New Delhi: Part-time work is on the rise in India, with the share of informal workers in organised firms rising to 68 percent in 2010 from 32 percent in 2000, the World Bank said in a report.
According to World Development Report, a flagship publication from the World Bank, there has been a sharp increase in the number of part time and temporary wage employment in India and other developing countries.
The number of temporary workers grew by more than 10 percent in 2009 and 18 percent in 2010, the report said. "More unusual is the increase in its number of informal workers in the organised sector, from 32 percent in 2000 to 68 percent in 2010."
"When workers move from low-to-high-productivity jobs, output increases and the economy becomes more efficient. Stringent regulations that obstruct such labour reallocation do not sit on the efficiency plateau and affect economic efficiency," Kaushik Basu, World Bank chief economist and senior vice president, said in the report.
"There are dimensions over which the country is not close to the cliff and the regulation does not have a detrimental effect on development, but on some other dimensions India is close to the edge, if not beyond it," Basu, a former advisor to the India's finance minister, said.
With the working age population increasing by 7 million each year in India, accelerating urban development and increasing labour flexibility are key to creating jobs in more productive activities, thus sustaining growth and reducing poverty, the report said.
The report titled "The World Development Report 2013: Jobs" stresses the role of a strong urbanisation policy for India in creating better jobs.
In 1990, the share of India's population living in cities was the same as China - 27 percent. Two decades later, China's coastal cities are engines of growth, while insufficient infrastructure, shortcomings in basic services and inadequate mechanisms to convert land clog Indian cities.
The report also emphasises the need for India to stay within the efficiency "plateau" of labour laws where labour policies are not too stringent and allow the creation of more wage employment, especially in cities and in activities connected to global markets.
The rise of informal workers in organised sector is partly due to the nature of firms in India and other developing countries.
The World Bank's survey of 54,000 firms in 102 developing countries finds that large firms (those with over 100 workers) have higher productivity and higher wages, are more likely to export and are more innovative than small firms (those with fewer than 20 employees).
Big firms are more likely to add a new product, incorporate new technology or upgrade a product line.
A majority of firms are born small but in India they also tend to stay small. In the US, if a company lasts 35 years, it becomes on average ten times as productive and employs ten times as many people.
In India, the productivity of a 35-year-old firm merely doubles and its headcount actually falls by a fourth. As a result, there is a "missing middle" of medium-sized firms, the report said.
First Published: Monday, November 5, 2012, 20:15