Sunday, September 21,
Of labour markets
Labour Market and
Institution in India: 1990s and Beyond
edited by Shuji Uchikawa. Manohar, New Delhi.
Pages 183. Rs 400.
dominant view in todayís world is that a flexible economy, one
that can readily adjust to the needs of time, will achieve faster
development than the economy with a rigid structure. While an
inflexible economy is more easily prone to bottlenecks due to
mismatch of demand and supply, leading to inflationary pressures and
other economic dislocations, the flexible economy, in which
individuals, firms, organisations and institutions efficiently
adjust their goals and resources to changing constraints and
opportunities, involves flexibility in all markets, i.e. land,
capital, financial, labour and product markets. One well-researched
aspect of market efficiency bearing on adaptability or flexibility
of the economy is the operation of labour markets. The notion of
labour market flexibility has been given different meanings that
revolve around the idea of the capacity to adapt to change.
This is precisely the
main theme of the six essays written by different scholars in the
book under review edited by Shuji Uchikawa. After economic reforms,
the Indian economy changed profoundly, as industrial licensing was
withdrawn, companies could expand capacity and set up new units on
the basis of their own judgement. In fact, investment in industry
grew rapidly after 1991. Regulation in the financial sector was also
relaxed. Imports increased because quantitative regulations were
abolished and import duty had been reduced. Domestic and foreign
companies in India were exposed to severe competition. They were
forced to adjust to new circumstances.