The Indian labor market can be categorized into three sectors:
- Rural workers , who constitute about 60% of the workforce
- Organized of the formal sector, that constitutes about 8% of the workforce; and
- Urban unorganized or informal structure which represents the 32% of the workforce.
The chart below describes the estimated increase in the number of labors from 1977-78 to 2004-05. The labor force has grown from 276.3 million to 385.5 million between 1977-78 and1993-94 showing an annual growth rate of 2.1%. During the year 1999-2000, the workforce was estimated to be 407
million. In 2004-05 the labor market consisted of 430 million workers and has grown up to 500 million in 2006.
Two-third of India’s workforce is employed in agriculture and rural industries. One-third of rural households are agricultural labor households, subsisting on wage employment. Only about 9 percent of the total workforce is in the organized sector; the remaining 91 percent are in the unorganized sector, self-employed, or employed as casual wage laborers. The labor force in year 2006 has grown up to 509.3 million out of which 60% are in agriculture, 12% are employed in industries and the residual 28% are in services.
Labor force can be divided into four categories: self employed workers, wage and salary earners, casual workers and unemployed. Of these, self-employed are most loosely connected to labor market because of the possibilities of work-sharing and work spreading in a self-employed enterprise. Non-contractual casual laborers have the closest connection to labor market on almost day-to day basis. Same is the case with those unemployed who are actively seeking work. Contractual and hence stable hired employment (with the same employer and/or in the same job) on a regular basis is covered in the description wage and salary workers. Persons who are engaged in their own farm or non- farm enterprises are defined as self employed. The employees in an enterprise can be either regular salaried/ wage employees or casual wage employees who are normally engaged on a day today basis. The casual wage workers both in public work and other types of work don’t have any job security or social security. These workers, either in formal or informal sector or in private households, are informal workers. The regular salaried/wage employees are those working in others farm or non- farm enterprises and getting in return salary or wages on a regular basis and not on the basis of daily or periodic renewal of work contract. This category includes those getting time wage as well as those receiving piece wage or salary and paid apprentices, both full time and part time. This category of persons may, therefore, include persons engaged regularly on an hourly basis, temporary workers, out- workers, etc.
The table given below classifies labor force across male-female and rural-urban dimensions. It is clear that
- Self-employment and casual labor statuses are more prevalent among rural than urban labor force and among female than male workers.
- The Incidence of unemployment is higher in the urban than in the rural labor force with nearly 48 per cent of the total unemployed persons coming from aggregate urban labor force whose share in total (rural plus urban) work force is 22 per cent.
- Those reporting wage and salary earning dominate in the urban labor force, their share being around 62 per cent (lines 10 to 12 of Table).