Unemployment

Squeeze on jobs

Print edition : April 26, 2019

At a job fair in Chinchwad, Maharashtra, on February 7. Photo: DANISH SIDDIQUI/REUTERS

Sweepers in New Delhi on March 22 as the child of one of them plays in the background. In urban areas, women from lower-income strata and socially depressed classes enter the workforce out of economic compulsions. Photo: R.V. Moorthy

The Oxfam India report on employment says jobs remain a huge challenge in India where half of the workforce depends on agriculturefor livelihood.

Employment, or the lack of it, has emerged as one of the most contentious issues in the general election this year. Most surveys show that the single biggest concern preoccupying the electorate, especially the youth, is unemployment. The very fact that the government introduced a quota for the economically weaker sections (EWS) in the general category in Central government jobs and educational institutions is a tacit admission of its abject failure to create gainful employment for the millions of educated youths.

A recent report by Oxfam India, Mind The Gap: The State of Employment in India in 2019, reiterates what most economists and trade unions have been saying for some time now—that jobless growth has been a phenomenon ever since the government embraced neoliberalism and that the share of wages in production compared with profit has been going down. Moreover, the report points to how workforce participation rates of women have been going down for economic and structural reasons, and how high economic growth has not translated into better lives for the masses.

The 222-page report discusses the phenomenon of deep wage inequality and its reasons, the link between inequality and rural employment, the falling female workforce participation, unpaid care work for women, labour law reforms, contract labour dynamics, forms of stigmatised employment in India, and the state of social security. The eight chapters focus on the lack of decent work and “state-sponsored inequalities”, which the report’s authors argue exacerbated problems of income and employment inequality in the country. The report strongly critiques the government’s policy approach to labour which, it says, is based on the premise that “informality” with regard to job and income security (informal self-employment) is not necessarily undesirable.

The labour policy of the government resonated in the Prime Minister’s rhetorical poser in a speech in January 2018 that if someone opened a pakoda shop in front of an office, would that not count as employment. This approach, says the report, summed up the government’s employment and labour policy which construes entrepreneurial self-employment devoid of any social security or gainful longevity as employment and thinks it should be factored in in the methods to estimate employment generation. This approach also means that the government has only a supportive role and that people can create their own employment if left to the market.

Wage inequality

Wage inequality has been one of the most stark features and outcomes of the lopsided sharing of the benefits of the new economic order. The worst to suffer have been the vast number of unskilled labour. The bulk of this section is in agriculture.

Certain social groups are found to have been affected adversely by the skewed distribution of the fruits of liberalisation. According to the 2007 report of the National Commission for the Enterprises in the Unorganised Sector, the majority of the poor and vulnerable belonged to the Scheduled Castes, the Scheduled Tribes and the Muslim community. The deprivation among these groups, the Oxfam report says, has either increased or remained stagnant.

Real wage growth, according to the Annual Industry Survey (2015), was stagnant at 1 per cent annual rate between 1983 and 2013. So even though productivity increased in manufacturing, says the report, it was accompanied with declining gains to workers. If in the early 1980s the share of wages was around 30 per cent and the share of profit 20 per cent, a remarkable turnaround took place in the 1990s. Today, the share of profit in net value added has crossed 50 per cent (and touched 60 per cent in 2007-08), with some fluctuation in the recession years, while the share of wages in “value added” plummeted to 10 per cent.

The ASI (2015) also revealed that until the 1980s, workers’ wages and emoluments to the managerial staff moved in tandem. By the early 1990s, the gap widened and by 2012, the last year for which data were available, managerial emoluments went up by 10 times or more while the corresponding increase in workers’ wages was less than four times. The gap has only continued to widen.

Decline in real wages

The denial of the rightful share in profits to the workforce happened alongside a sharp increase in the employment of informal workers in the organised sector, a trend which is growing. The Oxfam report says that in the beginning of the century, the share of contract workers to all workers was only 20 per cent, but within a decade it increased to more than one-third. The massive capital inflows post 1991, says the report, set off a domestic retail credit boom which, along with fiscal concessions, created an environment whereby better-off households indulged in more consumption. This enabled the growth of the gross domestic product (GDP). There has been no corresponding increase in consumption by the masses as real wages did not increase.

Heavy corporate tax exemptions, appropriation of land and natural resources and the lax implementation of regulations aided the capital accumulation process. Even though remunerations were better in the organised sector for regular workers, a huge gap existed in the wages of regular workers in the public and private sectors. Wage inequality was often determined by levels of education, gender, category of workers (agricultural and non-agricultural workers, organised and unorganised sectors) and social background.

The report analyses recent labour law reforms, notably changes in the Industrial Disputes Act, 1947 and the Contract Labour (Regulation and Abolition) Act, 1970, and the recently drafted Code on Wages, 2017. One of the things the draft code did was to decriminalise non-payment of wages and bonus. The code recommends the fixing of a national minimum wage by the Central government, but allows differentiated wage levels of the national wage for different States. The report notes that this will result in the lowering of wages by State governments in the race to attract investments. Almost all trade unions except the Bharatiya Mazdoor Sangh, which is affiliated to the Rashtriya Swayamsewak Sangh, have opposed the Code on Wages Bill.

There is no denying that wage levels have gone up to some extent over the years despite deep inequality in wage rates and payments. But in 2015, says the report, 82 per cent of men and 92 per cent of women were earning less than Rs.10,000 a month when the minimum wage, as recommended by the Seventh Central Pay Commission, is Rs.18,000. There are as many as 1,709 minimum wage rates currently in existence in India. Yet, the implementation of minimum wages itself has been poor as reported by the India Labour and Employment Report 2014 (based on National Sample Survey Office (NSSO) 2009-10 data). This report estimates that 73 per cent of rural farm, 37 per cent of rural non-farm and 54 per cent of urban non-farm casual workers received wages below the statutorily fixed minimum wages. Women workers, especially scheme-based workers appointed for delivering health and education programmes of the Central and State governments, were not paid minimum wages anywhere. In fact, they were not paid wages but incentive-based honorariums. Major companies were also found to be not paying minimum wages. A 2018 report by Oxfam, titled “Making Inclusive Growth”, found that in 2017, only 24 of the top 99 companies in India stated their commitment to ensuring payment of minimum wages even as six companies were committed to providing fair living wages.

Women and work

One of the interesting findings in the report, collated on the basis of various datasets, is about the pattern of female workforce participation in urban areas. It says that female workforce participation in urban areas was higher in smaller towns compared with larger cities. Contrary to the notion that the falling workforce participation of women was because either families had become well off or that women had moved on to getting an education, what appears is that rising incomes may have helped some women give up precarious casual employment or unpaid work in home enterprises in order to direct their focus on self-employment and regular salaried wage work.

The top ten industries in urban areas where women were found to be working was in education, retail trade, garment manufacturing, human health activities, households employing domestic personnel, other personal service activities, textiles, construction, tobacco and public administration and defence. The main reason for women to enter the workforce in urban areas, especially those who came from lower income strata and socially depressed classes, was economic. The reason that entire households of women worked as domestic helps for the urban upper middle classes was also rooted in the necessity to work in order to survive hostile and expensive urban environments. Every extra hand therefore counted as an extra income.

“If she does not work, what will she eat?” remarked a domestic help to this correspondent, referring to her newly-wed 14-year-old daughter-in-law in an urban setting in Delhi. “I can’t leave her alone at home. It is unsafe,” she added. The lack of corresponding opportunities of work for men also was a compelling factor for women to enter the workforce in urban India, an aspect that the report could have looked at adequately.

The safety of working women and of those women “looking for work” is something that is germane to any report seeking to understand workforce participation by women. There have been innumerable cases of women being lured for employment and then sexually assaulted and victimised further with blackmail in several urban centres.

While social norms may be a deterrent for women to enter the workforce, there is no doubt that more and more women are entering the same out of economic compulsion. For the well off, entering the labour market has always been a choice; for those living on the margins, those choices have never existed.

The caregiver industry, for example, and the online retail industry are relatively new “industries” employing thousands of people, most of whom probably do not even have a proper employment contract. Such industries are symbolic of the new forms of employment in the informal sector which lack a “workplace” and where thousands of the educated young are seeking work. In the caregiver industry, for instance, young people from indigent families got employed at very minimal rates with companies that, after a basic “training” of three days or so, would “place” them in households for taking care of the elderly. The application and the payment would be mostly in digital “online” form. The bulk of the amount paid by the contracting family went to the company, leaving only a fraction of the amount to the caregiver. There are no social security benefits or holidays for these caregivers whose situation is akin to that of daily wage labourers.

Limitations

One of the few limitations in the report pertains to its understanding of the present state of the trade union movement in India. One of the authors in the report says that the “flexibilisation” of labour—easy hire and fire of labour—has resulted in the weakening of the trade union movement. On the contrary, it has been seen that trade unions have campaigned against contract work, protested against changes in labour laws and the sale of profitable public sector units, and managed to mobilise successful joint struggles in recent years. They have been successful in the stalling of labour law reforms, especially the Code on Wages Bill.

The essence of the Oxfam report is that jobs remain a huge challenge in India even as half of the workforce depends on agriculture for livelihood. Rural labour markets, it says, continue to be dominated by unequal social and power relations. The crisis clearly is severe which no amount of rhetoric that passes off pakoda kiosks as a form of employment can conceal.

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