Liberalization and labour: the effect on formal sector employment

Abstract

This paper explores the impact of liberalization in India on formal sector employment in the cotton textile industry. It draws upon the results of field-work carried out primarily in Ahmedabad but also in Bombay, Delhi and Coimbatore between September and November 1996. This field-work included a survey of 101 employed mill workers in 16 mills in Ahmedabad, covering issues such as wages, job security and health and safety. The findings indicate that restructuring has led to a decline in employment levels in composite mills in the cotton textile industry in India through closure, downsizing and the shift towards more capital-intensive technologies. As wages are determined within an institutional setting, it was found that there was no significant variation across mills nor over time. Additionally, since many of the conditions of employment are determined by legislation, they apply uniformly across companies and have not altered in the post-liberalization context. However, the increased capital-intensity of production has resulted in an improvement in health and safety conditions within the mills, at least with respect to occupational hazards which have typified this industry in the past. © 1998 John Wiley & Sons, Ltd.