Labour Market and Informalization of Employment

Abstract

Structural change in output must be followed by structural change in employment providing more employment opportunities. Quality employment opportunities and productive employment generation is the key to growth with equity and to alleviate poverty. It is observed that the share of informal sector declines with the process of economic development. It is evident that structural change in the occupational distribution occurred both in the rural areas and in the urban areas as well but this change in employment remained slower in Haryana. The present research paper aims to analyze the economy of Haryana with the following objectives- (i) to explore the labor market; (ii) to analyze the pattern of employment growth (ii) to understand the informalization of employment. The period after economic reforms, underwent low safety net for the poor workers and other marginalized sections of the society. It has been empirically found that there is lower labor force participation rate in Haryana. The female labor force participation rate has also remained low. Imperfections in the labor market in Haryana are reflected in terms of monopsony markets, labor unions, non-measurement of productivity, preferences for home town jobs, rigid labor markets. There are high wage differentials and widening gaps among skilled-unskilled, rural-urban and men-women in labor markets. It led to the informalization of labor market which not only increased number of the informal sector workers but also created informal workers with-in the formal sector in Haryana.