Formal Sector | Sociology Optional for UPSC (Notes) PDF Download

 Page 1


 
Unit 19 
Formal Sector  
 
Contents 
 
19.1 Introduction 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
19.3 Employment Growth in Formal Organised Manufacturing  
19.4 Characteristics of Formal Sector Employment in the Post Reform Period 
19.5 Regional Variation in Organised Industrial Employment in India  
19.6 A Case Study of Andhra Pradesh:  
19.7 Conclusion 
19.8 Further Reading  
 
Learning Objectives 
 
• after studying this unit, you will be able to  
• compare between the formal/organized and the unorganized sectors 
• discuss the employment growth in formal/organized manufacturing. 
• describe the regional variation in organized industrial employment in India 
• discuss case study of Andhra Pradesh in the context of characterstics of the formal sector of 
employment 
 
19.1 Introduction 
 
The urban formal sector consists of the organised sector, and can be defined as the sector 
consisting of activities carried out by the corporate enterprises and the Government at the 
Central, State and Local levels, solely with the help of wage paid labour which in a great 
measure is unionised.  
 
Official statistics regarding the formal sector is available through data on the organised sector. 
This comprises of enterprises and information (e.g. statistical data) on their activities that are 
collected on a regular basis (e.g. on registered manufacturing units in the urban areas of India).  
 
 1
Page 2


 
Unit 19 
Formal Sector  
 
Contents 
 
19.1 Introduction 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
19.3 Employment Growth in Formal Organised Manufacturing  
19.4 Characteristics of Formal Sector Employment in the Post Reform Period 
19.5 Regional Variation in Organised Industrial Employment in India  
19.6 A Case Study of Andhra Pradesh:  
19.7 Conclusion 
19.8 Further Reading  
 
Learning Objectives 
 
• after studying this unit, you will be able to  
• compare between the formal/organized and the unorganized sectors 
• discuss the employment growth in formal/organized manufacturing. 
• describe the regional variation in organized industrial employment in India 
• discuss case study of Andhra Pradesh in the context of characterstics of the formal sector of 
employment 
 
19.1 Introduction 
 
The urban formal sector consists of the organised sector, and can be defined as the sector 
consisting of activities carried out by the corporate enterprises and the Government at the 
Central, State and Local levels, solely with the help of wage paid labour which in a great 
measure is unionised.  
 
Official statistics regarding the formal sector is available through data on the organised sector. 
This comprises of enterprises and information (e.g. statistical data) on their activities that are 
collected on a regular basis (e.g. on registered manufacturing units in the urban areas of India).  
 
 1
The manufacturing units are all manufacturing, processing, repair and maintenance services 
registered or not registered under the Factory Act 1948; and this pertains to the organised sector. 
That is, factories employing 10 or more (or less than 10) workers, and using power, or 
employing 20 or more (or less than 20 workers without power), in the reference year, belong to 
the registered manufacturing sector. Enterprises covered by the Annual Survey of Industries 
(ASI), Central Statistical Organisation, fall under the purview of organised employment of the 
formal sector. 
 
In India, employment was almost stagnant during the pre-liberalisation decade at the national 
level and experienced negative growth in the Eastern and the Western regions. The industrially 
developed states recorded stagnant employment while the industrially underdeveloped states 
showed a significant employment growth during this period. However, during post-liberalisation, 
all the regions experienced a marked acceleration in the employment while it was more 
pronounced in AGRIND or agriculture related industries in the Eastern, the Western and the 
Southern regions. The industrially developed states showed more pronounced acceleration in the 
employment in both AGRIND--agriculture related and NAGRIND--non-agriculture related 
industries during this period. The rise in output and increase in fixed capital in the organised 
manufacturing sector induced employment growth more in the Southern and Western regions 
during the post liberalisation decade. The industrial liberalisation accelerated employment 
growth in the organised manufacturing sector more in the industrially developed states such as 
West Bengal, Gujarat, Maharashtra, Karnataka and Tamil Nadu. However, some states like 
Bihar, Delhi and Punjab experienced deceleration in employment growth during the post 
liberalisation period.  
 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
The labour force in all developing economies consists of two broad sectors, the organised and 
unorganised sectors. In the organised sector, the labour productivity is likely to be high, incomes 
even in unskilled category are relatively high and conditions of work and services are protected 
by labour legislations and trade unions  
The major comparisons between these two sectors can be summed up as follows –  
1. The Market Structure: The large manufacturing firms in the formal, organised sector 
operate in markets where prices are controlled by few sellers, which are protected from 
 2
Page 3


 
Unit 19 
Formal Sector  
 
Contents 
 
19.1 Introduction 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
19.3 Employment Growth in Formal Organised Manufacturing  
19.4 Characteristics of Formal Sector Employment in the Post Reform Period 
19.5 Regional Variation in Organised Industrial Employment in India  
19.6 A Case Study of Andhra Pradesh:  
19.7 Conclusion 
19.8 Further Reading  
 
Learning Objectives 
 
• after studying this unit, you will be able to  
• compare between the formal/organized and the unorganized sectors 
• discuss the employment growth in formal/organized manufacturing. 
• describe the regional variation in organized industrial employment in India 
• discuss case study of Andhra Pradesh in the context of characterstics of the formal sector of 
employment 
 
19.1 Introduction 
 
The urban formal sector consists of the organised sector, and can be defined as the sector 
consisting of activities carried out by the corporate enterprises and the Government at the 
Central, State and Local levels, solely with the help of wage paid labour which in a great 
measure is unionised.  
 
Official statistics regarding the formal sector is available through data on the organised sector. 
This comprises of enterprises and information (e.g. statistical data) on their activities that are 
collected on a regular basis (e.g. on registered manufacturing units in the urban areas of India).  
 
 1
The manufacturing units are all manufacturing, processing, repair and maintenance services 
registered or not registered under the Factory Act 1948; and this pertains to the organised sector. 
That is, factories employing 10 or more (or less than 10) workers, and using power, or 
employing 20 or more (or less than 20 workers without power), in the reference year, belong to 
the registered manufacturing sector. Enterprises covered by the Annual Survey of Industries 
(ASI), Central Statistical Organisation, fall under the purview of organised employment of the 
formal sector. 
 
In India, employment was almost stagnant during the pre-liberalisation decade at the national 
level and experienced negative growth in the Eastern and the Western regions. The industrially 
developed states recorded stagnant employment while the industrially underdeveloped states 
showed a significant employment growth during this period. However, during post-liberalisation, 
all the regions experienced a marked acceleration in the employment while it was more 
pronounced in AGRIND or agriculture related industries in the Eastern, the Western and the 
Southern regions. The industrially developed states showed more pronounced acceleration in the 
employment in both AGRIND--agriculture related and NAGRIND--non-agriculture related 
industries during this period. The rise in output and increase in fixed capital in the organised 
manufacturing sector induced employment growth more in the Southern and Western regions 
during the post liberalisation decade. The industrial liberalisation accelerated employment 
growth in the organised manufacturing sector more in the industrially developed states such as 
West Bengal, Gujarat, Maharashtra, Karnataka and Tamil Nadu. However, some states like 
Bihar, Delhi and Punjab experienced deceleration in employment growth during the post 
liberalisation period.  
 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
The labour force in all developing economies consists of two broad sectors, the organised and 
unorganised sectors. In the organised sector, the labour productivity is likely to be high, incomes 
even in unskilled category are relatively high and conditions of work and services are protected 
by labour legislations and trade unions  
The major comparisons between these two sectors can be summed up as follows –  
1. The Market Structure: The large manufacturing firms in the formal, organised sector 
operate in markets where prices are controlled by few sellers, which are protected from 
 2
foreign competition by high tariffs. They sell products mainly to middle and upper 
income groups. On the other hand the unorganised sectors consist of a large number of 
small producers operating on narrow margins in highly competitive markets. The 
products are sold to low-income groups. 
2. Credit Facilities: The organised sector has greater access to cheap credit provided by 
various financial institutions while the unorganised sector often depends on the money-
lenders who charge a high rate of interest.  
3. Technology: The formal organised sector uses capital-intensive technologies and 
imported technology while the unorganised sector uses mainly labour intensive and 
indigenous technology. 
4. Role of Government: The organised sector has a privileged position as far as the 
Government is concerned because it has an easy access to and influence over 
Government machinery; it can build lobbies and pressurize the Government on an issue, 
while the unorganised has no political pull.  
5. Protection: Lastly, the organised sector is protected by various types of labour 
legislations and backed by strong unions. The unorganised sector is either not covered by 
labour legislation at all or is so scattered that the implementation of legislation is very 
inadequate or ineffective. There are hardly any unions in this sector to act as watch dogs.  
 
19.3 Employment Growth in Formal Organised Manufacturing 
During the 1980s, employment in the organised sector was virtually stagnant, which had 
substantially increased in the 1990s. Between 1980-81, and 1990-91, employment in organised 
manufacturing grew at the rate 0.53 percent per annum. In the next five years, 1990-91 to 1995-
96, the growth rate was much higher 4.03 percent per annum, comparing favourably with the 
growth rate achieved in the 1970s (about 3.8 percent per annum between 1970-71 and 1980-81). 
In the period 1990-91 to 1997-98, the growth rate of employment was 2.69 percent, well above 
the growth rate achieved in the 1980s and higher than the growth rate of the labour force.   
Effect of the Economic Reforms on the Formal Sector: 
 
The marked acceleration of employment growth according to some scholars in the formal sector, 
in organised activities, can be attributed to the process of major economic reforms that was 
initiated in India in 1991. It has been pointed out that the favourable effects in employment was 
 3
Page 4


 
Unit 19 
Formal Sector  
 
Contents 
 
19.1 Introduction 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
19.3 Employment Growth in Formal Organised Manufacturing  
19.4 Characteristics of Formal Sector Employment in the Post Reform Period 
19.5 Regional Variation in Organised Industrial Employment in India  
19.6 A Case Study of Andhra Pradesh:  
19.7 Conclusion 
19.8 Further Reading  
 
Learning Objectives 
 
• after studying this unit, you will be able to  
• compare between the formal/organized and the unorganized sectors 
• discuss the employment growth in formal/organized manufacturing. 
• describe the regional variation in organized industrial employment in India 
• discuss case study of Andhra Pradesh in the context of characterstics of the formal sector of 
employment 
 
19.1 Introduction 
 
The urban formal sector consists of the organised sector, and can be defined as the sector 
consisting of activities carried out by the corporate enterprises and the Government at the 
Central, State and Local levels, solely with the help of wage paid labour which in a great 
measure is unionised.  
 
Official statistics regarding the formal sector is available through data on the organised sector. 
This comprises of enterprises and information (e.g. statistical data) on their activities that are 
collected on a regular basis (e.g. on registered manufacturing units in the urban areas of India).  
 
 1
The manufacturing units are all manufacturing, processing, repair and maintenance services 
registered or not registered under the Factory Act 1948; and this pertains to the organised sector. 
That is, factories employing 10 or more (or less than 10) workers, and using power, or 
employing 20 or more (or less than 20 workers without power), in the reference year, belong to 
the registered manufacturing sector. Enterprises covered by the Annual Survey of Industries 
(ASI), Central Statistical Organisation, fall under the purview of organised employment of the 
formal sector. 
 
In India, employment was almost stagnant during the pre-liberalisation decade at the national 
level and experienced negative growth in the Eastern and the Western regions. The industrially 
developed states recorded stagnant employment while the industrially underdeveloped states 
showed a significant employment growth during this period. However, during post-liberalisation, 
all the regions experienced a marked acceleration in the employment while it was more 
pronounced in AGRIND or agriculture related industries in the Eastern, the Western and the 
Southern regions. The industrially developed states showed more pronounced acceleration in the 
employment in both AGRIND--agriculture related and NAGRIND--non-agriculture related 
industries during this period. The rise in output and increase in fixed capital in the organised 
manufacturing sector induced employment growth more in the Southern and Western regions 
during the post liberalisation decade. The industrial liberalisation accelerated employment 
growth in the organised manufacturing sector more in the industrially developed states such as 
West Bengal, Gujarat, Maharashtra, Karnataka and Tamil Nadu. However, some states like 
Bihar, Delhi and Punjab experienced deceleration in employment growth during the post 
liberalisation period.  
 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
The labour force in all developing economies consists of two broad sectors, the organised and 
unorganised sectors. In the organised sector, the labour productivity is likely to be high, incomes 
even in unskilled category are relatively high and conditions of work and services are protected 
by labour legislations and trade unions  
The major comparisons between these two sectors can be summed up as follows –  
1. The Market Structure: The large manufacturing firms in the formal, organised sector 
operate in markets where prices are controlled by few sellers, which are protected from 
 2
foreign competition by high tariffs. They sell products mainly to middle and upper 
income groups. On the other hand the unorganised sectors consist of a large number of 
small producers operating on narrow margins in highly competitive markets. The 
products are sold to low-income groups. 
2. Credit Facilities: The organised sector has greater access to cheap credit provided by 
various financial institutions while the unorganised sector often depends on the money-
lenders who charge a high rate of interest.  
3. Technology: The formal organised sector uses capital-intensive technologies and 
imported technology while the unorganised sector uses mainly labour intensive and 
indigenous technology. 
4. Role of Government: The organised sector has a privileged position as far as the 
Government is concerned because it has an easy access to and influence over 
Government machinery; it can build lobbies and pressurize the Government on an issue, 
while the unorganised has no political pull.  
5. Protection: Lastly, the organised sector is protected by various types of labour 
legislations and backed by strong unions. The unorganised sector is either not covered by 
labour legislation at all or is so scattered that the implementation of legislation is very 
inadequate or ineffective. There are hardly any unions in this sector to act as watch dogs.  
 
19.3 Employment Growth in Formal Organised Manufacturing 
During the 1980s, employment in the organised sector was virtually stagnant, which had 
substantially increased in the 1990s. Between 1980-81, and 1990-91, employment in organised 
manufacturing grew at the rate 0.53 percent per annum. In the next five years, 1990-91 to 1995-
96, the growth rate was much higher 4.03 percent per annum, comparing favourably with the 
growth rate achieved in the 1970s (about 3.8 percent per annum between 1970-71 and 1980-81). 
In the period 1990-91 to 1997-98, the growth rate of employment was 2.69 percent, well above 
the growth rate achieved in the 1980s and higher than the growth rate of the labour force.   
Effect of the Economic Reforms on the Formal Sector: 
 
The marked acceleration of employment growth according to some scholars in the formal sector, 
in organised activities, can be attributed to the process of major economic reforms that was 
initiated in India in 1991. It has been pointed out that the favourable effects in employment was 
 3
due to greater labour flexibility and increased trade orientation to changes in the structure of 
industries in favour of labour intensive industries and techniques of production (Singh1993, 
Papola 1994). 
 
On the other hand, it has been also pointed out by scholars that in some other ways the new 
economic policy is expected to have adverse effect on industrial employment. For instance, 
economic reforms have resulted in increased competition, improved access to foreign technology 
and imported capital goods. This has resulted in a drive by industrial firms towards the adoption 
of advanced technology, which is likely to lead to increasing capital intensity of production 
(Ghose1994). Also, as competition intensifies, industrial firms may try to save cost and become 
more competitive by cutting down on employment, particularly those firms (e.g. public sector 
units) that are characterised by overstaffing. Many scholars therefore are advocates of this 
pessimistic viewpoint of economic reforms on the formal sector (Mundle, 1992, 1993; 
Deshpande 1992; Bhattacharya and Mitra 1993; Mitra 1993; Agarwal and Goldar 1995; Kundu 
1997), and point out to the fact that the adverse effects may be so strong that they may outweigh 
the favourable effects of the economic reforms in the long run.  
 
19.4 Characteristics of Formal Sector Employment in the Post Reform 
Period 
1. Public Sector, Private Sector and Joint Sector Growth in Employment 
 
Table 1. Growth in Employment in Organised Industry, Private and Public Sectors 
 Employment (000) Growth Rate 
 (Percent per Annum) 
 1973-
74 
1980-
81 
1990-
91 
1997-
98 
1973-
80 
1980-
90 
1990-
97 
Public Sector 1365 2049 2323 2388 5.971 1.265 0.391 
Private and 
Joint Sector  
(including 
unspecified)  
4455 5666 5839 7538 3.495 0.302 3.715 
Aggregate 
ASI 
(including 
electricity) 
5820 7715 8163 9926 4.108 0.566 2.834 
Source: ASI 
 4
Page 5


 
Unit 19 
Formal Sector  
 
Contents 
 
19.1 Introduction 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
19.3 Employment Growth in Formal Organised Manufacturing  
19.4 Characteristics of Formal Sector Employment in the Post Reform Period 
19.5 Regional Variation in Organised Industrial Employment in India  
19.6 A Case Study of Andhra Pradesh:  
19.7 Conclusion 
19.8 Further Reading  
 
Learning Objectives 
 
• after studying this unit, you will be able to  
• compare between the formal/organized and the unorganized sectors 
• discuss the employment growth in formal/organized manufacturing. 
• describe the regional variation in organized industrial employment in India 
• discuss case study of Andhra Pradesh in the context of characterstics of the formal sector of 
employment 
 
19.1 Introduction 
 
The urban formal sector consists of the organised sector, and can be defined as the sector 
consisting of activities carried out by the corporate enterprises and the Government at the 
Central, State and Local levels, solely with the help of wage paid labour which in a great 
measure is unionised.  
 
Official statistics regarding the formal sector is available through data on the organised sector. 
This comprises of enterprises and information (e.g. statistical data) on their activities that are 
collected on a regular basis (e.g. on registered manufacturing units in the urban areas of India).  
 
 1
The manufacturing units are all manufacturing, processing, repair and maintenance services 
registered or not registered under the Factory Act 1948; and this pertains to the organised sector. 
That is, factories employing 10 or more (or less than 10) workers, and using power, or 
employing 20 or more (or less than 20 workers without power), in the reference year, belong to 
the registered manufacturing sector. Enterprises covered by the Annual Survey of Industries 
(ASI), Central Statistical Organisation, fall under the purview of organised employment of the 
formal sector. 
 
In India, employment was almost stagnant during the pre-liberalisation decade at the national 
level and experienced negative growth in the Eastern and the Western regions. The industrially 
developed states recorded stagnant employment while the industrially underdeveloped states 
showed a significant employment growth during this period. However, during post-liberalisation, 
all the regions experienced a marked acceleration in the employment while it was more 
pronounced in AGRIND or agriculture related industries in the Eastern, the Western and the 
Southern regions. The industrially developed states showed more pronounced acceleration in the 
employment in both AGRIND--agriculture related and NAGRIND--non-agriculture related 
industries during this period. The rise in output and increase in fixed capital in the organised 
manufacturing sector induced employment growth more in the Southern and Western regions 
during the post liberalisation decade. The industrial liberalisation accelerated employment 
growth in the organised manufacturing sector more in the industrially developed states such as 
West Bengal, Gujarat, Maharashtra, Karnataka and Tamil Nadu. However, some states like 
Bihar, Delhi and Punjab experienced deceleration in employment growth during the post 
liberalisation period.  
 
19.2 Comparison between Formal/Organised and Unorganised Sectors 
The labour force in all developing economies consists of two broad sectors, the organised and 
unorganised sectors. In the organised sector, the labour productivity is likely to be high, incomes 
even in unskilled category are relatively high and conditions of work and services are protected 
by labour legislations and trade unions  
The major comparisons between these two sectors can be summed up as follows –  
1. The Market Structure: The large manufacturing firms in the formal, organised sector 
operate in markets where prices are controlled by few sellers, which are protected from 
 2
foreign competition by high tariffs. They sell products mainly to middle and upper 
income groups. On the other hand the unorganised sectors consist of a large number of 
small producers operating on narrow margins in highly competitive markets. The 
products are sold to low-income groups. 
2. Credit Facilities: The organised sector has greater access to cheap credit provided by 
various financial institutions while the unorganised sector often depends on the money-
lenders who charge a high rate of interest.  
3. Technology: The formal organised sector uses capital-intensive technologies and 
imported technology while the unorganised sector uses mainly labour intensive and 
indigenous technology. 
4. Role of Government: The organised sector has a privileged position as far as the 
Government is concerned because it has an easy access to and influence over 
Government machinery; it can build lobbies and pressurize the Government on an issue, 
while the unorganised has no political pull.  
5. Protection: Lastly, the organised sector is protected by various types of labour 
legislations and backed by strong unions. The unorganised sector is either not covered by 
labour legislation at all or is so scattered that the implementation of legislation is very 
inadequate or ineffective. There are hardly any unions in this sector to act as watch dogs.  
 
19.3 Employment Growth in Formal Organised Manufacturing 
During the 1980s, employment in the organised sector was virtually stagnant, which had 
substantially increased in the 1990s. Between 1980-81, and 1990-91, employment in organised 
manufacturing grew at the rate 0.53 percent per annum. In the next five years, 1990-91 to 1995-
96, the growth rate was much higher 4.03 percent per annum, comparing favourably with the 
growth rate achieved in the 1970s (about 3.8 percent per annum between 1970-71 and 1980-81). 
In the period 1990-91 to 1997-98, the growth rate of employment was 2.69 percent, well above 
the growth rate achieved in the 1980s and higher than the growth rate of the labour force.   
Effect of the Economic Reforms on the Formal Sector: 
 
The marked acceleration of employment growth according to some scholars in the formal sector, 
in organised activities, can be attributed to the process of major economic reforms that was 
initiated in India in 1991. It has been pointed out that the favourable effects in employment was 
 3
due to greater labour flexibility and increased trade orientation to changes in the structure of 
industries in favour of labour intensive industries and techniques of production (Singh1993, 
Papola 1994). 
 
On the other hand, it has been also pointed out by scholars that in some other ways the new 
economic policy is expected to have adverse effect on industrial employment. For instance, 
economic reforms have resulted in increased competition, improved access to foreign technology 
and imported capital goods. This has resulted in a drive by industrial firms towards the adoption 
of advanced technology, which is likely to lead to increasing capital intensity of production 
(Ghose1994). Also, as competition intensifies, industrial firms may try to save cost and become 
more competitive by cutting down on employment, particularly those firms (e.g. public sector 
units) that are characterised by overstaffing. Many scholars therefore are advocates of this 
pessimistic viewpoint of economic reforms on the formal sector (Mundle, 1992, 1993; 
Deshpande 1992; Bhattacharya and Mitra 1993; Mitra 1993; Agarwal and Goldar 1995; Kundu 
1997), and point out to the fact that the adverse effects may be so strong that they may outweigh 
the favourable effects of the economic reforms in the long run.  
 
19.4 Characteristics of Formal Sector Employment in the Post Reform 
Period 
1. Public Sector, Private Sector and Joint Sector Growth in Employment 
 
Table 1. Growth in Employment in Organised Industry, Private and Public Sectors 
 Employment (000) Growth Rate 
 (Percent per Annum) 
 1973-
74 
1980-
81 
1990-
91 
1997-
98 
1973-
80 
1980-
90 
1990-
97 
Public Sector 1365 2049 2323 2388 5.971 1.265 0.391 
Private and 
Joint Sector  
(including 
unspecified)  
4455 5666 5839 7538 3.495 0.302 3.715 
Aggregate 
ASI 
(including 
electricity) 
5820 7715 8163 9926 4.108 0.566 2.834 
Source: ASI 
 4
The above table presents a comparison of employment growth rate between public sector and 
private sector (including joint sector) factories. It can be discerned from the above table that in 
the 1970’s employment grew rapidly in both the public and private sector factories. There was a 
sharp deceleration in employment growth in the 1980’s in both the public and private sector 
factories. In the 1990’s the growth rate of employment in the public sector factories has come 
down further. It was only 0.4 percent per annum between 1990-91 and 1997-98. By contrast, the 
growth rate of employment in private sector factories has recovered and surpassed the growth 
rate prevailing in the 1970’s with the consequence that almost the entire increase in employment 
in organised manufacturing that has taken place in the 1990’s can be accounted for by public 
sector factories.  
2. Distribution of Employment by Size Class of Factories 
Table 2. Distribution of Employment by Factory Size 
Distribution of Employment  (Percent) Growth Rate (Percent per 
Annum) 
Factory Size 
Class 
1973-74 1980-81 1990-91 1997-98 1973-80 1980-90 1990-97 
0-49 14.4 13.8 17.5 16.8 3.477 2.983 2.201 
50-99 8.2 9.0 10.8 13.1 5.502 2.416 5.686 
100-199 9.4 9.2 10.7 12.9 3.789 2.096 5.652 
200-499 13.1 12.1 13.5 19.0 2.934 1.673 7.979 
500-999 11.6 9.7 12.0 13.6 1.481 2.729 4.711 
1000-1999 12.8 13.7 10.1 9.4 5.124 -2.454 1.815 
2000-4999 16.7 15.9 9.5 10.0 3.381 -4.482 3.649 
5000+ 13.8 16.6 15.9 5.2 6.892 0.134 -12.438 
TOTAL 100.0 100.0 100.0 100.0 4.108 0.566 2.835 
Source: ASI 
 
The distribution of employment by size class of factories shows that there was a marked change 
in the size structure in the 1980s and more so in the 1990s. The size class 50-500 employment 
gained, while the size classes 2000-4999 and 5000+ lost heavily. Since the factories in the lower 
employment size classes are more labour intensive, these changes in size structure had a 
favourable effect on employment growth. The size class 5000+ is the most capital intensive and 
least labour intensive and the sharp decline in the relative share of this size class in the 1990s and 
the increase in the relative shares of the size classes 50-99, 100-199 and 200-499 must have 
made a significant contribution to employment growth in this period (Goldar, 2000).  
 
 5