jobs across Different Occupations

The growing informalisation of jobs within the non-farm sector has challenged the objective of providing decent work to the workforce. More than that it has also challenged the objective of economic empowerment of the deprived sections of the society. To the extent that the provisions of positive discrimination are only applicable in the case of formal jobs in the government sector, the growing informalisation of jobs within this sector limits the access to such jobs among the deprived caste groups. Therefore, the shrinking size of the government sector and formal jobs within the government sector make the provisions of positive discrimination void. Further, the distribution of these shrinking FREFNFS within the government sector is found to be skewed in favour of the forward castes.

Now we will analyse the distribution of FREFNFS in the government sector with more than three years of contract among various caste groups across different occupations (Table 6). For this analysis, the National Classification 2004 has been followed. The National Classification of Occupations has been defined based on skills and educational requirements for each broad occupation category. These occupational-cum-skill levels are: 1 (requirement of education is undefined)—legislators, senior officials, and managers; 2 (IV)—professionals; 3 (III)—associate professionals; 4–8 (II)—service workers, shop and market salespersons, skilled agricultural and fishery workers, workers in craft and related trades, and plant and machine operators and assemblers; 9 (I)—elementary occupations (requires primary or below education). “The concept of skill level was not applied in the case of legislators, senior officials, and managers as skills for executing tasks and duties of these occupations varied to such an extent that it was not feasible to link them with any of the four, broad skill levels” (GoI 2016).

In this analysis, it has been observed that the distribution of the most secured jobs in the government sector across the caste groups is highly disproportionate to their actual share in the total population. Further, it is revealed that most secured employment in the government sector seems to be concentrated mostly among the forward castes in terms of both numbers and percentage distribution (Table 6). The forward castes have significantly better access to the jobs in the top categories of the occupational classification in general. The high representation of the forward castes has been observed in the first three categories of occupational classification. While the workers in other caste groups are found to be concentrated in the lower categories of jobs in the hierarchy of occupational categories. The high representation of the SC group has been observed in the ninth category, which includes elementary occupations requiring primary or below education levels. In other words, they are mostly concentrated at the bottom of the occupational hierarchy. In comparison to their share in the total population, they have been unable to represent themselves in the upper categories. It is uniformly distributed among the OBCs from the second to the ninth category, though, at a lower level than their share in total population; the share of OBCs in the uppermost category remains nearly half.

Therefore, the already small representation of the SC, ST, and OBC groups in the most secured jobs in the government sector is concentrated in the occupations requiring primary to secondary level of education or basic skill levels.

The Industrial Relations Code, Implications Thereof, and the Way Forward

As part of the recently undertaken labour reforms by the Gov­ernment of India, the IRC (2020) was enacted on 29 September 2020 (Gazette of India 2020). It applies to all the establishments engaged in the production, supply, or distribution of goods or services (Section 2[p] of the code). The IRC imposes the first layer of exclusion of the workers by excluding from the definition of “industry” the institutions owned or managed by organisations wholly or substantially engaged in any charitable, social, or philanthropic services, sovereign functions, domestic services, and any other activity as may be notified by the central government (Section 2[p] in the code). Scheme workers that constitute a substantial proportion of the workforce have not been given attention. Further, such exclusion may adversely affect the access to social security and status of employment security among the regular workers engaged in such institutions.

The last three decades of the neo-liberal regime have witnessed a weakened position of trade unions in the country. It has adversely affected employment security among the workers. A few crucial modifications in the IRC are supposed to further weaken these institutions. Though, an improvement in case of compliance, grievance redressal, speedy resolution of disputes under the IRC is supposed to boost up the levels of productivity and gross value added at the enterprise level, it can have negative implications for labour. To mention broadly, the modifications that may affect the labour rights and welfare are as follows:
(i) existing threshold of workers in an establishment reduced from 100 to 300 for seeking permission before closure, retrenchment, and lay-off (Section 77[1] of the code), (ii) the provisions concerning standing orders (for regulation of service conditions) being made applicable only to establishments engaging 300 or more employees (Section 28[1] of the code). It leaves a large proportion of the employees in establishments having less than 300 employees outside its fold, and (iii) the requirement of giving 14 days of notice before strike and lock-out may help in the resolution of disputes by third-party intervention (that is, conciliation) and thus reduce the chances of improving industrial relations (Sections 28[1] and 62[2] of the code). These modifications may affect the overall bargaining power of the trade unions and the workers may be unable to fight for their rights.

In the IRC, fixed-term employment (FTE) has been recognised as one of the prevalent forms of employment and therefore brought under the framework of applicable laws. However, FTE is defined under the IRC as the engagement of a worker based on a written contract of employment for a fixed period (Section 2[o] in the code); however, the type of employment relationship remains unclear. The IRC does not explain whether the written contract is between a worker and a principal employer or between the worker and the contractor, thus obscuring the role of a principal employer or a contractor while defining FTE. Such an ambiguity hinders the enforcement of worker’s rights and limits their access to social security benefits. Now that the FTE is introduced in the IRC, there is also an urgent need to integrate an improved module to collect relevant data on employment relations in the Periodic Labour Force Surveys (PLFS) to ensure a regular estimation of permanent workers, FTE, and contractual workers in total regular employment. As of now, there are no relevant queries in the schedule of the survey which separates these three categories, and thus, which will restrict the examination of the possible impact of the IRC in the coming years.

Nevertheless, if a fixed-term relation is established between a worker and a principal employer directly, then the IRC may have bidirectional effects on regular employment. First, it promises better social security to the fixed-term workers in comparison to those engaged through a labour contractor. They will be entitled to all statutory benefits such as social security, wages, etc, at par with the regular employees who are doing similar work (Lok Sabha Secretariat 2020). However, employment security remains a question mark as a fixed-term worker can also be removed from the service by giving prior notice by the employer as it is usually done in the case of a worker employed through a labour contractor.

Second, FTE may allow employers the flexibility to hire workers for a fixed duration and for work that may not be permanent. However, the absence of any objective criteria, like minimum and maximum period of FTE or any ceiling on successive use of fixed-term contracts, might adversely affect the overall employment security among the employees in the long run and provide scope to the employers to shift from permanent to FTE. There is evidence that the establishments prefer to employ an excessive number of contract workers and try to minimise the use of regular workers (Sapkal 2016). The recently fostered contractualisation of jobs across all types of enterprises, along with privatisation, also put forth a big threat to the job security among the regular workers; and the government sector has also been no exception to this.

The historically deprived sections of the society, namely the SCs and STs, will be the most affected as they lack access to capital, particularly social, political, and financial capital. As posited from the National Sample Survey Office (NSSO) estimates, they have a lack of access to quality jobs, especially the most secured regular jobs in the non-farm sector or the jobs related to the upper hierarchy of occupations, due to several reasons, including educational backwardness and caste-based discrimination. In this situation, positive discrimination as a legal instrument (across government, public–private and private enterprises) may help to remove the vulnerabilities among the deprived sections and assure equal opportunities for them to get access to secured jobs. As of now, these policies are barely implemented in the case of FTE and workers employed through a contractor. The diminishing permanent job opportunities in the government sector along with the promotion of privatisation in an imprudent manner will further aggravate the vulnerabilities of the deprived caste groups. Caste-based discrimination, in the absence of legal provisions for positive discrimination and policies, will lead to their greater exclusion from the job market.

However, as an outcome of the provisions of IRC, if a shift from contractual hiring to FTE has to be expected, it will occur primarily from short duration to relatively long-duration contracts as the employers would not possibly be willing to take the burden of the cost involved in hiring on a very frequent basis. Eventually, it will enhance employment security and thus reduce vulnerability among the workers; though, a positive change in the employer’s mindset will be a precondition to that. In addition, there is a need to focus on “reducing the insecurity among regular workers” rather than “reducing merely the share and size of informal regular employment” in the non-farm sector. It could be possibly done by minimising the role of labour contractors and facilitating direct recruitments by setting up employment cells at the enterprise/establishment level. It would eventually create employment opportunities.


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Updated On : 11th Jul, 2022
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