India has over 12 million retail stores. Dhaka, the Bangladeshi capital has over 400,000 rickshaws. How are these two facts related? These numbers are a symbol of an inherent malice in the system which is the lack of good employment opportunities in these two countries for the unskilled. Consider the Indian example in this, why does the shop owner put up his "dukaan"? Because mostly, he has tried his hand at education and the employment exchange and has failed to get the results. So with no other option left open to him, he decides to raise whatever limited capital he can afford and sets up a small shop. Unfortunately, there are many, many more like him. The net result - a huge number of dilapidated, poor quality retail stores which are an eyesore for organised urban development and hardly generate enough returns on their meagre investments. Such employment opportunities are also highly inefficient ways to utilise labour.
And the reason for this inefficient use of both labour and capital is redundant, "labour-friendly" labour laws. In India, you can hire but you just cant fire. As a result, they simply dont hire. Most business units try and stay below the legal limits of 20 employees beyond which labour laws become applicable for the firm. As a result, not only do the employees suffer, even the enterprenuers do since they are denied the benefits of economies of scale.
Now, given that there are so many of these dukaan wallas - none of them manage to make any decent sums of money - hence the need to cut corners - hire children, not pay electricity bills, flout norms etc etc. See how its all related?
