Introduction

During the last 20 years, the Indian economy has grown dramatically, at around 6% per year in real terms in the 1990s, rising to more than 7% at the start of the 21st century. Over this period India became the second fastest-growing large economy, second only to China (Dreze and Sen, 2014). As we try to understand the direction and magnitude of changes taking place in India in relation to key variables such as labour force, employment and income it is important to look at some historical antecedents of the experience of western industrial economies during the 19th century. Labour market analysts have long argued that long-term economic growth sets in motion profound structural changes in the size and composition of the economy and concomitantly that of the labour force. The changes that unfolded in western industrial economies since the onset of the Industrial Revolution, studied at length by scholars in the tradition of Simon Kuznets (1972) and Angus Maddison (2003), provide fascinating insights into the manner in which history might repeat itself in developing countries that are currently at the threshold of experiencing major structural changes. This will help us to place the development of the Indian labour market in a historical perspective and perhaps also equip us to formulate labour market policies appropriate to the time and space in which we find ourselves. To do this, we need to start with a brief review of changes that have impacted on the size and composition of the labour force in the industrial economies during the 19th and 20th centuries. This is crucial as it was also a period of demographic explosion and a pronounced increase in the size of the labour force. These developments occurred along with significant increases in the productivity of labour and a conspicuous shift of population and workforce from agriculture towards more productive sectors of the economy.

The most important consequence of rising productivity levels was that it set the stage for radical improvements in the living standards of people in the industrial economies. Associated with this rise in living standards was yet another unparalleled phenomenon, a reduction in the drudgery of work, which can be seen in the evidence of a consistent decline in the number of hours worked per person per year.