Labour Productivity& Jobs
By Dhurjati Mukherjee
Reskilling as well as internship proposals announced recently by the government are welcome but anappropriate strategy of generating employment needs to be spelt out. More so, as while industry leaders and economists are keen on increasing labour productivity,the same intensityis not seen on raising wages. There is an ongoing debate on innovation i.e. bringing in new processes and products, but social and economic situationssuch as high population and a huge workforcediffers in countries.
There are no two opinions on the proposition that if there is a wave of innovation that enhances labour productivity, then it would lead to an increase unemployment and under-employment. Such an increase in unemployment would necessarily mean a shift in the relative distribution of income from wages to profits since real wages would not rise in tandem with labour productivity, owing to the reduction in the bargaining power of the workers,
This is exactly what has happened. According to a report byGlobal Trends for Youth 2024 (GET for Youth)released by International Labour Organisation (ILO) recently, the number of adults engaged in low-paid employment increased in South Asia between 2010 and 2023. Low-paid employment refers to jobs that pay less than two-thirds of the median monthly wage. In these countries including India, wages are quite poor and the percentage of population who get less than two-thirds of the average monthly wage is increasing by around one percentage point from about 20 percent in 2010, the report pointed out.
“In high-income countries, about three to four young adults will find a secure job (with a paying employer and long-term contract) while in a low-income country, the share falls to less than one in five. This means that outside high-income countries, most young adults are not accessing jobs that set them on a route towards income security in adulthood”, notes the report. The number of unemployed in the age group of 15-24 is a matter of concern globally but this is more of a severe problem in India, where not just formal employment but also informal jobs are declining, and wages are much below market rates.
Technological progress is, no doubt, welcome but this has to be implemented in such a way that the resultant effect is not unemployment but more of skilled employment so that quality of products improve and reach global standards. Recently about India, the International Monetary Fund(IMF) pointed out that though there is 7 percent growth, not much employment creation is being witnessed and demand is not upbeat. In western economies, the increasing demand factor due to high per capita income has not affected the economy but in India, low wages and abundant labour availability has upset the entire scenario.
Another significant problem is the rise in temporary jobs in the country. While it may be said that this is a global trend, the situation is quite different in the West, where wages are quite high and there are huge temporary consultancy jobs. This trend opine experts is likely to continue. In fact, a Nasscom–Aon report predicts a 78 percent increase in India’s gig workers by 2025 to reach an estimated 25 million. The future of work in the country, however, extends beyond temporary or contractual jobs and includes long working hours, not just in India but in China too, as per a report of ILO, on work-life balance.
A recent McKinsey’s remote work study reveals a significant portion of tasks can be accomplished remotely, potentially impacting talent pools for even temporary jobs. The World Economic Forum’s ‘Reskilling Revolution’ emphasises the need to equip workers with in-demand skills such as complex problem solving and creativity. Similar studies by PricewaterhouseCoopers International Limited (PwC) and Ernest &Young(EY) highlight the rising demand for specialised skills whether working in temporary, contractual or consultancy positions.
As per the Economic Survey, India needs to generate 78.5 lakh non-farm jobs until 2030 to employ the Indian youth entering the workforce. There are proposals in the recent budget to facilitate employment, skilling and other opportunities for 4.1 crore youth over the next five years. But the government is silent on the number of vacancies that remain unfilled for years together in various sectors and what it intends to do in the matter. Also,questions remain on what is the number of jobs that are being outsourced and whether the number will not continue increasing?
Labour skilling is bound to increase, and this will have a positive effect on the economy. To tackle unemployment, it is necessary to increase State spending to stimulate the economy, which is now thwarted by global finance capital. For State spending to play an effective role, it must be financed by fiscal deficit or by taxes on the rich. But the government does not intend to follow any of such steps.
Take the case of the rural employment programme where though skilling and labour productivity could be stressed, more funds should have been allocated so that the programme could run for complete 100 days a year, keeping in view wage increases. Providing even 60 days of work required about Rs 1.1 lakh crore while providing 80 days needed roughly Rs 1.5 lakh crore. The allocation in the past two years has not exceeded Rs 90,000, which, as per calculations, is grossly insufficient and could provide a maximum of 55 days of work.
Moreover, experts have pointed out that an urban employment programme would be announced but this was not done in the recent Budget. This despite the fact thatthere’s ample work to be done pertaining to environmental cleanliness and sanitation in municipalities and zilla parishads given these bodies don’t have adequate staff.
Therefore, though the need for gearing up all-round efficiency and not just of labour is undoubtedly vital, there must be a sustained policy of imparting the right skilled training, efforts of which have started. The informal sector would need to be the focus of attention and a policy framework of reviving this sector must be drawn up so that employees do not have to languish. Simultaneously, as has been emphasised repeatedly labour-intensive industries need a big boost, for which both Central and state governments must extend a helping hand. — INFA