Tackling Inequalities in Brazil, China, India and South Africa

The Role of Labour Market and Social Policies

image of Tackling Inequalities in Brazil, China, India and South Africa

Greater integration into the world economy and important policy reforms have resulted in Brazil, China, India and South Africa becoming major actors in the globalisation process, with impressive results in terms of economic growth, social development and poverty reduction. But the benefits of stronger growth have not always been shared equally and income inequality has remained at very high levels. 

Existing evidence suggests that the evolution of the distribution of income in these four countries is the result of many forces. These include demographic change, migration, unequal access to education, informal employment, existing regulations and their enforcement, social norms and cultural legacy. These forces are often interlinked and reinforce one another. However, as employment is the primary source of income for most households, understanding the impact of labour market outcomes is crucial.  

This book focuses on the role of growth and employment/unemployment developments in explaining recent income inequality trends in Brazil, China, India and South Africa, and discusses the roles played by labour market and social policies in both shaping and addressing these inequalities. It includes the papers presented at the joint OECD and European Union High-Level Conference on Inequalities in Emerging Economies held in Paris in May 2010. This work is part of OECD’s ongoing dialogue and co-operation with non-member economies around the world.



Decreasing poverty and increasing inequality in India

India’s GDP accelerated in the post-reform period, but it was accompanied by rising inequality. This growth in inequality can be partly traced to the peculiar sectoral composition of India’s growth, with the tertiary sector taking the lead in terms of both employment and value added. This rather unique feature of India’s growth can in turn be traced to the dualistic nature of India’s modern (non-household) manufacturing sector – with the two strong modes of very small-sized firms (fewer than ten workers) and very large firms (500 or more workers). The dual structure of manufacturing is partly caused by the content and implementation of labour laws, but other factors connected with education, infrastructure and industrial policies are equally, if not more, important. The resultant concentration of employment growth in the large informal sector has left policy makers struggling to build adequate systems of social protection and assistance which extend benefits to workers in this sector as well as to the formal sector of the labour market. These programmes have been enacted in various fronts, but have still not been implemented adequately.


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