ECONOMIC HIGHLIGHTS

New Delhi, 28 November 2008

Dispense Feudal Mindset

NEW REFORM ERA NEEDED

By Shivaji Sarkar

It is a well known fact that employers’ profit remains safe either when the economy is in boom or doom.  It is the worker who suffers in both the cases. The productive employer is not considered an important input. He is supposed to be the most dispensable and often useless of all the “ingredients”. Whenever it hits profits, the employer has the easiest way of chucking the worker off.

Neither the industry nor the Government has taken any taken steps to create insurance for job losses. Whatever little safety measures were created since Independence have been deliberately eroded since 1991, which ushered in the era of liberalization in the name of labour reforms without changing the law.

More of such “reforms” meant the workers basic right was trampled upon. The Government, as the Marxist would say, coalesced with the capitalist employer. The employer’s right was always protected and the worker allowed to starve if not die.

Nobody is sure how many jobs are being lost. The Government, on its part, has adopted an ostrich-like policy and would like people to believe that job loss is an elusion. The industry pattern of couching such losses as lay-off --- temporary job loss or keeping the casual workers off the roaster is not officially treated as a loss of job.

The total job loss through this year (2008) is estimated from a modest two to three million to a staggering 10 million. Both the figures are correct. About three million jobs are being lost in the organized sector and another seven million in the unorganized sectors that depend for their survival on the organized sector.

According to the Confederation of Indian Industry (CII) Secretary General DK Nair, over 700,000 people have already lost their jobs this year and another 500,000 more could be laid off. Not only that. Many mills, particularly in the textile and garment sector, which are running at 75 per cent of their capacity, have reduced shifts and running three to four days a week, he added.

Still the employer grudges that he does not have the freedom to hire and fire. Hiring and firing is a rule in the Indian context because the Labour Department despite enough legal powers does not act. The officials are less honest and get influenced by the employer. Often the political boss also prevents them from taking action when the worker is affected. Worse, the labour courts have become a mockery. What more “reforms” would an employer like to have?

The Labour Department is not known to have effectively sued even an employer for default in depositing the Employees’ Provident Fund contribution to the Employees Provident Fund Organisation. Nor have they taken any action for default in depositing the contribution to the Employees State Health Insurance Corporation. An employer with ‘packets’ to distribute to officials can go scot-free. This has happened in all States including the Left Front-ruled Kerala and West Bengal.

“For the world’s 1.5 billion wage-earners, difficult time lie ahead”, warned the International Labor Organisation (ILO) Director General Juan Somavia. He also dispensed with the view that the era of liberalization saw a wage increase. The ILO Global Wage Report 2008-09 states that between 1995 and 2007, each additional one per cent of growth per capita GDP led to an average of only a 0.75 per cent annual increase in growth of wages. As a result, in almost three-quarters of the countries worldwide the labour share in GDP had declined.

The reports also states that since 1995, inequality between the highest and the lowest wages have increased in more than two-thirds of the countries surveyed, including India. Often reaching unsustainable levels.

Sadly, the policy makers and economists have ignored this quotient. The new genre of economists, unlike the ones in the 1950s of the Prasant Mahalanobis School, gave the labour and their trade unions a bad name and left it to fend for itself often sustaining the worst treatment by the employers. They turned regular jobs into contract ones, gave raises to lure them away from the legal security net and then fired them with impunity. All over the country there are lakhs of such instances. No employer has been prosecuted for blatant violation of the law.

The jobs have been lost in the US too. It has reached a 16-year high to touch 542,000. But so have the cost on the support system. The workers losing jobs get social security benefits to sustain their living.

India does not have any. The workers are leaving in droves from cities like Hyderabad, Mumbai, Surat, and Kolkata to go back to their villages. There is a similarity between them and their brothers in China. Both do not have social security benefits. The family comes to sustain them.

These workers are going back to increase the fold of farm labourers thus further eroding incomes in the rural areas. The agriculture sector which employed 52 per cent in 2007-08 is likely to go up at least to the 1993-94 level of 61 per cent if not the 1983-84 level of 65 per cent.

The large industrial employers are responsible for this grim situation. Since Independence they have not allowed any job insurance or social security benefit to be built up. Liberalisation has come as a strong tool for them to further deprive the work force.

The employers forget that the work force is the potential consumer. If they are not strengthened the economy cannot be strengthened. The Indian industrialist unfortunately has been extremely self-oriented with a feudal mindset. They do not consider the work force to be their compatriots.

Needless to say, the Indian workers have lost during the socialistic regimes as the employers called them “bandicoots”, when they fought for their rights. In the liberalized economy, though all industrialists saw their own coffers rising, the workers were forced a cut on their basic wages.

A new era of reform has to be ushered in. The Government, of any shade, has to care for the workers. It has to usher in reforms keeping the labour as the foremost priority. Sustainable growth that the Eleventh Plan aims at would remain a distant dream unless the reform process starts with increasing the benefits of the working class. A mere GDP growth cannot be the objective if it does not translate into all-round growth and poverty alleviation.

This calls for policy re-orientation. The World Bank’s pro-rich and pro-stock market policies have ushered in the present doom. It has still not published the World Development Report that was due in September. This is recognition of its policy prescription failure. It is time a new policy formulation is created which treats the labour as the prime development force and takes policy prescriptions from the ILO.

The world is looking towards India for the new prescription. If the present Government or the new one does it, this could be the beginning of a change. All that Karl Marx said may not be correct but all that Keynes said is also not correct. Labour has to be given more weightage. ---- INFA

(Copyright, India News & Feature Alliance)