Labour, Labour Everywhere, But Not A Job To Find

Sadanand Patwardhan

(From, 19 August, 2010 – Ed/.)

"Three out of every ten of the world’s new workers will be Indian, employing them won’t be easy"- The Economist
ILO has estimated that over 80 million new pair of hands will join the workforce in India during the next decade. Add to this figure another 30 million women if the percentage of them seeking jobs rises to 38% from the current one third, according to the study made by Tushar Poddar of Goldman Sachs and Pragyan Deb of LSE. How to find jobs for these people? A task made easy when global capital itself would begin its search for a new “workshop of the world” as the Chinese labour markets mature and thereby drive up costs and employee-demands? India should provide an ideal “resettlement & rehabilitation” location in the coming decade for the global capital with its abundant supply of hungry labour. More so, since the Indian manufacturing (widget-makers) has quietly been clocking a healthy annual growth rate of 8% per annum in the last decade and has contributed 16.1% of GDP last fiscal overtaking agriculture for the first time. But there is still a hitch. The author-duo points out that Global Capital is a shy creature. It shies away from India’s archaic labour laws that number some 55 at the central level with the tally made worse by another hefty 150 added at State level. The worst they point out is the Industrial Disputes Acts that governs conduct of establishments employing 100 or more workers. The Economist article finally concludes with a grand flourish : “While World Bank Survey in 2006 found that only 15% of manufacturing companies held labour regulations as an obstacle in their operations, the participants in the survey could have been only existing and surviving firms. Those firms which were still born or died couldn’t have been surveyed”. The implication being that but for the pernicious labour legislation many more firms would take birth and would survive, thus providing much needed employment opportunities for the teeming millions who will hit the job market in the next decade. The policy prescription therefore is to do away with or at least weed away vigorously labour legislation.
Curiously, the Economist has included a statement of the chairman of a company that calls itself the “Largest Independent Forge shop in the world” that flies in the face of its own conclusions. Baba Kalyani of Bharat Forge said that in the 80s the worker cost was Rs. 700-800/ month and same costs today 20,000 to 30,000/month. Then he adds, Bharat Forge was never competitive in the 80s but is so today despite burgeoning labour costs. The answer for this conundrum lies in technology, the technology that replaces labour, and therefore, he concludes the answer doesn’t lie in labour intensive manufacturing. So unlike the Economist's claim that removing labour legislation would absorb more labour into manufacturing, the manufacturers would rely upon removing labour itself through technology. But this is not the only gaping hole in the Economist’s theory. It identifies the Industrial Disputes Act as the worst culprit, but says it protects only a tiny minority - the tiny minority of a “lucky labour” such as the employees of the Bharat Forge. That leaves the vast majority of the workforce working in small or tiny enterprises either less protected or ill protected. But the story doesn’t end here.
Even in the organized sector there is a lesser known tale that is rarely told. Right since the 90s when liberalization progressively weakened the labour protection de facto, there has been a concerted campaign to avoid replacing the expensive aging work force that retires or is got rid of through “attractive” VRS scheme with new recruits, who still “cost” a lot; but instead to hire “contract labour” on the cheap for purely temporary spikes in work. After less than 6 months employment, the contract labour is sent for a cooling off period of an equal duration when their ranks are filled by those who have completed their cooling off period. Across the board today in the medium and large scale manufacturing firms about 80 to 90% work force comprises of such “temporary workers” who perform the same tasks as their permanent counterparts at 1/5th or 1/4th the wages. Such is the efficacy of the “over-protection” provided by the Industrial Disputes Act. The Economist wants even such impotent de jure legislation undone de facto to ostensibly improve job opportunities for the new workforce of the next decade, when Capital itself is outwardly denying any role for cheap and abundant labour for its competitiveness, though using it on the sly. They would prefer to be without any laws rather having to break them. Global Capital is hankering for a “little lawless corner” that Charles Dickens describes in his novels and has “unfortunately” lost it in most of the industrialized world.
The Financial Express resident editor, Subhomoy Bhataacharjee, argued in favour of laissez faire in Indian labour markets in his article “Filling the Iron Bowl” on August 7, and just 6 days later the above article in Economist appeared in Indian Express. Incidentally, both articles are “exercised” over how to take care of the masses looking for food and jobs. Is it just coincidence?