Migrant Labour and the Unorganised Sector in a Remittance Economy: Labour Supply, Informality and Regional Development in Kerala

Abstract

This study examines the role of inter-state migrant labour in the unorganised sector of Kerala, a state whose economy is shaped simultaneously by large-scale emigration to the Gulf and large-scale in-migration from other Indian states. It combines an integrative review of 28 scholarly and institutional sources with a descriptive analysis of secondary data drawn from the Kerala Migration Surveys, the Gulati Institute survey of domestic migrant labour, the Reserve Bank of India's state-level wage statistics, the Periodic Labour Force Survey and the Kerala Economic Review. The data show that emigration has stabilised at about 2.2 million persons while remittances have risen to Rs 2.17 lakh crore, or 23.2% of net state domestic product, in 2023; that rural daily wages in Kerala exceed the all-India average by 109 to 125% across agricultural, non-agricultural and construction work; that agriculture has fallen to about 8% of gross state value added while services approach two-thirds; and that a domestic migrant workforce estimated at 2.5 million in 2013, drawn chiefly from West Bengal, Bihar, Assam, Uttar Pradesh and Odisha and concentrated in construction, fills the manual-labour gap that these conditions create. Four themes are developed: the Kerala labour market paradox, the structural shift of employment out of agriculture, the position of migrant workers as the flexible labour force of the unorganised sector, and the welfare balance between income gains at origin and precarity at destination. The findings are organised into a Supply–Absorption–Welfare framework and five research propositions. The paper argues that migrant labour has become a structural rather than a transitional feature of Kerala's economy, that the unorganised sector is the channel through which it is absorbed, and that the state's development model now depends on the inclusion of workers it does not formally count. Implications are offered for employers, industry bodies and policymakers.