All work and no wage

 Demands for respectable academic contracts with adequate living wage and social security are not surprising

Underpaid scientific labour has been systematically justified, if not internalised, by the very intellectual community whose standards of living and passion for building a science-conscious society are being invisibly compromised. The status quo seems to be challenged by the recent academic workers’ strike at the very core of Western capitalist nations, the United States of America and the United Kingdom, where cost-cutting in the academia has been institutionalised in the name of market competency in scientific endeavours. Around 48,000 academic workers from the University of California went on strike demanding full-time wages and academic benefits (picture, top); about 70,000 academic workers, covering 150 universities across the UK, took part in the university strike (picture, bottom).

Demands for respectable academic contracts with adequate living wage and social security are not surprising. Numerous underpaid academic employees are burdened with the rising costs of living and pre-existing debts. Many of them are now realising that the university system has forced them into indebtedness by encouraging the marketisation of education and the delegitimisation of rightful, free college education.

Hypothetically speaking, if the cost-of-living crisis subsides by short-run economic management, should university employees forget the demands for better academic pay and social security benefits for their junior peers? No, they should not. Evidence suggests that decades of low wages for academic labour are detrimental: for instance, research at the University of Colombia found that persistent low wages are linked to a faster decline in memory.

Underpaid wage combined with increasing work dissatisfaction and diminished career prospects among researchers is a reflection of a structural crisis in the labour market of science. Scientific research is undoubtedly a risky and expensive venture. But why should economic vulnerability be imposed on doctoral students, postdoctoral fellows and trainees? Policy-instituted economic insecurity is harmful to the nurturing of scientific passion and innovation. It also undermines the emancipatory potential of scientific projects for society.

The slogan, “U.C., U.C., you can’t hide! We can see your greedy side”, echoing from the walls of campuses, is emblematic of the sentiment of every underpaid researcher across the globe. Scientists are leaving academia in response to low wages. Economic security and academic freedom are two fundamental conditions that must be met to stem the tide.

Such anxiety-inducing ec­o­nomic penury has been per­sistent in the scientific com­munity. Post-doctoral fel­lows are being forced to accept underpaid wages in the form of stipends and fellowships. However, despite the growing disenchantment, researchers are delivering remarkable innovations.

There is an additional dimension to the crisis. The underpayment of the scientific community — researchers and others — may have wider societal consequences. What society is receiving in terms of returns, such as scientific innovation and endeavours, is only a small percentage of what researchers are capable of. If ideal conditions — fairer wages and intellectual freedom — are met, the returns from the scientific community would be greater.

Jameel Barkat, Amit Sadhukhan

Source: The Telegraph, 18/04/23

Gaping gap: Editorial on pay gap between men and women

 Psychological stress is also the result of embedded discrimination

An important sign of gender inequality across the world is the pay gap between men and women doing the same job and with the same level of productivity. Globally, women earn only 77 cents on an average for every dollar earned by a man. This gap is present in India too, and may be worsening over time. Between April and June 2022, the female wage rate ranged across states from just over 50% to 93.7% in rural India, and from just under 50% to 100.8% in cities. The gap in rural areas has worsened over the last decade in most states. The urban gap has, however, diminished. The data have been released by the National Statistical Office in the report, Women and Men in India 2022. In some states where the male wage is among the highest in India, the gender gap is also the widest. The data do not reveal any obvious patterns. According to the report, in the states of West Bengal, Gujarat and Chhattisgarh, the rural wage gap has increased by more than 10% between 2011-12 to 2022. These three states have different patterns of development, ranging from very rapid to quite slow. The figures are perhaps indicative of the deep-rooted patriarchal belief that women are less productive and more likely to leave the labour force or be absent.

The pay gap is not only unfair in terms of the ethics of equal pay for equal work but it also has long-term consequences for the economic development of a nation. The lifetime earnings of women turn out to be less compared to men. Women often end up in poverty despite having similar wage employment. Poverty is disempowering. Thus, the ability of a woman to have an effective influence over decisions affecting her own life, such as education, health, personal expenses and childcare, is likely to be poor. This engenders low self-esteem and self-worth, reinforcing beliefs of gender inequality. Psychological stress is also the result of embedded discrimination. In some situations where women may have other job opportunities available, they may not work for the same employer for long. This creates a self-fulfilling condition of lower productivity for women. This is caused by the fact that they are either constantly on the lookout for higher-paying jobs or for matrimonial alliances to augment their access to a higher family income. Getting rid of the wage gap and other forms of discrimination is not too difficult, provided there is adequate political will among those who govern.

Source: Telegraph, 27/03/23

What we don’t know about working Indian women

 According to the recently released Global Gender Gap Report 2022, India ranks 135 out of 146 countries and it has slightly improved its position in the overall ranking compared to the last year.

According to the recently released Global Gender Gap Report 2022, India ranks 135 out of 146 countries and it has slightly improved its position in the overall ranking compared to the last year. However, India is one of the worst performers on gender equality in South Asia as only Iran, Pakistan and Afghanistan perform worse in the region. This is largely due to the lowest gender parity in health and survival, poor representation of women in politics and a low labour force participation rate of women. Understanding women’s role in the workforce is critical to promote gender equality and realise economic growth in India. But the data to aid this understanding is missing, incomplete or inadequate.

In India, information about labour is collected and compiled by several agencies. The Census collects data every ten years from all Indians, while the National Sample Survey Office (NSSO) collects it every five years from a large sample of households covering a wide range of variables. Considering the importance of labour force data, from 2017, the Government of India launched an annual statistics series called the Periodic Labour Force Survey (PLFS). But women’s work is underreported in all these surveys. Women may not necessarily participate in the formal labour market, meaning their contribution to the household economy, and economic activity more broadly, remains invisible.

The most recent PLFS data showed that more than half of the women were engaged in different unpaid domestic activities and most of them were involved in household chores (such as cooking, cleaning, caring for the children and elderly) along with a decrease in uncounted activities like collection of vegetables, firewood, cattle feed, and sewing, tailoring, weaving. The previous NSSO reported significant engagement of women these kinds of activity, so the disparity needs a more detailed analysis. Perhaps the women had improved access to infrastructure like drinking water and fuel (as the government’s Ujjwala scheme had intended). But without more detail, any conclusions remain difficult.

To capture women’s work, the Central Statistical Office undertook the first national Time Use Survey (TUS) during January-December 2019. This survey interviewed participants about their recent activities and asked respondents to assess the amount of time spent at each. The TUS highlighted the inadequacy of conventional employment and unemployment surveys and the Census in measuring women’s unpaid work. And while concerns regarding the methodology were raised, it was described as the best available method in a country such as India with a low literacy level.

In India, work has been increasingly informal in nature. Given the huge size of the informal sector, it is important to collect data on the conditions of such work (for example paid leave and access to job contracts) but data is only available at the state and national level. Data should also be collected on the proportion of women workers who need social security benefits and those who are getting them. There is no data on the number of women workers who received training and were promoted to a higher position in regular employment, and the number of women cultivators and agricultural labourers who received agricultural machinery and agricultural extension training.

Similarly, there is no information on the number of cases registered against employers paying lower than minimum wages to women workers; percentage of women workers with ‘decent’ work conditions; the shortfall in access to working women’s hostels; creche facilities available at the workplace; and whether lactating mothers are allowed breaks to feed their children during work hours.

The Annual Survey of Industries collects data on the organised manufacturing sector, but it provides gender-disaggregated data only for directly employed workers. There is no gender-disaggregated data for contract workers or their wages. Given the large increase in the proportion of contractual workers, and a sizable proportion of women among contract workers, gender-disaggregated data on India’s factory sector is required to understand the composition and characteristics of the workforce.

Migration for employment is another important aspect of economic empowerment. The inability of the official data to delineate the scope, scale and patterns of female labour migration has been central to making women invisible. In India, the Census and NSSO are the two official data sources on migration. However, they provide figures for long-term migration (migration for more than six months) and capture only one reason for migration. Usually, respondents give a social reason — marriage, migration with parents — as the primary reason for migration, which means that even if a woman also migrates for economic reasons, it is not captured. Also, the surveys do not differentiate between circular and seasonal migration and commuting for work, which is more common among women than long-distance, long-term migration.

Ownership of assets (land, housing and livestock) is an indicator of the status and power of an individual in a household but there is no gender-disaggregated data on asset ownership. Similarly, the gender dimension of access to basic amenities is often ignored in the official statistics. For all the data that is collected, the unit of analysis is the household, and often the only gender disaggregation is in terms of the sex of the head of household. The NSSO, National Family Health Survey and the Census collect information on whether a household has access to a latrine (owned/shared) but there is no information in any of these surveys on whether women use the latrine facility and whether they have access to it throughout their life. This is important as India is currently focusing on toilet building, but ensuring its use is not considered.

There is no data on whether people are also defecating openly despite having a latrine at home. Further, there is no information available on workplace amenities. In short, data on individual access to water and actual toilet use are two basic amenities that are particularly relevant to women’s lives and data on these two variables is absent. Surveys could also focus on individual access to these facilities.

India’s decline in women’s labour force participation could be due to social or economic factors influencing demand and supply. However, the available data does not allow analysis of the factors that lead occupations to becoming being segregated by gender and the ensuing wage discrimination. Information on hiring practices would help understand such disparities and formulate policies to ensure the presence of women in non-traditional occupations.

For a better understanding and analysis of women’s empowerment in India, adequate and good quality data is required. The TUS attempted to fill some of the gaps. Adding this survey method to forthcoming labour force surveys, or an independent TUS, would help to fill in missing data. The many reasons for migration, data collection on ownership, management of assets and business at the individual level instead of the household level are also recommended for women’s empowerment and gender equality.

Shiney Chakraborty 

Source: The Statesman, 9/03/23

Good idea: Editorial on living wage for workers

 The concept of the living wage is distinct from, but closely related to, the notion of the much talked about universal basic income

The idea of a living wage for workers is not something new. In India, it has been discussed ever since Independence, along with the concepts of a minimum wage and a fair wage. The minimum wage is usually calculated on the basis of survival needs and minimum calorific requirements. The living wage, on the other hand, is conceived of as being much higher than the minimum wage, with the inclusion of estimates made for spending on education, healthcare, transport and shelter over and above the requirements of food and clothing. The fair wage is usually computed as lying somewhere between a living wage and the minimum wage. The International Labour Organization had pointed out in the India Wage Report  of 2018 certain flaws in how minimum wages are calculated in India. Living wages would, obviously, be expected to be significantly higher than the minimum wages prescribed in India for many types of employment. The Bharatiya Mazdoor Sangh, a workers’ union, for instance, wants the living wage to be at least 10% of the highest salary received in the economy. The tricky issue is this: who would pay the living wage? Would it be the government or the direct employer? For the government, the fiscal implications of such a scheme could weigh heavily on the size of public debt. Private-sector employers, on the other hand, would be reluctant to pay higher than necessary wages in fear of lower profits.

The concept of the living wage is distinct from, but closely related to, the notion of the much talked about universal basic income. But both these concepts ensure that everybody in an economy is receiving at least an adequate income for a decent living. In the former, people have to obtain employment for earning a living wage; in the latter, to receive a universal basic income, one need not have to work. The living wage is a morally superior notion as there are no free lunches being passed around. Overall demand in the economy for consumer goods would increase with a less skewed distribution of income. Ideally, direct employers ought to pay a living wage through some fiscal incentives like lower taxes for employers. However, if a worker loses employment, the living wage would be lost too. In such a case, would personal savings suffice? Or would the importance of a social safety net become critical? In an economy where employment or the minimum wage guaranteed is uncertain, the idea of living wages must be contemplated with seriousness.

Source: The Telegraph, 7/02/23

Proposal to Shift from “Minimum” to “Living” Wages

 The Union Labour Ministry is currently mulling to shift from the “minimum wages” to “living wages” in a bid to bring more people from poverty in the country.

What is a living wage?

The term “living wage” is the theoretical income level that enables an individual or a family to afford adequate shelter, food, healthcare and other basic necessities. It is the minimum income of that helps support a satisfactory standard of living and prevents individuals from falling into poverty.

How is the living wage different from minimum wage?

• A living wage is defined as the minimum income necessary for workers to meet their basic necessities. It is different from the minimum wage, which is based on labor productivity and skill sets.
• Minimum wage is the lowest amount of money a laborer can earn as mandated by the law. It does not change based on inflation. It can increase only with the government intervention. This is not true for the living wage.
• The living wage is determined by the average cost to live comfortably, while the minimum wage is the fixed amount set by the government.
• The difference between the minimum wage and the living wage can range between 10 and 25 percent based on the cost of living in a specific place.

About India’s decision

The Indian government is considering to shift from the minimum wage to the living wage to eliminate poverty in the country. If such a shift happens, it would have significant financial implications for India and the government. It will make Sustainable Development Goal commitments easily achievable.

India is planning to receive assistance from the International Labour Organization (ILO) to understand what constitutes a living wage since it is highly subjective. The ILO member states, including India, have recently requested the ILO to contribute to the improved understanding of living wages by undertaking a peer-reviewed research on the theoretical concepts and theoretical estimations.

Wage crisis: Editorial on Global Wage Report 2022

 The International Labour Organization has come out with the latest Global Wage Report 2022. Over the past two years, labour markets have witnessed significant changes globally. These changes have been triggered by a slow economic recovery from the pandemic, high and persistent inflation rates, and new uncertainties brought about by the war in Ukraine. Global growth rates slowed down in 2022 and are expected to do so in 2023. The International Monetary Fund had predicted a global growth rate of 3.6% in April 2022, which was revised downwards to 3.2% in July 2022. In October 2022, the IMF’s prediction for economic growth in 2023 was in the range of 2% to 2.7%. Inflation was expected as an outcome of the pandemic; the policymakers’ response to it was presumed to be the loosening of money supply and reduction in interest rates. However, central banks across the world tightened money supply and hiked interest rates in an effort to control high inflation rates. In 2022, the global average inflation rate is expected to be 8.8%, falling to 6.5% in 2023 and to 4.1% in 2024. Weak recovery and high inflation have led to a slow adjustment in nominal wages and rapid rise in prices. Hence real earnings, particularly among low-income households, have fallen sharply.

Globally, real monthly wages fell by 0.9% during the first six months of 2022. For the G20 countries, which account for 60% of the world’s wage-earners, real wages fell by 2.2% in the half year of 2022. The labour market has in some economies been characterised by greater wage inequality. On the other hand, almost all nations, particularly India, have witnessed a large informalisation of the labour market which implies greater uncertainty in job security and earnings. From the policy perspective, there is a need to switch from average targeting to focussed targeting of income support schemes. Since high inflation has raised housing, food and transport prices, lower income households require special attention, with more than average adjustments required in their nominal wages. Central banks have to realise the need to ensure that cheap and assured credit lines are available for the small and medium sectors of the economy while tightening money supply and hiking interest rates. The economic scars of Covid will not go away in a hurry. Interventions must be suitably designed to ensure that the scars do not leave lasting marks on the economy.  

Source: The Telegraph, 26/12/22

Uneven pattern: Editorial on variations in rural wages

 Indian agriculture is well-known for a number of complex problems that contribute toward poverty, inequality, and low productivity. Recent data compiled by the Reserve Bank of India reveal a great deal of variations in rural wages for the year, 2021-22. While a rural wage earner in Kerala had an average monthly earning of Rs 18,170, the figure in Gujarat was Rs 5,500 per month. The national average across states was a wage of Rs 323.2 per day. This would turn out to yield a monthly income of Rs 8,080 per month, assuming a worker had worked for 25 days in a month. In fact, a number of states other than Gujarat have rural wages less than the national average. These include Madhya Pradesh, Uttar Pradesh, Bihar and Maharashtra. On the other hand, states like Kerala, Himachal Pradesh and Tamil Nadu, among others had rural wages much higher than the national average. The year for which these data were compiled, namely 2021-22, was a bad year for economic activity due to the incidence of Covid and its associated disruptions. It could have depressed rural wages in some areas where the disruptions were the most. However, it does not explain the variations across states and the implications for rural demand.

The marked variations in rural wages across states show the imperfect nature of rural labour markets. Ideally, wage differences would induce migration from low to high-wage destinations. In India, even though migration does take place, there are cultural and language barriers that restrict these flows. The year, 2021-22, was bad from this angle too. Covid had induced reverse migration to home states. The second aspect of concern that can trigger wage differences is the local climate in different states that affect agricultural activities and, hence, rural wages. Agriculture is still dependent on monsoons and climate variations have been accentuated by global warming. Another implication of imperfect markets coupled with climatic unpredictability would be uncertainties in jobs and incomes. Hence, even though there has been a recent trend of lower demand for jobs under the Mahatma Gandhi National Rural Employment Guarantee Act, depressed wages can, once again, lead to a need for greater allocation for employment under MGNREGA for wage earners to supplement incomes. Finally, there are possibilities of boosting non-agricultural sources of rural incomes such as floriculture, horticulture, local food processing and cold chains. These would increase rural incomes and provide new employment opportunities. Policymakers need to take a relook at the entire sector. But before doing so, they must talk to rural workers to find out what actually ails them.

Source: The Telegraph, 29/11/22

Workers of the world are in need of a better deal in today’s times

 The last four decades of globalization and technological innovation have been a boon for those with the skills, wealth and connections to take advantage of new markets and opportunities. But ordinary workers have had much less to cheer about. In advanced economies, earnings for those with less education often stagnated despite gains in overall labour productivity. Since 1979, for example, US production workers’ compensation has risen by less than a third of the rate of productivity growth. Labour-market insecurity and inequality rose, and many communities were left behind as factories closed and jobs migrated elsewhere.

In developing countries, where standard economic theory predicted that workers would be the main beneficiary of the expanding global division of labour, corporations and capital again reaped the biggest gains. A forthcoming book by George Washington University’s Adam Dean shows that even where democratic governments prevailed, trade liberalization went hand in hand with repression of labour rights.

Labour-market ills create broader social and political strains. In his pathbreaking 1996 book When Work Disappears, sociologist William Julius Wilson described how the decline in blue-collar jobs had fuelled an increase in family breakdown, drug abuse, and crime. More recently, the economists Anne Case and Angus Deaton have documented the rise in “deaths of despair" among less-educated American men. And a growing empirical literature has linked the rise of authoritarian, right-wing populism in advanced economies to the disappearance of good jobs for ordinary workers.

As a result of the covid pandemic, labour problems are receiving renewed attention, and rightly so. But how can workers not only get their fair share but also have access to decent jobs that enable meaningful lives?

One approach is to rely on the enlightened self-interest of large corporations. Happy, fulfilled workers are more productive, less likely to quit, and more likely to provide good customer service. MIT’s Zeynep Ton has shown that retail establishments can cut costs and boost profits by paying good wages, investing in their workers, and responding to employees’ needs. But many firms that claim to take the high road in labour standards are also vehemently anti-union; taking the low road by minimizing workers’ pay and say is too often a profitable corporate strategy. Historically, it is the countervailing power of labour—through collective action and union organization—that has brought about the most significant gains for workers.

So, a second strategy to help workers consists of increasing the organizational power of labour vis-à-vis employers. US President Joe Biden has explicitly endorsed this approach, arguing that the shrinking of the US middle class is a consequence of a decline in union power, and has vowed to strengthen organized labour and collective bargaining.

In countries such as the US, where unions have become significantly weaker, this strategy is indispensable to redress imbalances in bargaining power. But the experience in many European countries, where labour organization and collective bargaining remain strong, suggests that it may not be the full remedy. The trouble is that strong worker rights can also create dualistic labour markets, where the benefits accrue to ‘insiders’ while many less experienced workers struggle to find jobs. Extensive collective bargaining and robust labour regulations have generally served French workers well. But France has one of the highest youth unemployment rates among advanced economies.

A third strategy, which aims to minimize unemployment, is to ensure adequate labour demand through expansionary macroeconomic policies. When fiscal policy keeps aggregate demand high, employers chase workers—rather than the other way around—and unemployment can remain low. Research by Larry Mishel and Josh Bivens of the Economic Policy Institute shows that macro-economic austerity is a major reason why US wages have lagged behind productivity since the 1980s. By contrast, the Biden administration’s aggressive fiscal response to the covid crisis has ensured that US wages have increased amid a sharp fall in unemployment. But although tight labour markets can help workers, they can also pose an inflation risk. Moreover, macroeconomic policy can’t target the lowest-skilled workers or the regions where jobs are most needed.

A fourth strategy, then, is to shift the structure of demand in the economy in order to benefit less-educated workers and depressed regions in particular. The shortage of secure, middle-class jobs is closely linked to the disappearance—as a result of globalization and technological change—of blue-collar manufacturing work and service-sector sales and clerical jobs. Policymakers must focus on expanding the supply of jobs in the middle of the skill distribution in order to reverse these polarizing effects.

This entails revising existing industrial and business-development programmes so that incentives go to the firms most likely to generate decent jobs in the right places and are designed with these firms’ needs in mind. Conventional industrial policies that target skill- and capital-intensive manufacturing, and rely heavily on tax breaks, will not do much to spur the expansion of good jobs for those who most need them.

Also, we must consider how new technologies help or hurt workers, and rethink national innovation policies. The current narrative focuses almost exclusively on how workers should retrain to adapt to new technologies, and too little on how innovation should adapt to the workforce’s skills.

As economists such as Daron Acemoglu, Joseph Stiglitz, and Anton Korinek have pointed out, the direction of technological change is flexible and depends on price incentives, taxes and the norms prevailing among innovators. Government policies can help guide automation and artificial-intelligence technologies along a more labour-friendly path that complements workers’ skills instead of replacing them.

Ultimately, boosting labour earnings and the dignity of work requires both strengthening workers’ bargaining power and increasing the supply of good jobs. That would give workers a better deal and a fair share of future prosperity.

Dani Rodrik is professor of international political economy at Harvard University’s John F. Kennedy School of Government, and president of the International Economic Association

Source: Mintepaper, 13/12/21

What the continued distress in informal labour market says

 

Ishan Bakshi writes: It points towards a continuing divergence in the fortunes of the formal and informal parts of the economy.

Economic data released over the past few weeks suggests that the Indian economy has emerged from the second wave of the pandemic better than most expected. Two broad points emerge. First, although the second wave was far more virulent, the impact of the localised restrictions imposed during this period on economic activity was less damaging than observed last year. And second, in the weeks and months thereafter, large parts of the economy are almost back to pre-Covid levels. However, these data points mask the distress lingering in large parts of the informal economy.

The informal/unorganised sector in India accounts for roughly half of the total value added in the economy (52.4 per cent in 2017-18), and employs around 90 per cent of the labour force. The extent of distress that continues to persist in this part of the economy — at least in rural areas — can be gauged from the state of the informal labour force. This can be gleaned from the MGNREGA data.

In the first quarter (April-June) of the ongoing financial year, the number of households demanding work under MGNREGA, while higher than pre-Covid levels, was lower than last year. There could be two possible explanations for this. One, that the extent of distress in the labour market last year was of a much higher magnitude. Or two, that the spread of the pandemic in rural areas this year curtailed the registration of households demanding work under MGNREGA.

In the second quarter (July-September), however, the number of households demanding work this year was not only around the same level as last year, but was also significantly higher than the pre-Covid level (2019-20). This signals two possibilities.

First, that sections of the informal labour force in rural areas and the migrant households who have not returned to urban areas, were unable to find non-farm employment, and had to rely on MGNREGA. This implies that large parts of the informal economy — sectors like manufacturing, construction, trade and transport, where those currently demanding work under MGNREGA would have normally found jobs — were operating well below their pre-Covid levels in the second quarter as well.

Second, it is also plausible that to the extent that employment opportunities were available, a section of the informal labour force simply opted for whatever work was available at depressed wage rates, supplementing its income by seeking work under MGNREGA. After all, in the absence of safety nets, at current per capita income levels, few can afford to stay unemployed for long and look for remunerative employment. (MGNREGA also provides an avenue for these households to rebuild their buffers, which would have been depleted while dealing with the fallout of the second wave.)

The situation is unlikely to be materially different for the urban informal labour force considering that even formal employment in some of these sectors (trade, accommodation and restaurants) has been badly hit, as revealed by the latest Quarterly Employment Survey. This implies that even a downward trending unemployment rate will not be an accurate gauge of labour market distress.

This level of sustained distress in the informal labour market points towards a continuing divergence in the fortunes of the formal and informal parts of the economy. For, if both formal and informal segments were rebounding at an equal pace, then surely, the labour market distress in both these segments should also have been dissipating, even if with a lag, at similar momentum. After all, the value added per worker is unlikely to rise dramatically in the informal economy. It is more likely to rise in the case of the relatively larger firms in the formal sector. This is in line with the first quarter results of the listed companies which show that while the bigger companies flourished, the smaller ones (those in the range of Rs 0-25 crore) continued to be mired in distress.

This also suggests that in sectors with a large informal presence — construction (where three-fourths of the overall value-added was by the informal segment in 2017-18), trade, transport and communication (value added by the informal segment ranges from 47.7 per cent to 86.6 per cent), real estate and professional services (roughly half the value-added is by the unorganised segment) and manufacturing (where between 20-25 per cent of the value-added is by the unorganised segment) — the relatively larger firms in the formal sector would have gained at the expense of the unorganised.

Thus high-frequency indicators, which indicate that the economy is operating at more than 90 per cent of its pre-Covid level — even surpassing it in many sectors — do not reflect the distress in the informal economy or among the smaller firms in the formal economy. Simply extrapolating the performance of the organised sector to that of the unorganised, as may be the case with some estimates, would thus present an inaccurate picture of the Indian economy.

One outcome of this sustained divergence between the formal and the informal labour force is the worsening of the income distribution. To the extent that it endures — even when the economy had recovered to pre-Covid levels during the second half of last year, the number of households demanding work under MGNREGA remained significantly higher than pre-Covid levels — this loss in purchasing power of the lower half of the distribution chain would translate to the aggregate household consumption basket shifting towards that of the relatively affluent households. This would raise demand for the less labour-intensive services and high-end/imported manufactured products and reinforce the current labour market trends.

How quickly, and to what extent, the informal economy can return to its pre-Covid level of value-added and employment is debatable. While during demonetisation, a badly bruised informal sector clawed its way back, the disruption this time is of a much higher magnitude. This labour market scarring has broader implications for aggregate consumption and investment, and indicates subdued medium-term growth prospects.

This column first appeared in the print edition on October 4, 2021 under the title ‘Unmask the distress’. ishan.bakshi@expressindia.com

Source: Indian Express, 4/10/21

Regularly available, credible data on formal and informal work force is needed to inform policy, plug the gaps

 

It provides policymakers not only a sense of the extent of labour market distress during periods of economic upheaval, but also an understanding of the effectiveness of government policies.

On Monday, the Ministry of Labour and Employment released the findings of the new Quarterly Employment Survey (QES) for the first quarter of the ongoing financial year. As most labour market data in India comes with a considerable lag, making it too late for any meaningful input in policymaking, the new survey is a welcome step towards filling the information void that surrounds the labour market. Regularly available, high quality, credible labour market data forms a valuable input. It provides policymakers not only a sense of the extent of labour market distress during periods of economic upheaval, but also an understanding of the effectiveness of government policies.

The quarterly survey provides data on employment in nine non-farm sectors of the economy — namely manufacturing, construction, trade, transport, education, health, accommodation and restaurants, information technology/business process outsourcing and financial services. These nine sectors account for roughly 85 per cent of total employment in units employing 10 or more workers. According to this survey, organised sector employment stood at 3.08 crore during April-June 2021, up from 2.37 crore in 2013-14. This translates to an annual growth rate of just 3.3 per cent. While most sectors saw a rise in employment during this period, employment in trade, and accommodation and restaurants — sectors that are more likely to have been hit by the pandemic — was down by 25 per cent and 13 per cent respectively. In fact, as per the survey, employment actually fell in 27 per cent of the establishments due to the pandemic. However, the survey also says, during the period of the national lockdown last year (March 25-June 30, 2020), 81 per cent of workers received full wages, 16 per cent received reduced wages, while 3 per cent were denied wages. How this demand-side snapshot provided by an establishment-based survey reconciles with supply-side data from household surveys remains to be seen.

As the QES covers only establishments with at least 10 workers, it provides data essentially on the formal economy. Considering that informal workers (with no written contracts, and benefits) account for roughly 90 per cent of the labour force in India, the QES thus provides only a partial glimpse of the labour market. Only when data on the unorganised sector (establishments employing nine or less workers) is captured — this forms the second part of the framework of the labour bureau’s establishment-based surveys — will a more comprehensive picture of the labour market emerge.

Source: Indian Express, 29/09/21

The right to sit must be the beginning

 The lack of access to seating works as a strong impediment to women’s participation in India’s workforce.

On September 13, the Tamil Nadu (TN) assembly passed the amended Tamil Nadu Shops and Establishments Act, 1947, making it mandatory for shops, storefronts, and commercial establishments to provide employees with seating facilities. TN is the second state to do so after Kerala. With most establishments having no chairs or stools for salespersons who work for over 10 hours a day, often with no toilet or tea breaks, workers developed various physical ailments (and most of the workers are women). These rules defy every tenet of labour rights and human dignity, and are often compounded by paltry wages and scant benefits.

While granting workers the right to sit is a positive move, India has a long way to go. The shops and establishments acts are state-specific, and regulate the terms of employment and conditions of service of employees. However, labour rights experts are demanding more: National legislation to protect the fundamental rights of employees because issues such as the lack of access to seating and toilets are related to occupational health and safety. Such provisions should have been added to the Occupational Safety Health Working Conditions Code, 2020. At present, the Code is applicable to establishments that have more than 10 employees.

The lack of access to seating works as a strong impediment to women’s participation in India’s workforce. Indian women face many barriers to their entry into the labour market. The denial of basic working conditions adds to those problems, and forces them out of the workforce. This not only undermines India’s economic growth and development trajectory, but denies a chance for 48% of its population to fulfill their dreams and potential.

Source: Hindustan Times, 26/08/21

An effective migrant labour policy must consider where existing labour laws fail

 The Niti Aayog’s draft Migrant Labour Policy is a clear statement of intent to better recognise migrants’ contribution to the economy and support them in their endeavours. It puts forward several radical ideas, including the adoption of a rights-based approach and establishing an additional layer of institutions to create a more enabling policy environment for migrants. It proposes a new National Migration Policy and the formation of a special unit within the Labour Ministry to work closely with other ministries. The new structure would bring about much-needed convergence across line departments and would be a huge step towards a universal understanding of the causes and effects of migration as well as the interventions needed.

The policy calls for improving the record on the implementation of the country’s many labour laws that have, by and large, failed to make a difference to the lives of labour migrants. It discusses at length the provisions under the Equal Remuneration Act, The Bonded Labour Act, the Building and Other Construction Workers Act and the Interstate Migrant Workmen Act, among others. The draft also invokes the ILO’s Decent Work Agenda as well as the Sustainable Development Goals which aim to protect labour rights. It acknowledges the challenges of welfare provision to a highly fragmented migrant workforce due to recruitment patterns and the lack of data. It refers to the importance of collective action and unions and there are detailed plans for improving the data on short-term migration, especially seasonal and circular migration. As a statement of goals, the draft contains much to be celebrated.

But the policy needs to delve deeper into the causes underlying the poor implementation of labour laws that are linked to the political economy of recruitment and placement. Labour migrants from rural areas find work in the urban economy and high productivity rural enterprises either through kinship networks or labour market intermediaries. These networks are critical for supplying workers that can be positioned in jobs, where there is a demand for hard-working and controllable workers who will stay tied to the job. One way of ensuring that workers do not leave because of harsh conditions is to bond them through the notorious system of advances. Although illegal, this kind of arrangement is attractive for migrants from relatively disadvantaged backgrounds as they cannot mobilise large sums of money for weddings, housing and repaying loans. There is reference to unfair recruitment practices in the document, but virtually no analysis of why the system persists and how it is enabled by the employment structure of businesses and enterprises.

Another area where the draft needs to be strengthened is addressing gender differences in employment. Domestic work is one of the most important occupations for migrant women from relatively disadvantaged backgrounds. Although the new policy aims to be inclusive of all kinds of marginalised migrants, it could do more to explicitly mention the challenges faced by domestic workers. It would be very easy for them to remain excluded as India has not ratified the ILO Convention on Domestic Workers and The Domestic Workers Bill 2017 has not become law. Other kinds of home-based work, enormously important for female migrants could similarly remain excluded.

Another point to raise here is the apparent ambivalence about the ability of tribal migrants to think for themselves and decide how they access the opportunities offered by migration. Early in the draft we see a commitment to recognising migrant agency, but this is less clear in the section where tribal migration policies are discussed. Tribal migration is constructed as a process whereby recruiters are “luring” or even trafficking them. Domestic work, which is mentioned in this context, is an important source of income for tens of thousands of tribal women from impoverished backgrounds in eastern Indian states. There are, of course, some instances of abuse, but these do not represent the majority experience. There is a need to better understand how migrants themselves weigh up the costs and risks against potential benefits of working in the city. Controlling tribal migration would go against the objective of recognising migrant agency.

To conclude, the draft policy is a good start which could, with a few adjustments, reduce the vulnerability and risks faced by labour migrants and ultimately build a more sustainable model of development.

Written by Priya Deshingkar

This column first appeared in the print edition on April 7, 2021 under the title ‘Recognising the migrant’. The writer is Professor of Migration and Development, University of Sussex

Source: Indian Express, 7/04/21

Can the right to work be made real in India?

 

It can be made workable if there is political will and fiscal resources

As economies around the world struggle to recover from the double whammy of a pandemic and a lockdown, unemployment is soaring. In India, the land of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the promise of jobs and the politics of unemployment have a long history. Can a citizen demand work as a right, and is it the state’s responsibility to provide employment? Reetika Khera and Amit Basole discuss the possible policy approaches to the right to work, in a conversation moderated by G. Sampath. Edited excerpts:

What is the legal status of the right to work internationally and in India?

Reetika Khera: The right to work was a big topic of discussion after World War II, and the Universal Declaration of Human Rights includes the right to work in the International Covenant on Economic, Social and Cultural Rights. In India, we don’t have a constitutional right to work. But what we do have is MGNREGA. This is a step in the direction of a right to work, but it is a statutory right. Under MGNREGA, a person can hold the state accountable for not fulfilling the right by demanding an unemployment allowance. But if the law is amended or withdrawn, the right vanishes.

Comment | Equal freedom and forced labour

Is the right to work relevant as a concept any more given that most countries have embraced the market economy? India has been seeing a declining jobs-to-GDP ratio, and mostly jobless growth, with labour also subject to the laws of the market.

Amit Basole: It is precisely under these circumstances that this right becomes important. The term ‘right to work’ is often used in the context of unemployment or lack of availability of work. But there is also another sense of it, which is the right to earn my livelihood without any obstruction. In both these senses, what we have seen in the past few decades is that the path of development not only does not create adequate employment opportunities, it also actively dispossesses or displaces people from their means of livelihood. So, on the one hand, displacement and dispossession, and on the other, failure to create new jobs make it all the more important to imagine the right to work in a creative way and make it legally enforceable.

Reetika Khera: These are basic questions for policymakers that don’t get enough attention. For instance, GDP growth can come from both an increase in the manufacture of weapons of mass destruction as well as from the manufacture of medicines. Similarly, we rarely discuss per capita GDP growth; most discussion centres on overall growth even though from the vantage point of people’s welfare, the former matters more. Distribution issues are buried in subtle ways. For a labour-abundant country like India, I’m not sure how much policy sense it makes to encourage capital-intensive methods of production. It made sense in the countries in which these techniques of production evolved since they were labour-scarce. But more and more automation in a country like India is likely to lead to jobless growth. Such fundamental questions about our growth strategy need further deliberation.

How exactly do we make the right to work, work?

Reetika Khera: One approach is Decentralised Urban Employment and Training, or DUET, which has been around for some time. The idea here, like with MGNREGA, is to create new employment opportunities so that those who are unemployed may be gainfully employed and earn a dignified living. This dignity is supposed to come from work conditions, such as being paid a fair wage and having regulated work hours, and also from the social value of the work that people do — useful things such as repairing school buildings, cleaning parks, and so on.

For DUET, urban local bodies can issue job vouchers to certified public institutions such as schools and universities for pre-approved tasks. These institutions can only use the vouchers to hire labour for pre-defined tasks — e.g. painting school buildings, repairing broken furniture, and so on. A whole range of skills can be accommodated. So this is a workable agenda, but to make it workable, we need not only political will, but also fiscal resources.

Amit Basole: The right to work is not only about lack of adequate work but also the profound lack of public goods and assets, in urban India generally. It is the state’s responsibility to provide these public goods, and this imperative can be combined with an employment creation programme just like MGNREGA does in rural areas. In MGNREGA too, the asset creation part is often under-emphasised, and it would be good to bring both these things together through an urban employment guarantee. Interestingly, three States — Odisha, Jharkhand and Himachal Pradesh — have launched something along these lines in the wake of COVID-19. There are bits of these policies that could be used if we wanted to try it out on a national scale. Together with MGNREGA, an Urban Employment Guarantee can be a very important piece of the puzzle, on the way to ensuring the right to work.

So, is the right to work the same as an employment guarantee?

Amit Basole: No, I won’t reduce it to an employment guarantee. With the idea of right to work, the question is: what is the responsibility of the state in a capitalist economy where welfare and employment are not a guaranteed by-product of private economic activity? So, if private economic activity cannot generate an adequate number of decent livelihoods, or if it displaces livelihoods, then what is incumbent on the state to do? That is the question. I view this as a holistic thing. So we’re talking not only about the state generating its own work — for public goods, education, healthcare, administration, etc.

To be sure, for all these things which the state is supposed to do, it should generate its own employment. But at the same time, it’s also supposed to safeguard people’s employment. That includes everything, from ensuring that street vendors have vending zones, and fish workers are protected, to ensuring that farmers have viable incomes — all of this comes broadly under the right to livelihood or right to work. One small part of this can be an employment guarantee, but by no means is it the only thing.

Speaking of the state’s responsibilities, the Rashtriya Janata Dal in its Bihar poll manifesto promised 10 lakh government jobs. As a measure towards the right to work, how feasible is this approach where the state is the major employer?

Reetika Khera: The RJD manifesto, so far as jobs are concerned, has appealing elements. It picks up on the issue of vacant posts in government jobs. These are posts that are sanctioned but not yet filled. Many of these are essential services — teachers, nurses, ASHA workers, anganwadi workers, doctors, etc. So, not only will it create employment, it will also hopefully fill the void in essential public services.

In this context, people often cite the example of Thailand, which has a universal basic healthcare system that is labour-intensive. It solves two problems at the same time: it builds social infrastructure, and creates jobs. Is this something India can adopt?

Amit Basole: Absolutely. It is incumbent on the state to provide basic services such as health, education and housing, and in providing them, employment is generated. There may be some disagreement on whether it is the state itself that should provide, or if there should be room for private provisioning. But I don’t think people disagree that we need to expand spending on these things. We are nowhere near countries that are comparable in GDP per capita, such as Vietnam, and countries that spend much more on public goods as a percentage of their GDP. We should do that. That will create jobs.

The government has whittled down 44 labour laws into four labour codes that labour organisations have criticised as a dilution of workers’ rights. Where there is a dilution of rights ‘in work’, as it were, how does it matter whether or not there is a right ‘to work’?

Amit Basole: You are right to ask if it is at all worth raising the right to work question when very fundamental rights ‘in work’ are being violated, and violated not only for lack of legislation, but also because of labour legislation being diluted. In terms of the labour code changes, one thing to remember is that India is a labour surplus economy. In the capital-labour bargaining process, labour is structurally weak in India, which means it is incumbent on the state to provide that support to labour. But the state has been doing the opposite; it has abdicated a fundamental responsibility in that sense.

From a philosophical perspective, as human beings, isn’t a demand for the right to work setting the bar too low? We were speaking of dignity earlier — shouldn’t the demand really be for right to leisure rather than right to work?

Reetika Khera: A poster from the World War II period says ‘eight hours of work, eight hours of leisure, and eight hours of rest’. That was the original demand. Perhaps the correct way to view this is that if you guarantee a good eight hours of work, then automatically you are guaranteed that the rest is for you to enjoy your life, or the fruits of your labour.

Amit Basole: There is this 19th century book by Paul Lafargue called The Right to be Lazy, which was a response to the right to work campaign going on at that time, and his point was, why are we asking for the right to work, we should be asking for the right to be lazy! This is a live debate in Marxian political economy. The right to work essentially plays into capitalism and the work ethic — the right to work is the right to be exploited by capital. And that is a perfectly fair point of view. If you are really looking at the future of humanity, then one cannot take a narrow perspective. Work should be fulfilling, work should be creative, and work has to be put in its place, which is hopefully a very small place.

Amit Basole is Head, Centre for Sustainable Employment, Azim Premji University, Bengaluru; Reetika Khera  is Associate Professor of Economics at IIT-Delhi

Source: The Hindu, 13/11/20

New labour codes will force workers into a more precarious existence

 

In real terms, the essential thrust of the new labour codes is the generalisation of a paradigm of labour–capital relations, which is based on reduced state intervention or deregulation, and its corollary, bipartite industrial relations.

With Parliament passing the three new labour codes that replace 25 existing labour laws, the present conjuncture officially marks the end of labour law as we have seen it for most part of the 20th century.

The codes substantially revise the pre-existing thresholds which were used to earmark the ambit of labour law enforcement; namely the size of an establishment’s workforce. The Industrial Relations Code, for instance, allows establishments employing up to 300 workers to layoff and retrench workers or close units without prior approval of the government; thereby pushing out a large section of workers employed in numerous medium-sized enterprises from the ambit of industrial disputes legislation. Earlier this threshold was 100 workers.

Likewise, the codes categorically double the threshold for the applicability of the Factories Act, 1948, i.e. from 10 to 20 workers in the case of establishments run on electricity, and from 20 to 40 workers in the case of units run without electric power.

Even the threshold specified in the Industrial Employment (Standing Orders) Act, 1946, by which an establishment with at least 100 workers was mandated to formally define employment conditions, has been enhanced to 300 workers. The Occupational Safety, Health and Working Conditions Code, meanwhile, increases the threshold limit of contractor-employed workers from 20 to 50 while allowing the hiring of contract workers in all areas, including core production.

In reality, these labour codes constitute de jure recognition of a wave of piecemeal endeavours by which state governments have been chipping away at key labour laws under the authority granted to them in the concurrent list within which labour falls. Periodic amendments to the Industrial Disputes Act, Factories Act, Industrial Employment Act, etc. by several states, as well as a slew of executive orders passed at the state and central level in the bid to attract foreign and domestic investment, are well known.

Of course, the bulk of amendments have concentrated on introducing self-certification of employers’ compliance with labour laws in small and micro industrial establishments, and the exemption of these establishments from the ambit of crucial labour laws. In 2014, the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act was amended to change the definition of “small” establishments so as to cover units employing a larger number of workers than the original piece of legislation. Now, with the Central Acts being modified and superseded by the new labour codes, the protection offered by the law to workers of larger establishments stands withdrawn.

In real terms, the essential thrust of the new labour codes is the generalisation of a paradigm of labour–capital relations, which is based on reduced state intervention or deregulation, and its corollary, bipartite industrial relations.

Importantly, the consolidation of this paradigm of deregulation marks a jurisprudential shift towards the more brutal, early colonial precarious labour conditions in which the state refrained from regulating work relations, using the logic that employer-employee relations are a private matter or private domain of social relations. In the global as well as the Indian context of burgeoning historical struggles of collective labour, a more interventionist role of the state in labour-capital relations became the order of the day since the 1920s, which culminated in the tripartite industrial relations machinery that persisted till the start of the liberalisation era of the 1990s.

However, with successive governments steadily withdrawing from regulation of contemporaneous industrial relations, the domain of the workplace is sought to be reduced to a private domain in which employers shall yield enhanced power to unilaterally fix wages, extract overtime, manage leaves, determine compensation, hire and fire, etc. Once inside the workplace, labour shall be under the blanket authority of employers. Given that labour inspection has shifted towards the self-certification system and third-party inspection by the employer, the private power of employers is all the more expected to grow with the enforcement of the labour codes. Henceforth, state intervention will be restricted to the use of the criminal law framework to curb labour unrest; a trend which is already rising.

The immediate consequence of deregulation is the generalisation of the highly oppressive paradigm of work relations typical of the informal sector. In the informal sector where a vast majority of working-class men and women are labouring in labour-intensive, lower-segment jobs, the absence of the state has nurtured the condition of quasi-magisterial powers of employers over the work contract. Now, of course, such enhanced private power of employers with respect to the work contract will be the norm across a large part of the formal sector as well.

This concerted attack on higher segments of the labour market shall have a spillover effect on the lower rungs where informal workers will be exposed to exceedingly higher levels of exploitation. The possibility of this is undeniable, considering what enhanced deregulation of work relations would mean in terms of periodic unemployment of higher skilled workers, who shall proceed to crowd lower-skilled, informal sector jobs. Subsequently, the existing informal workforce shall be compelled to negotiate their own survival through lowering of wages, longer spans of overtime, enhanced quantum of work, etc.

The rapidly unfolding context of deregulation, backed by persistent criminalisation of the labour movement, expunges the collective force of labour from ensuring the implementation of welfare legislation; thereby rendering the alleged extension of social security as unattainable for the larger section of workers.

This article first appeared in the print edition on October 15, 2020 under the title ‘Enslavement by law’ The writer is assistant professor, Delhi University, and a labour historian

Source: Indian Express, 15/10/20