Labour Reforms and Growth in Manufacturing Employment in India

Bishwanath Goldar (), Prateek Kukreja and Havishaye Puri
Additional contact information
Bishwanath Goldar: Non-Resident Senior Fellow, Institute of Economic Growth
Prateek Kukreja: Independent Policy Research Specialist
Havishaye Puri: Indian Council for Research on International Economic Relations

The Indian Journal of Labour Economics, 2025, vol. 68, issue 1, No 3, 45-73

Abstract: Abstract There has been limited econometric research on the impact of labour regulations on the growth in manufacturing employment in India, which has been mainly confined to the organised/formal sector of manufacturing, accounting for only about 20–25 per cent of the total manufacturing employment. To give an empirical content to labour reforms in terms of an index, the focus of the past research dealing with labour regulations has been mainly on the amendments made by different states in India to the Industrial Disputes Act, 1947 (IDA). The enhancement of the threshold applicability limit of the IDA from 100 to 300 workers, as several states have done in the past, has received particular attention. However, manufacturing enterprises employing up to nine workers form about 98 per cent of total manufacturing enterprises in India and account for a dominant portion of total manufacturing employment. Employment in such enterprises is unlikely to be impacted much by an enhancement of the threshold applicability limit of the IDA. Rather, employment in such enterprises may get a boost from an enhancement in the threshold applicability limit under the Factories Act, 1948. In this paper, the state-wise manufacturing employment data, covering both formal and informal segments, are used to investigate econometrically the impact of labour reforms, particularly the enhancements of the threshold applicability limit under the Factories Act and the IDA, on manufacturing employment. The results of the analysis indicate that labour reforms significantly positively impacted manufacturing employment in India and contributed to employment growth.

Keywords: Labour reforms; Employment growth; Indian manufacturing (search for similar items in EconPapers)
JEL-codes: J21 K31 L60 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s41027-025-00564-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ijlaec:v:68:y:2025:i:1:d:10.1007_s41027-025-00564-2

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/41027

DOI: 10.1007/s41027-025-00564-2

Access Statistics for this article

The Indian Journal of Labour Economics is currently edited by Alakh Sharma

More articles in The Indian Journal of Labour Economics from Springer, The Indian Society of Labour Economics (ISLE) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().