Regulations or no regulations in economies with surplus labour? A case study of three States of India

Dr. Pankaj Kumar

The effects of employment regulations on labour market segmentation in an economy where the supply of labour is much more than the demand is much varied than the conventional perception in the Global North. In fact, the pervasive pressure from the supply side in such economies thwart segmentation efforts. More so, regulations in the third World often breed corruption and red-tapism.
With more than 44 Central laws and 200 State laws governing employment matters, the endeavor of the Indian policy makers since independence was to improve labour standards and market segmentation; however, still about 94 percent of the working populace continue to toil in the informal sector with negligible labour standards. India, with a growing population which is likely to surpass China in a decade time, the employment pressure is so high that all de-jure efforts mostly fail on de-facto implementation. The paper starts with a case study of Rudrapur industrial region neighboring Uttar Pradesh the most populous State of India where field study shows little implementation of regulations on the ground. In fact regulations in this part of the country is seen to rather induce the employers to keep their workers in an informal state so to avoid the ambit of regulations and the inherent corrupt practices. The second study in the paper with more or less similar findings is of the Delhi Metro Rail Corporation (DMRC) located in the National Capital Region of the country where migrant workers crowd the labour market. The third case of a Special Economic Zone (SEZ) in Gujarat, the most developed State of India, however have shown dissimilar outcome to be elaborated in the paper.
The paper at the end takes cue from the author’s field study from the Guangzhou and Shenzhen regions of China besides the three multi-sited ethnographic (Marcus (1995, 1998)) case studies in India, to conclude that, “in economies with surplus labour only regulations has not helped, but where workers are organized and have a voice at the workplace, employment regulations are seen to have worked towards containing the informal sector and increasing labour market segmentation so to improve labour standards”.