Soft Skills, Mediation, and Labor Market Efficiency in Informal Labor Markets

Informal labor markets dominate employment in many low- and middle-income countries and are often characterized by verbal contracts, weak enforcement of agreements, and limited access to dispute resolution. Our ongoing research on construction workers in India documents high rates of wage theft, poor workplace amenities, and frequent worker absenteeism driven by breakdowns in employment relationships. In exploratory fieldwork among construction and brick kiln workers, most workers reported having experienced wage fraud, while very few knew of any organization that could help them recover unpaid wages or resolve disputes.

This project develops and pilots two complementary interventions to improve employment relationships in informal labor markets. The first provides workers access to Labourline, a mediation service implemented by Work Fair & Free that helps workers resolve wage disputes and workplace conflicts. The second is a soft skills training module focused on workplace communication, documentation of work performed and payments received, and negotiation skills.

The pilot will refine intervention content, test implementation logistics, and generate the information needed to design a full randomized controlled trial. The anticipated full RCT will compare four groups: control, mediation access only, soft skills training only, and mediation plus training. Key outcomes include wage theft, delayed payment, worker earnings, absenteeism, job retention, dispute incidence, successful dispute resolution, and trust between workers and employers.

The project will generate policy-relevant evidence on whether worker capabilities and mediation institutions can improve labor market efficiency in informal employment settings, and whether the two approaches are complementary.