Nos. 70 & 71, April 2018

Nos. 70 & 71 (April 2018)
India's Working Class and its Prospects

India's Working Class and its Prospects

VII. The reserve army of labour

The unemployed
The reserve army of labour in India is very large. The official figure of open unemployment is a small number: the NSS puts it at 10.6 million in 2011-12, or just 2.2 per cent of the labour force; ‘labour force’ is defined as those either working or actively seeking work.28

However, this hardly captures the real scale of unemployment. Many persons of working age (15-59 years) do not seek work. Some are students, or attending ‘domestic duties’, and hence may not want employment even if it were available. However, there are large numbers of the working age group who do not seek employment knowing that there are no opportunities; they are excluded from the official definition of ‘labour force, and hence would not be counted as unemployed. As a result, just 58.3 per cent of the working age group was counted in the labour force, even using the most generous measure – ‘usual (principal and subsidiary) status (UPSS)’ (a person who works even 30 days in a year is included in this measure of the labour force). Thus 339 million persons in the 15-59 age group were not counted in the labour force, and hence are not counted among the unemployed.

Partial employment and unorganised sector employment
But of course the reserve army is not restricted to the openly unemployed: “The relative surplus population exists in all kinds of forms. Every worker belongs to it during the time when he is only partially employed or wholly unemployed.” (Marx 1990, 794) One way of estimating the number of those who are employed for only part of the year is to look at the gap between two different official measures of employment: ‘UPSS’ employment (those who worked at least 30 days in the year), and those who had work on the day of the survey (Current Daily Status). The difference comes to 58.3 million persons, that is, 12.3 per cent of those considered employed by UPSS measure.

As we mentioned earlier, Marx’s reserve army is composed of:

-- the ‘floating’ reserve (those in and out of industry according to the swings of the business cycle and the increase in productivity with new technology);

-- the ‘latent’ reserve (those being rendered unemployed by the advance of capitalism in agriculture, and available for jobs in industry);

-- and the ‘stagnant’ reserve (those employed in informal industry at lower wages, longer hours).29

If we leave aside the ‘floating reserve’, the reserve army in India can be found mainly in three spheres: among those who are ‘partially employed’ in agriculture; those employed in unorganised sector industry, trade, and other services; and the large section of women who are not in wage employment. None of these sections is idle, but their ‘productivity’ is low and their money incomes are low (or even nil in the case of women who are not in the labour market), even as they are active in subsistence work and other labour of reproduction. As can be seen from Table 2, total employment in the unorganised sector accounts for more than 83 per cent of total employment.

Specific form of  reserve army in India
The form of the reserve army in India is somewhat different from the reserve army described in Capital. Marx describes the reserve army as created by the capitalist accumulation process itself, as it uproots peasants from agriculture and retrenches workers from industry. This is to some extent reflected in India in recent years, when we have seen a steep rise in the corporate grabbing of peasant land, and the consequent displacement of peasants.

However, the other, longstanding, elements of the reserve army in India have not resulted from a capitalist accumulation process of this type, but from the stunted and distorted pattern of development imposed by imperialism. The sectors in which the vast majority of the working people are to be found are marked by the meagre, or even negative, rate of capital accumulation. Instead of generating a surplus, which is then re-deployed in productivity-enhancing investment, thereby bringing about ‘expanded reproduction’, these sectors have to struggle to achieve ‘simple reproduction.’ Thereby, employment in modern industry has remained at low levels, absorbing only a small fraction of the workforce. For lack of alternative employment, vast numbers have remained crowded in agriculture and informal industry – often for them a ‘refuge’ employment.

This reserve army in India is very large compared to the contingent of workers employed in modern industry. It keeps down wages by providing a stream of cheap labour power whenever required, enabling employers to replace their existing workers with ease. When necessary, employers actively tap these contingents of the reserve army, through the institution of the labour contractor. The reserve army employed in the unorganised sector also supplies, at very low margins, some cheap consumer goods and services consumed by other workers and employees, thereby indirectly making it possible for employers to keep down money wages.

Form of operation of reserve army in India
However, the reserve army in India does not come into operation in the same way as in a developed capitalist economy, since it is constituted differently. There are a number of barriers preventing its smooth functioning. (i) Access to education differs according to caste, community and gender, and poorer families cannot afford to keep their children in school for long. So the pool of those available for skilled work is restricted. (According to the NSS 2011-12, less than 29 per cent of the workforce has secondary or higher schooling.) (ii) On the other hand, upper caste workers resist taking up certain types of manual labour, particularly work associated with lower castes. (iii) Women, burdened with housework, tend to enter the labour force in larger numbers in situations of distress such as drought (precisely when employment is scarcer); when the household’s economic situation slightly improves, women tend to exit the labour force, focussing on household work and subsistence (non-market) activities. (Mehrotra 2015) (iv) The poorest workers in rural areas tend to be less mobile than slightly better-off workers. If the poorest do migrate, they tend to migrate seasonally, rather than for the long term. Urban areas are unfriendly to poor migrants from the rural areas, particularly in the matter of housing. (v) This makes migrants from the rural areas all the more dependent on networks of persons from their village and caste/community, which in turn means that they get concentrated in particular types of work, on a caste/community basis.

For all these reasons, despite the large size of the reserve army, which depresses the general level of wages, it operates in separate contingents, divided by caste, community, region, and gender, and the mobility of some of these contingents is limited. Thus employers periodically do find the market is tight for one or the other type of labour power. This is where labour contractors, with ties to specific rural areas and specific castes/communities, play a critical role in mobilising the reserve army as it is constituted in India.


28. Other data sources suggest a much larger scale of unemployment than reflected in the official figures. According to a periodic survey carried out since January 2016 by the Centre for Monitoring Indian Economy (, the number of persons unemployed and actively seeking work was 38 million in March 2016. Further, CMIE found that another 40 million persons were unemployed and willing to work, but not actively seeking a job, possibly because they were discouraged by the non-availability of work. The CMIE takes the two figures together to obtain what it calls the ‘greater unemployment rate’, which it puts at 17 per cent in 2016. CMIE uses different definitions from the NSS and the two sets of data are not directly comparable. (back)

29. Apart from these three sections, there are also paupers, of whom we of course no shortage in India. (back)



NEXT: Different forms of capital in India, reflected in the working class


All material © copyright 2018 by Research Unit for Political Economy