Change and Development in Industrial Society — NCERT Solutions

Introduction:
Liberalisation refers to the process of reducing government controls and opening up the economy to market forces and foreign investment. In India, economic liberalisation began in earnest in 1991 with the New Economic Policy (NEP), which included privatisation, deregulation, and globalisation. It has had far-reaching effects on employment patterns.

1. Growth of the Service Sector and IT Industry:

• Liberalisation led to rapid growth in the Information Technology (IT), Business Process Outsourcing (BPO), banking, finance, retail, and telecommunications sectors.
• These sectors created a large number of white-collar, high-skill jobs, especially for educated urban youth.
• Cities like Bengaluru, Hyderabad, Pune, and Chennai became major IT hubs, attracting a new class of well-paid professionals.
• However, these jobs are concentrated among the educated middle class and have not benefited the majority of the workforce.

2. Decline of the Formal/Organised Sector:

• Liberalisation encouraged companies to cut costs to remain competitive. One major way of doing this was by reducing permanent, formal employment.
• Many large public sector undertakings (PSUs) underwent downsizing, restructuring, or privatisation, leading to job losses.
• The textile mill closures in cities like Mumbai (Girangaon) are a prominent example — thousands of permanent mill workers lost their jobs and were pushed into the informal economy.
• The share of formal sector employment (with job security, social security benefits, and legal protections) has declined relative to total employment.

3. Rise of Informalisation and Contractualisation:

• One of the most significant effects of liberalisation has been the informalisation of formal sector work.
• Companies increasingly hire workers on short-term contracts, through labour contractors, or as casual/temporary workers rather than as permanent employees.
• This allows employers to avoid paying Provident Fund, ESI, gratuity, and other benefits, and to dismiss workers easily.
• Even in large, modern factories (e.g., automobile plants like Maruti), a large proportion of workers are contract workers earning much less than permanent workers doing the same job.
• This trend is sometimes called 'flexible labour' — flexible for the employer, but highly insecure for the worker.

4. Growth of the Informal Economy:

• The vast majority of India's workforce — estimated at over 90% — is in the informal/unorganised sector: street vendors, domestic workers, construction workers, home-based piece-rate workers, agricultural labourers, etc.
• Liberalisation has not significantly reduced this proportion. In fact, many workers displaced from the formal sector have been pushed into informal work.
• Home-based work and subcontracting have increased — for example, in garment manufacturing, bidi rolling, and agarbatti making — where workers (often women) are paid piece-rates with no benefits or protections.

5. Impact on Women's Employment:

• Liberalisation has had a contradictory effect on women's employment.
• On one hand, the growth of IT, BPO, retail, and garment export industries has created new employment opportunities for women.
• On the other hand, much of women's employment is in low-wage, insecure, informal work — as home-based workers, domestic workers, or in export processing zones with poor conditions.
• Women remain concentrated in the lower rungs of the labour market with significant gender wage gaps.

6. Regional Disparities:

• Liberalisation has led to uneven regional development. States with better infrastructure, skilled labour, and investor-friendly policies (Maharashtra, Karnataka, Tamil Nadu, Gujarat) attracted more investment and created more jobs.
• Economically backward states (Bihar, Uttar Pradesh, Odisha, Jharkhand) saw less investment, pushing their populations to migrate to other states for work.
• This has intensified inter-state labour migration as a major feature of the Indian economy.

7. Agricultural Employment:

• Liberalisation and the opening of agricultural markets have had mixed effects on farmers and agricultural labourers.
• Reduced subsidies and competition from cheaper imports have hurt small farmers.
• Many agricultural workers have been pushed out of farming into casual urban labour, contributing to the growth of the urban informal sector.

8. New Forms of Work — The 'Gig Economy':

• More recently, liberalisation and digitalisation have given rise to the 'gig economy' — platform-based work such as app-cab drivers (Ola, Uber), food delivery workers (Zomato, Swiggy), and freelance workers.
• These workers are classified as 'partners' or 'independent contractors' rather than employees, meaning they have no labour law protections, no social security, and no job security.
• This represents a new form of informalisation enabled by technology.

Conclusion:
In summary, liberalisation has created new employment opportunities in high-skill service sectors and export industries, but has simultaneously led to the decline of secure formal employment, the rise of contractual and informal work, increased labour insecurity, and growing inequality between different sections of the workforce. The benefits of liberalisation have been unevenly distributed — concentrated among the educated urban middle class — while the majority of workers, especially the poor, women, and marginalised communities, continue to face precarious working conditions. This makes the relationship between liberalisation and employment a deeply contested and complex one in Indian sociology.