Part-time work is on the rise in India, medium-size businesses are not growing and the share of informal workers in organised firms is up from 32 per cent in 2000 to 68 per cent in 2010, says the World Development Report 2013-Jobs.
The World Bank report said firm dynamics (or lack thereof) partly accounted for these trends.
The Bank’s survey of 54,000 firms in 102 developing countries found that large firms (over 100 workers) had higher productivity and wages, were more likely to export and were more innovative than small firms (less than 20 employees).
“A majority of firms are born small but in India they also tend to stay small…. In India, the productivity of a 35 year-old firm merely doubles and its headcount actually falls by a fourth. As a result, there is a “missing middle” of medium-sized firms”, it said
The report, which called for a strong urbanisation policy for India for creating better jobs, also emphasised the need for labour policies that were not too stringent.
“When workers move from low-to-high-productivity jobs, output increases and the economy becomes more efficient. Stringent regulations that obstruct such labour reallocation do not sit on the efficiency “plateau” and affect economic efficiency.,” said Kaushik Basu, former Chief Economic Advisor to India’s Finance Ministry and the current World Bank Chief Economist.
The report’s authors processed over 800 household surveys and censuses to arrive at their findings.