Impact of Trade Liberalisation on Employment: The Experience of India’s Manufacturing Industries

The Indian economy has entered a phase of high growth in the recent years, after a long period of low growth. Since economic growth itself is not sufficient to achieve economic development, the concern of policy makers seems to have shifted towards making the growth inclusive – a process wherein employment is at its core. The available evidence, however, tends to indicate that the high growth has been accompanied by low employment growth in the organised manufacturing sector. Various reasons have been put forward in the literature to explain the observed jobless growth. This included, but not limited to, labour market rigidity, growth of mandays worked, growth in wage rate and others. But the observed jobless growth has been coincided with an unprecedented increase in the rate of integration of Indian economy with the world market through trade liberation. Yet, it is surprising to note that the impact of trade liberalisation has not received the attention of scholars that it deserves in explaining the observed jobless growth. Hence, the present study explores the underlying factors behind the poor performance of the organized sector in terms of employment generation in the context of trade liberalization.