Labour and liberalisation

Published : Sep 12, 2003 00:00 IST

On the growing vulnerability of the working class and the general decline in employment generation since the advent of economic liberalisation, in the context of the crushing of a government employees' strike in Tamil Nadu and a Supreme Court Bench's remarks on the right to strike work.

A WELL-REGARDED doctrine in political economy holds that the market process possesses few of the inherent mysteries and magic ascribed to it. It has no means to establish social harmony and would indeed only exacerbate tensions and create unbridgeable divisions, were it not for more mundane processes of countervailing power. Every organised force is fettered in the pursuit of its own interests by the exercise of a countervailing power by some other group within society. A rough social harmony is established in the mutual play of these diverse interests, sometimes conflicting, sometimes congruent.

To work in a reasonably equitable manner, the process requires that all the liberal principles of organising and pressing one's interests be respected and protected by law. The impairment of basic democratic rights and entitlements of any organised force would skew the social contract and tilt the balance of economic welfare.

The Tamil Nadu administration's pre-emptive decision to crush a strike by teachers and government employees, using the provisions of a draconian law made harsher by post facto amendment through ordinance, was a blow aimed at the foundations of the liberal order. The subsequent Supreme Court decision upholding the dubious sequence of decisions and extinguishing the right to strike is a still more lethal setback. Asked to adjudicate on the merits of one particular strike and the Tamil Nadu government's ruthless response of mass arrests and summary dismissals, the Supreme Court sought to fashion a system of reliefs that would provide the State government a face-saving exit. In the bargain, the two-member Bench of the court issued an extraordinary ex cathedra denunciation of the right to strike. Effectively, the ruling handed down by Justices M.B. Shah and A.R. Lakshmanan turns the clock back on the enlightened jurisprudence evolved since the 1960s, upholding the right to collective bargaining and industrial action as a basic democratic entitlement.

Chief Minister Jayalalithaa's All India Anna Dravida Munnetra Kazhagam (AIADMK) administration in Tamil Nadu invoked a rather simple argument as it fashioned its strategy of breaking the threatened strike - that a minority of the total workforce could not be allowed to hold the people of the State to ransom. This strategy sought to recruit the frustration of the unemployed and the unorganised in fighting off the struggles of the organised. Using the primitive retaliatory principles that would have shamed the most hard-hearted sweat-shop owner, it crushed organised worker resistance to government fiat by calling into the equation those who in the normal course remain marginal to the processes of market competition.

The Tamil Nadu government has fashioned a creative response to India's crisis of employment, which has begun to loom ever larger since liberalisation and globalisation became the reigning mantras in the early-1990s. Private employers have often used the vast but inchoate power of the unorganised to demolish the strength of labour unions. And in counselling a symbolic retreat from the Tamil Nadu government's aggressive tactics while quashing the organised working class' hard-won right to strike, the Supreme Court has legitimised this regression to less enlightened times. The power of organised workers is not to be engaged in dialogue, but crushed through the invocation of police power. Segments of the workforce that have the nominal protection of organisation and the law are to be reduced to the desperation of those without such recourse.

IT is impossible to separate this cynical strategy and its legitimation by the Supreme Court from the context of the liberalisation decade, which has converted the employment scenario into a virtual disaster area. The figures are uncontestable, since they have been officially endorsed. It is only the lunatic fringe of market zealots who have sought to put a gloss on the dawning reality of a crisis of employment by putting out the thesis that official figures have an unconscious bias towards pessimism.

A Special Group on Employment Opportunities constituted by the Planning Commission reported in May 2002 that the rate of employment growth had declined from an annual average of 2.7 per cent in the period between 1983 and 1993-94 to 1.07 per cent in the period between 1993-94 and1999-2000. This happened despite a significant acceleration in the recorded rate of economic growth, from an annual average of 5.2 per cent in the earlier period to 6.7 per cent. The unemployed population had increased as a result of this conjunction of factors, from 20.13 million to 26.58 million.

Since the late 1970s, a relentless process of casualisation of employment has been under way. In 1983, the "usual status" of 31.5 per cent of the workers was recorded as "casual". In comparison, 7.5 per cent were salaried, and a substantial 61 per cent self-employed. The latest round of the National Sample Survey records that the number of casual workers on the "usual status" definition had increased in 1999-2000 to 37.3 per cent of the total. While salaried workers have fallen in proportion to 6.7 per cent, the real increase in casualisation has come at the expense of the self-employed category, which has fallen to 56 per cent.

The decline in the already modest contribution of the organised sector points to the same trend of a rapid deterioration in the quality of employment. In 1990, the total employment in the organised sector was 26.35 million, with the public sector accounting for over 71 per cent of the total. As the decade wore on, organised employment increased marginally, peaking in 1997. There has since been a decline in both public and private employment in the organised sector. The most recent figure available for 2001 puts the total at 27.79 million, of which just under 69 per cent is in the public sector.

Wages and salaries in the organised sector have, expectedly, been fairly buoyant through the 1990s. In 1990-91, the Central government set aside Rs.12,606 crores as wages and salaries for its general administrative departments. The sum in 2001-02 had reached Rs.36,669 crores - an increase of almost three fold. But the argument that government employment has been more than adequately compensated for inflation does not stand scrutiny. The consumer price index for urban non-manual employees increased in this same interval by over 2.4 times. If government servants were to be compensated for inflation, the total wage bill in 2001-02 would have stood at just over Rs.30,000 crores, only marginally below the actual figure. Obviously, some other factors have to be invoked to account for the massive negative savings - estimated in 2001-02 at Rs.75,000 crores on the current account of government administration - that have precipitated a serious fiscal crisis.

Roughly the same parameters are at work in the government's departmental commercial undertakings and central public sector units. Employee compensation has fractionally been ahead of inflation, but nowhere near as generous as to account for the torrent of red ink that has been unleashed in government accounts.

As far back as 1988, a committee of the Planning Commission had warned that "high-wage public employment could well limit (the) ability to sustain a more broad-based programme for employment generation and poverty alleviation". That argument has lost none of its appeal with the passage of time and has evidently been deployed with great efficacy and populist impact by Jayalalithaa. But it is really debatable from the conduct of economic policy since the 1990s that any savings in the government's wage bill would go towards employment generating investment, and not be squandered in lavish and ultimately unproductive tax breaks for the rich.

A further point that needs to be factored in is the indirect employment benefit of the organised sector. Electricity, water supply, transport and other such infrastructure sectors may absorb only modest quantities of labour, but in their linkages with other sectors could generate massive stimuli for employment. The drop in organised sector employment and the growing casualisation of labour is then an index of a general failure of policy since the 1990s - not cause but consequence.

THE situation at the level of the States is even more alarming. Of the total budgetary outlays by State governments, over 21 per cent goes towards the highly employment intensive and crucial sectors of education and healthcare. Although the State governments have made a more serious taxation effort than the Centre through the 1990s, their fiscal situation continues to be under strain, placing an unsupportable strain upon even essential welfare sectors. The decline of government employment since the 1990s and the modest increase in earnings really compel a re-examination of the facile arguments that the strike-breakers have sought recourse to. It brings to the foreground the implicit authoritarian logic of the recent Supreme Court judgment: that security of employment is often a disincentive to accountable and productive work. And if the central cause of the crisis of employment, which is the stagnation of investment in agriculture, were to be taken into account, then the cure would seem to be more rather than less organised sector employment. An increase in outlays and employment in irrigation, power supply and rural extension programmes, for instance - which are all typically organised sector activities - could well be the required stimulus for a generalised growth of employment. When an intensified tax effort and a rapid increase in public investment is called for, economic policy since the 1990s has focussed on escalating tax concessions and sharp cutbacks in public spending.

Together with the rapid casualisation of labour, there is increasing evidence of growing gender disparities and the persistence of the scourge of child labour. The female work participation rate according to the 2001 Census was 25.6 per cent - a rather moderate increase from the 22.3 per cent recorded in 1991. Much of this employment is in the rural sector, in situations of distress and compulsion rather than choice. Similarly, the number of child labourers in the country, according to the NSS 1999-2000 survey, is over 10 million.

The official response to this gathering social crisis has been to make a virtue of its grossest abuses. A policy of Special Economic Zones introduced in 2000 talks of creating enclaves of economic activity in certain parts of the country, isolated from their surroundings and exempt from national labour laws. With Union Budgets having ceased to be statements of fiscal policy and encroaching increasingly into the domain of industrial and labour policy, the Finance Minister in 1999 proposed the lowering of the threshold of employment for formal notification of industrial closure under the Industrial Disputes Act. Neither change has yet been enacted because political scruples intervened at some stage in the march of cynicism. But the de facto empowerment of organised business at the expense of labour has been a fact on the ground in the decade of liberalisation. The most recent Supreme Court ruling effectively underlines this process, giving it the stamp of constitutional legitimacy.

There is perhaps no denying that the issue of democratic accountability for government servants is still an open debate. Organised trade unions, it has been argued, have for much of the last two decades been concerned with sectional and sectoral demands, rather than broader issues of political rights and entitlements. This has compounded the effects of the modest size of the organised labour force - in relation to the country's total working population - and engendered a degree of isolation from broader political currents. But with the crisis of employment now threatening all and the judicially sanctioned response being to reduce all workers to the same common denominator of disorganisation and insecurity, there are new possibilities for democratic struggle opening up.

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