Labor Market Flexibility & Trajectories of Development : Lessons from Brazil, India & China

In China, labor policy first diluted employment security rights to facilitate re-allocation of labor to the private sector. When new labor problems emerged, policy shifted to reregulate the labor market. Brazil's success in achieving economic growth and social progress simultaneously is unparalleled: informality, income inequality and unemployment decreased. India needs macro-level flexibility in re-allocating labor from informal to formal work, from rural to urban areas, and from the unskilled to the skilled. Micro-level flexibility through termination of employment must be coupled with stronger social security programs for adequate severance pay and re-training for other employment and also stronger protection for workers in the informal sector.