in states with flexible labour laws. States with rigid labour laws have led local entrepreneurs to prefer casual workers or contract workers with finite employment time period; in essence, more rigid and inflexible labour law states see increased informal employment. A 2007 article in The Economist finds India to have the most restrictive labour laws in any major economy of the world. India's private sector, including its organised manufacturing sector, employs about 10 million Indians. Manufacturing firms need to obtain government permission to lay off workers from factories, and this permission is usually denied if they have more than 100 staff. This partly explains why most Indian firms are small: 87 percent of employment in India's organised manufacturing sector is in firms with fewer than ten employees, compared with only 5 percent in China. Small Indian firms cannot reap economies of scale or exploit the latest technology, and so suffer from lower productivity than if they scaled up, employed more people and were much bigger companies. This cripples Indian firms ability to rapidly expand or adjust with changes in global economy, both during early opportunity phase and during economic change. One exception is white collar jobs, where companies have stronger lobbies and employees are not unionised, so they have managed to operate freely with a much larger workforce and have been able to lay off a significant portion of their workforce without contravening labour laws. In almost all cases white collar employees are forced to resign under threat of negative recommendations and black-listing with industry associations. Djankov and Ramalho have reviewed a number of labour studies on developing countries including India. They find, consistent with above criticisms, that countries with rigid employment laws have larger unorganised sectors and higher unemployment, especially among young workers. They also report the rigid, inflexible labour laws are strongly related to low per capita income. International comparison of Indian labour laws The table below contrasts the labour laws of India to those of China and United States, as on 2011. Further reading Comprehensive Social Security for the Indian Unorganised Sector Comments on Social Security Code, 2020 Self-employed Migrant Workers in the Unorganised Sector India has a new code to simplify law on minimum wages – but it doesn't give workers any real benefit Designing a Universal and Comprehensive Social Security Floor for Informal Sector Workers See also Child labour in India Economy of India Industrial