The Role of Caste and Ethnicity in Shaping India’s Working Class

India’s working class is not a homogeneous mass. It is a layered, diverse, and historically shaped social group – defined as much by caste, ethnicity, religion, and language as by economic position. Long before a person enters the labor market, their social background has already begun shaping what jobs they can access, what wages they can expect, and how they will be treated at the workplace. While industrialization and urbanization have blurred some traditional divisions, the imprint of these primordial identities – identities rooted in birth, community, and social hierarchy – remains a defining feature of the Indian working class.

Caste: the oldest organizer of Indian labor 🔗

The caste system has organized Indian social and economic life for centuries. It is not merely a religious or cultural institution – it is a mechanism that distributes opportunity. Research published in the Journal for Labour Market Research highlights that caste determines the distribution of human and physical capital, occupational choices, power, and social status. Entire groups have been locked into narrow occupational categories across generations, with little room for mobility.

The most marginalized in this hierarchy are the Scheduled Castes (SCs) – historically called “untouchables” and today often referred to as Dalits – along with Scheduled Tribes (STs). These groups face what scholars describe as “pre-labor market discrimination”: lower educational attainment, poorer health, and restricted social networks, all of which disadvantage them before they even look for work. Once in the labor market, they encounter further barriers. The same research confirms that SCs and STs are disproportionately found in low-paid, insecure, and dead-end employment, while the share of non-SC/ST workers in regular, salaried employment is substantially higher.

Caste discrimination in wages and employment 🔗

Caste-based wage discrimination is well-documented in both the public and private sectors. A study published in the Economic and Political Weekly found that discrimination in employment and wages was particularly severe in the private sector, where Scheduled Caste workers faced denial of equal access to jobs and lower daily wage rates. This discrimination, compounded across employment, wages, and occupational segregation, pushes SC workers into chronic poverty. Even those who manage to enter the labor market are often confined to low-earning jobs in the informal sector.

What makes caste discrimination especially hard to break is how deeply it has shaped social networks. In India, caste networks operate as referral systems – employers tend to hire people they know or who are recommended by trusted contacts, and those contacts overwhelmingly belong to the same social group. This nepotism effectively keeps lower-caste workers out of better-paying roles, regardless of their qualifications or skills.

The psychological cost of caste identity at work 🔗

Caste shapes not only employers’ decisions but workers’ own behavior. A field experiment studied by the American Economic Review found that many Indian workers were willing to forgo significant wages to avoid tasks associated with a caste lower than their own. In the experiment, nearly half of participants were willing to give up ten times their daily wage – roughly a month’s income – to avoid spending just ten minutes on tasks not matched to their caste identity. This reveals how deeply caste norms are internalized, shaping labor supply decisions in ways that go far beyond employer discrimination alone.

Ethnicity, language, and the migrant worker 🔗

India’s ethnic and regional diversity adds another layer of complexity to its working class. The country has over 400 million internal migrant workers who form the backbone of its informal economy. Research from the London School of Economics observes that a migrant worker’s identity in India is shaped by an intersection of caste, ethnicity, language, and network capital – making their position in the labor market exceptionally complex. Workers migrate from states like Bihar, Uttar Pradesh, and Odisha to industrial centers such as Delhi, Mumbai, and Bengaluru, often entering the lowest rungs of the labor market.

At destination cities, migrants frequently face discrimination from local populations who perceive them as competitors. Language barriers are particularly significant – workers who do not speak the local language are relegated to menial roles with little job security or legal protection. Studies on migrant wage differentials confirm that low-skill migrants are discriminated against at their destinations and paid lower wages than comparable non-migrant workers in the informal sector. They are also far less likely to be covered by social security nets and are routinely excluded from labor unions, leaving them with little bargaining power.

Segmentation along ethnic and regional lines 🔗

Research on labor market inequality in India shows that seasonal and circular migrant workers – who constitute a growing portion of informally employed workers – are segmented along lines of caste, sex, ethnicity, language, and region. Poor and lower-caste workers form a disproportionately large share of this group, filling the lowest-paid and most hazardous positions on construction sites, in brick kilns, and in factories. Academic work published in Work, Employment and Society confirms that social relations of gender, caste, ethnicity, and religion intersect to reinforce existing inequalities both in the labor market and at the workplace – meaning these identities do not act in isolation but compound each other.

Religion as a barrier to formal employment 🔗

Religious identity – particularly being Muslim – significantly shapes access to formal-sector employment in India. Muslims constitute nearly 14% of India’s population, yet Al Jazeera’s investigation into hiring bias, drawing on the Sachar Committee Report, found that fewer than 8% of Muslims were employed in the formal sector, compared to a national average of 21%. This gap is not merely a result of educational disadvantage – it reflects active discrimination in hiring.

Oxfam India’s Discrimination Report 2022 found that discrimination against Muslims in the labor market rose from 59.3% in 2004-05 to 68.3% in 2019-20 – an increase of 9 percentage points over 16 years. Only 15.6% of urban Muslim workers held regular salaried employment, compared to 23.3% of non-Muslims. Excluded from the formal sector, urban Muslims disproportionately rely on self-employment – research published in PMC notes that Muslims are often concentrated in self-employment activities that dominant-caste Hindus and OBCs have rejected as low-paying or low-status, effectively creating a “ghettoised economy.”

Religion-based wage gaps 🔗

Analysis of National Sample Survey data finds that wage differentials between Hindus and Muslims are high in both the formal and informal sectors of the regular labor market. A longitudinal study tracking Hindu-Muslim wage gaps from 1983 to 2011-12 found that the gap has increased over time and is especially pronounced at the higher end of the wage distribution – evidence of a “glass ceiling” effect – and more severe in urban areas than rural ones.

Muslim women face a double burden. A study by the Led By Foundation conducted over 10 months found a net discrimination rate of 47.1% against Muslim women in entry-level job applications, even when they were equally qualified as Hindu candidates. Only 21.6% of Muslim women in urban areas hold regular employment, compared to 40.4% of Hindu women and 60.7% of Christian women. Of the Muslim women who do work, around nine in ten are employed in the informal economy as craftswomen, tailors, weavers, or domestic workers.

Social dynamics within the working class 🔗

The diversity of social backgrounds within India’s working class does not only structure entry into the labor market – it shapes everyday workplace dynamics. Caste, ethnic, and religious identities influence who gets promoted, who is trusted with supervisory roles, how disputes are resolved, and which groups form cohesive social networks. Trade unions have historically served as a counterforce to these divisions, uniting workers across social lines. However, their effectiveness has been limited by the very identities they seek to overcome. Caste and regional loyalties often fragment union politics, weakening collective bargaining and enabling management to exploit social divisions among workers.

In some industries, recruitment itself is organized along social lines. Contractors and middlemen often bring workers from their own caste or regional communities, reinforcing occupational segregation from the point of entry. IZA Journal research on India’s urban labor market notes that formal-sector employers use caste and religion as signals of productivity – a form of statistical discrimination where, given two equally educated candidates, they prefer a higher-caste Hindu over a lower-caste Hindu or a Muslim. This employer behavior translates directly into occupational segregation and wage inequality.

Change and continuity: urbanization and shifting identities 🔗

Urbanization and the expansion of modern industry have introduced some erosion of rigid social hierarchies. In cities, workers from diverse backgrounds interact daily, and younger generations have more exposure to workplaces and peer groups that cut across caste and community lines. Scholarly work on Indian working lives notes that India’s economy has transitioned significantly since liberalization in 1991, with growth in manufacturing and services creating spaces where social origin is less overtly enforced than in traditional rural settings.

Yet this change is partial and uneven. The informal economy – which accounts for over 92% of India’s workforce – continues to mirror traditional social hierarchies. Caste-based networks remain the primary channel for job referrals in many industries. Language and ethnic identity continue to determine where migrant workers settle and what work they find. And religious discrimination has not diminished – it has, in some respects, intensified. The persistence of informality ensures that the legal protections that formally exist against caste and religious discrimination rarely reach the workers who need them most.

Policy and the limits of formal protections 🔗

India’s Constitution provides robust protections against caste discrimination and untouchability, and the reservation system – the world’s most comprehensive affirmative action program – has improved educational and public-sector employment outcomes for SCs and STs. Legal scholars at OnLabor note that these constitutional protections have been in place since 1950, yet present-day poverty rates, educational gaps, and labor market exclusions reflect how entrenched caste remains in Indian society. The private sector, which drives most employment growth, operates largely outside reservation policies.

For religious minorities, no comparable structural protections exist in private-sector hiring. The recommendations of the Sachar Committee, submitted in 2006, highlighted the severe underrepresentation of Muslims across public institutions, banks, and universities – findings that have seen limited policy follow-through. For migrants, the Code on Social Security, 2020 expanded definitions to include informal workers and created social security funds for unorganized, gig, and platform workers – a significant step, though enforcement remains a challenge.

The broader challenge is that caste, ethnicity, religion, and language do not function as separate forces – they intersect and compound one another. A Dalit Muslim migrant woman from Bihar faces a qualitatively different, and far more severe, set of labor market barriers than any of those identities would produce in isolation. Addressing the social background of India’s working class requires policies that are sensitive to these intersections, not just to any single axis of disadvantage.

What do you think? If caste-based labor networks and religious identity continue to shape who gets hired and at what wage even in modern Indian cities, can urbanization and economic growth alone reduce these inequalities – or do they require direct legal and institutional intervention? And given that the informal sector employs over 90% of India’s workforce, how effective can formal anti-discrimination laws ever be in practice?

References

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