Labour Market Tendencies in India and Brazil Maria Cristina - - PowerPoint PPT Presentation

Labour Market Tendencies in India and Brazil

Maria Cristina Cacciamali. University of São Paulo “Understanding Inequality in Brazil and India” Workshop supported by IDRC Jawaharlal Nehru University, New Delhi, 17 February 2015

Structure

Addressing Inequality in the Labor Market Informal sector Real Wages and Wage Differentials Gini coefficient Summing up and Perspectives

The approach to the informal sector

• The approach to the informal sector is

different in the two countries, in Brazil it is linkage to several categories of status of work: unregistered workers, self employees-micro entrepreneurs, domestic servants and unpaid workers; in India the association is with the unorganized sector.

Brazilian Labour Market Structure by Work Status

5 10 15 20 25 30 35 40 45 1993 1995 1999 2003 2005 2009 2012

Private registered wage-earners Public employees Non registered wage earners Self-employed Domestic workers Non paid and subsistence economy

Indian Labour Market Structure by Work Status

10 20 30 40 50 60 70 80 90 100 1999-00 2004-05 2009-10 2011-12

Regular wage employment Regular-formal Regular informal Casual wage employment Self- employment Organized sector Unorganized sector

Informal sector in Brazil and India

• In India 83.6% of jobs are in the unorganized

sector; In Brazil the formal sector is responsible for almost 50% of jobs. But the tendency is the same, in the two countries the formal/organized sector has increased, although in Brazil the formal sector raised faster. Note that self- employment in India has decreased, and that Brazil has presented the same tendency concerning self employment, unregistered workers and specially unpaid workers.

Unemployment rates

Year UPSS CDS 1972-73 1.61 8.35 1983 1.90 8.28 1993-94 1.90 6.03 2004-05 2.33 8.34 2011-12 2.20 5.60

Year Total Rural Urban 1983* 4.9 1.1 6.4 1989* 3.0 1.0 3.7 1993 6.2 1.5 7.7 1995 6.1 1.6 7.5 1999 9.6 3.0 11.6 2003 9.7 2.5 11.2 2005 9.3 2.8 10.8 2009 8.3 3.2 9.3 2012 6.2 2.9 6.8

India Brazil

Real Wages

3 6 .6 4 6 .8 6 8 .8 9 7 .9 9 9 .9 1 2 4 .8 1 6 4 .8 2 26 .8 50 10 0 15 0 20 0 25 0

1 9 83 19 9 4 20 0 5 2 01 2 19 8 3 1 9 94 2 0 05 2 0 12 rural urban R u p e e s /d a y

G ra p hs b y S ector

Real wages in India Labour income in Brazil

Brazilian and Indian Labour Market Structure

• In Brazil, the differential of average wages has fallen

dramatically across the main groups of the labor force, f.e., between sectors, regions, registered and unregistered wage workers, between skilled and unskilled, also the premium to higher education decreased relatively to high school wages, and across gender and white and non white.

• Statistically this is the main cause for the inequality

decrease in the Brazilian LM, measured by the ratio 10 10, the Gini coefficient or the Theil coefficient.

• This is not the case of India.

Ratio of wages in Brazil: registered to non-registered wage earners

10

Wage ratio in India: regular to casual workers

11

Rural

0.43 0.38 0.37 0.46

0.00 0.10 0.20 0.30 0.40 0.50 1983 1994 2005 2012

Urban

0.41 0.38 0.36 0.38

0.33 0.34 0.35 0.36 0.37 0.38 0.39 0.40 0.41 0.42 1983 1994 2005 2012

Brazil Labor income Gini

Gini in Brazil

13

India Wages Gini

Gini in India

Different tendencies

• Brazil presented one unique tendency, the systematic

decrease of wage gaps across many important factor;

• In India there is no common tendency. Urban

inequality raises, considering the ratio between wages of regular and casual workers, as well as the ratio between wages of higher educated workers and high school workers. Although across few factors inequality fell: in rural areas and gender.

Summing up

• The structure of the labour market at the end of the 2000s is quite

different in Brazil and India, as well as the outcomes on labor income

• inequality. In Brazil almost 50% are wage workers in the formal sector and

16% are unregistered or informal wage workers in the formal and informal

• sectors. In contrast India has 6.8% of regular workers and 16.4% in the
• rganized sector.
• The economy has grown much more in India than in Brazil, but Brazil

proportionally has created more formal jobs for unskilled wage workers, and has successfully enforced minimum wage.

• In Brazil wage differences has declined in all the important categories of

the labor market reducing inequality, but wage differences has not decrease systematically in India.

Institutions, inequality and growth regime

• What are the causes?
• In Brazil there are several complementary factors: market labor expansion

in a scenario of low rate of economic growth; more credit to enterprises – big and small; increase of enrollment in higher education; labour institutions – labour legislation, labour courts and minimum wage ; social assistance institutions - income cash transfers for elderly, disabled and rural workers non contributors – guarantee by the Federal constitution – and cash transfers for poor.

• The lack of formalization in India limits tackling inequality through

economic or labour policy in order to reduce labour market inequalities; India needs more effective labour market institutions coupled with social

• policies. In Brazil several public programs increase wage reservation, as

income transfers programs or minimum wages empowering workers in collective and individual bargain.

Perspectives

• Brazil presented a demographic dividend from the late

1990s to 2015; thus at the present moment Brazil follows the pattern of the last stage of demographic transition, and older demographic structure, toward a society with 30% of the population beyond 60 years old in the mid of this century.

• India will present a demographic dividend almost to
• 2050. It is an advantage for India economic

development in this century, if education and productivity increase simultaneously.

Perspectives

• In the long run, India scenario could be

considered positive: demographic dividend, high rate of savings and high productivity, factors that create the economic base for the increasing labor market policies, social programs and the social security system.

• In Brazil, on the other hand, it is need to increase

investment and productivity. It is the challenge to keep the raise in jobs and to finance labour and social policies.

• Obrigada and Namaste