India's Labour Economy
MSME workers deliver just 14% of large-firm output; informality is costing India billions
India’s micro, small and medium enterprises (MSME) employ 32.9 crore people—nearly 330 million workers. They account for 62 per cent of non-agricultural employment and contribute roughly 30 per cent of GDP. By headcount, they form the backbone of the economy. Yet by output per worker, they are startlingly thin. The average MSME employee produces only 14 per cent of the output generated by a worker in a large enterprise. Capital intensity explains part of the disparity. Informality and weak skill formation explain much of the rest. The issue is not scale. It is efficiency.
India must lift labour productivity to reach Viksit Bharat goal: Suman Bery
NITI Aayog's Suman Bery says India must boost labour productivity, deepen investment, raise women's participation and leverage AI to reach per capita income levels required for Viksit Bharat 2047
INDIA: JOB CREATION IS CONCENTRATED IN LOW-PRODUCTIVITY SECTORS, WHICH IS HINDERING GROWTH
Between 2013 and 2018, India experienced robust productivity growth (increasing by a factor of 1.3, comparable to Vietnam, slightly lower than China, and higher than Indonesia, Malaysia, the Philippines and Thailand). However, from 2019 onwards, productivity in India has stagnated, while it has continued to rise in other countries (with the exception of the Philippines). This trend is particularly concerning given that GDP per capita remains low (in PPP, it was 2.4 times lower than that of China in 2024) and unemployment is high, especially among young people (15.6% in 2024 according to official data). Without a rapid increase in productivity, India could remain a ‘middle-income’ country.
India Labour Productivity Growth 1992 - 2023 | YEARLY | % | CEIC DATA
• India Labour Productivity improved by 3.39 % YoY in Dec 2023, compared with a growth of 1.51 % in the previous year • India Labour Productivity Growth data is updated yearly, available from Dec 1992 to Dec 2023, averaging at 7.06 % • The data reached an all-time high of 8.92 % in Dec 2016 and a record low of -2.51 % in Dec 2020
Labour Reforms
Investor Confidence and the Remaking of Labour Rights
India’s four Labour Codes, implemented in November 2025, consolidate a long-term shift privileging capital interests over collective bargaining. By legalising decades-old practices, they recast citizenship for working people in an economy marked by informality and precarity.
Labour Unions
Supreme Court slams trade unionism for stunting industrial growth and closing factories
While hearing a plea seeking welfare measures, including minimum wages, for domestic workers, Chief Justice of India Surya Kant said Thursday that trade unions were “largely responsible for…stopping the industrialisation growth in the country.” “How many industries in this country have been successfully closed, thanks to these trade unions? Let us know the realities also. As children, we used to see all the traditional industries in this country; now, because of these ‘jhanda’ unions, they have been closed all throughout the country. They don’t want to work,” the CJI presiding over a two-judge bench said.
Regrettable and Regressive remarks of the Chief Justice of India on Trade Unions and the Minimum Wage
The New Trade Union Initiative finds the statements of the Chief Justice of India, Mr. Justice Surya Kant, while hearing the case, on the absence of statutory wages and regulation of employment conditions for a statutory minimum wage, filed by our affiliate Penn Thozhilalar Sangam and other unions vs. the Union of India in Writ Petition (Civil) 26 of 2026, regrettable. Mr. Kant’s statement is incorrect insofar as the Hon’ble Supreme Court has itself held that non-payment of minimum wages as amounting to forced labour (Article 23 of the Constitution) and no employer has a right to exist if they are unable to pay the minimum wage. Furthermore, domestic workers, especially women are subject to the worst forms of exploitation at work which cannot be reversed without regulation of their conditions of work including through a mechanism of registration.
Benefits for Workers
A Law Only on Paper: Welfare for Construction Workers
Construction workers in India occupy an unusual position within the informal economy. They are one of the few informal sector groups covered by a dedicated central welfare law—a law that should, on paper, give them stronger social security protections that most of their peers. But the reality tells a different story.
Educational support reform for children of unorganised workers
The Ministry of Labour & Employment has introduced a change to strengthen education support for children of unorganised workers. This reform is part of the Code on Social Security, 2020, which aims to provide better welfare and protection for workers and their families. The Ministry runs a scheme that gives financial help for schooling to children of Beedi, Cine, and non coal mine workers (including iron, manganese, chrome, limestone, dolomite, and mica mines). The scheme is need based, meaning families receive support regardless of academic merit, to reduce financial stress and keep children in school.
News from States
Bihar’s persistent labour-market paradox
Bihar’s economy has grown, its workforce has diversified, and education levels have improved. Yet for millions of its workers — especially the young — the promise of secure employment remains elusive. Over the past two decades, the State’s labour market has undergone structural change but persistent employment challenges remain. People have moved out of agriculture, but not into stable jobs; education has expanded, but employability has not kept pace; and participation by women has risen, largely through informal and low-quality work.
Fewer Inspections, Fewer Cases, Fewer Penalties: How Labour Law Enforcement Is Failing in J&K
As per the official data of the Directorate General Factory Advice Services and Labour Institutes (DGFASLI), the rate at which labour inspections happen across India has reduced significantly over time. The percentage of workplaces that get inspected by labour authorities, compared with the total number of workplaces liable to be inspected in a given year, has fallen. The decline has been from 47.56% in 2005 to 19.12% in 2023. The inspections are provided for in the Factories Act, which has existed since 1947. Long-term inspection data from DGFASLI shows that inspection intensity – the percentage of registered factories inspected in Jammu and Kashmir – declined from 78% in 2005 to 41% in 2023. This is a fall of about 47% over the reference period.
Pending Wages
Maharashtra Govt Releases ₹100 Crore To MSRTC For Pending Salary Hike Arrears Of 86,000 Employees; Minister Pratap Sarnaik Urges Unions To Call Off Protest
The Maharashtra government has released ₹100 crore to MSRTC to clear pending salary hike arrears for nearly 86,000 employees. Transport Minister Pratap Sarnaik urged unions to call off the February 24 protest to ensure uninterrupted bus services during SSC and HSC exams.
Livelihoods
Land acquired for strengthening elephant corridors, pressurises farmer livelihoods
The acquisition of land for elephant corridors is an example of how conservation interventions are expanding beyond protected areas and into surrounding agrarian landscapes. “First, they said that the forest was for the tiger. Now, they are saying this land is for the elephant. There has been no change after they bought the land. Elephants are still destroying crops,” said a farmer whose neighbour’s land was acquired to strengthen an elephant corridor connecting the Biligiri Rangaswamy Temple (BRT) Wildlife Sanctuary and Tiger Reserve in Karnataka with the Sathyamangalam Tiger Reserve in Tamil Nadu.
India’s first Agniveers
L-G VK Saxena approves 20% quota for ex-Agniveers in Delhi Police, recruitment age limit relaxed
Delhi Lt Governor V.K. Saxena approved 20% reservation for former Agniveers in Delhi Police's male constable recruitment. They will also receive exemption from physical efficiency tests and three years of age relaxation (five years for the first batch). This decision aligns with similar initiatives by other states to provide job opportunities for Agniveers after their military service.
Profiles
Baba Adhav: Labour Activist, Social Lodestone
Baba Adhav (1930–2025) was a multi-faceted personality who empowered unorganized sector workers through rights-based mobilisation. A sustained struggle secured landmark social security legislation and fostered transformative initiatives ensuring security and dignity for workers in Maharashtra. With his charismatic personality and unending energy, Baba began to organise the workers. He spoke to them about rights, caste, and education, strengthening and supporting them. In 1956, this work led to the establishment of a union of the head-load workers, the Hamal Panchayat.