Saturday, December 24, 2016

India "missing middle class" graph of the day

We had argued here that India suffers from a "missing middle class". More evidence comes from the ICE 360 survey (The whole Mint series on this is informative). Globally the middle class are overwhelmingly composed of salaried workforce. In India though, less than 20% of the entire workforce is composed of salaried employees. Take out the nearly 30 million public sectors employees, and the share drops to very low single digits!
This is a strong reminder of the fact that India needs more formal jobs. This, in turn, links up with the "missing middle" in the distribution of business enterprises. Jobs get created when firms start formal and grow into middle-sized entities. Unfortunately, India has millions of enterprises which start informal as gnomes and dwarfs and remain so. Filling the "missing middle" in firm distribution therefore appears to be the path to raise the "missing middle class"!

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