Economy and Labour force in India

Indias planned economic development gave a big push to heavy industrialization which witnessed a phenomenal growth of the public sector and establishment of a diversified industrial base. Still only 52% of the workforce is literate and 60% depends on agriculture. In organized industry, employment has stagnated in relative terms. The tertiary sector is growing rapidly and accounts for 23% of employment and 49% GDP. Together with tertiarization of the economy, there is growing casualization of employment. This is a major cause for concern for workers, unions, and government. Improving the base of education and skills and restructuring agricultural workforce in non-farm rural employment is imperative for addressing the triple curses of unemployment, poverty, and inequality. Together the issues of labour mobility, both domestic and international, labour commitment, work culture, productivity and competitiveness need to be addressed. These aspects critically influence labour management relations and warrant close cooperation and collaboration between the two for making the economy globally competitive

Tertiarization economies are those where the service sector dominates growth in terms of share of employment and GDP Casualization refers to the employment of a large percentage of labour force in casual occupations Labour Mobility refers to the inflow and outflow of the labour force from one country to another and within occupancies on an annual basis Labour commitment is a situation wherein a permanent member of the working force, a committed worker, receives wages and is dependent for making a living on enterprise management that offers him/her work and directs his/her activities at the workplace Work Culture deals with the behaviour, values and beliefs, and assumptions, concerning work, of all people at work, including managers

The history of Indian Economy and its labour force in the post independence period can be divided into 2 phases : 1. The import substitution era post independence (1947-1991) 2. The era of economic liberalization (1991present)

BEFORE LIBERALIZATION State sponsored and state mediated development Protected domestic market Budgetary and directory institutional resource allocation
Su sidies and administered price regime

AFTER LIBERALIZATION Market led and private enterprise dominated Competitive market Competitive capital market led resource allocation
Rational pricing, including user c arges

Welfare state active in la our market Systematic de-casualization of jo s

La our neutral and investment friendly state policies Fast re-casualization and contractualization of jo s

Largely government funded social security Crisis of sustaina ility of social security and welfare programs for a few welfare programs and pressure for security measures for all Sta le governing structure and policy regime Sta le, t oug o solete, la our intensive tec nologies Dominant status of manufacturing Crisis of governance and fear of political and economic insta ility Micro-electronics-led new generation capital and silk intensive tec nologies T reat if deindustrialization and rapid growt of service sector

Objectives before liberalization:1. Improve the conditions of labour and welfare of workers 2. Prevention and settlement of industrial disputes and maintenance of industrial peace and harmony to avoid disruption of industrial activity which could adversely affect the realization of plan goals 3. Controlling industrial growth to prevent concentration of economic power in the hands of a few an reduce income disparities among individuals and regions 4. Workers education 5. Workers participation in management

Objectives post liberalization: Facilitating growth of enterprise and entrepreneurship and aligning labour policies with economic policies A shift in policy focus from organized labour to unorganized labour eform labour laws and labour policies in the wake of globalization A shift in emphasis from job security to income security and social safety measures Concern for skills development, productivity and competitiveness eformation in pension policies A shift in the government role from control to facilitation

Economic activities are classified into 3 sectors: Primary (agriculture) Secondary (manufacturing) Tertiary (service) The tertiary sector came into existence post industrialization and its a major provider of jobs and the main source of GDP and economic growth. In India, since mid 1980s the service sector has been growing rapidly. In current scenario, the service sector has 400 million Indians working, and contributes roughly half of the Indian GDP. The contribution of the manufacturing sector has gone down over the years. It currently contributes to 25% of the GDP. India being an agrarian economy, agriculture forms the largest part of the GDP. Its contribution stands at 3/5th of the current GDP

2001 Population Labour force/workforce Or anize sector/formal sector Unor anize sector/informal sector Self employe Re ular workforce Casual workforce Employment in overnment an public sector Employment in private sector Unionize workforce/union ensity Workforce covere by collective bar ainin 93 55 13 32 >18 million >9 million 4 2 >1 billion <400 million

2001

The most common trends in the employment pattern : Declining stability and security in employment Declining labour intensity A growing irregular labour force due to extensive use of casual, contract, contingent, part-time, temporary, fixedterm, job-sharing, atypical, non-core/peripheral labour Shift from contract of service to contract for service Increase in home-based work and the consequent blurring of the gap between work and home when work is at home and home is at work Declining and/or extinction of a few occupations and the birth of a few others Declining mutual commitment: erosion of the concept of one person-one skill-one job-one company Declining influence of trade unions

the major trends in the labour market are: ecruitment ban/squeeze in the public sector and government employment Increasing open unemployment Decreasing formal sector employment in formal terms Growing casualization and contractualization of labour Falling employment elasticities Emergence of global chains splitting production processes into different parts dispersed over several locations Mergers, acquisitions, divestitures, and other ownership changes and consequential pressure on doing more with less Significant workforce reduction in both public and private sectors

To address/redress indigence (poverty), unemployment, inequality and illiteracy, the key issues and critical challenges before the government are centered on providing work to all those who seek it. Six challenges have been identified and discussed here: Technology and job creation Skills development Labour mobility Labour commitment Work culture Productivity and competitiveness

Technology, global competition and ownership changes through privatization and translational mergers have all resulted in a phenomenon of doing more with less and reduction of workforce for improving competitiveness In most areas e.g.. Infrastructure, transport, banking etc. its becoming imperative to use advanced technology regardless of their impact on employment New technologies usually displace unskilled workers and reward skilled workers. They also eliminate the dangerous aspect of work. Firms using advanced technologies shrink employment and expand scales of business

5% of the Indian labour force in the age bracket 20-24 years, has obtained vocational training Mismatch between skills acquired and skills required Dearth of skilled professionals The above points give a macro perspective of the labour market in India. Competencies for different jobs should be accused systematically both in the organized and unorganized sectors
Only

The government should invest in basic education, skills formation and training. Apart from achieving literacy for all, vocational skills provision should receive urgent attention. This can be best done through private public partnerships with due emphasis on vocational skills certification and appropriate funding. Vocational education should be integrated at the school levels. Also, special care should be taken to protect the interest of the vulnerable groups and to enhance income security for those who are adversely affected by unemployment or job loss.

Worldwide labour migration occurred due to globalization Globalization resulted in loss of jobs in some countries and gain in some Technology has played a large role in labour migration, resulting in job gain in some sectors and loss in some sectors Labour migration was at its peak during the 19th century The current technological advances has reduced job migration to a large extent, instead of people moving, jobs have been moved

 The

labour outflow from India has always been in great numbers, prior to liberalization the migration was largely in the unskilled labour sector mainly to the Gulf Post liberalization, a large number of skilled workers have migrated for large incomes Even with the dampening of US and European economies hasnt deterred skilled workers from migrating form India

committed labour is one who stays in the job and has served his/her major connection with land He/she is a permanent member of a workforce of an enterprise and draws livelihood from that enterprise There are 4 stages of commitment: Uncommitted worker Partially committed or semi-committed worker Generally committed worker Specifically committed worker

Uncommitted worker a temporary worker who accepts industrial employment to tide over some temporary difficulty and returns to the village after working for a short time Partially committed or semi-committed worker looks at industrial employment as permanent, but remains in contact with the village Generally committed worker dependent on industrial employment and has no contact with the village Specifically committed worker permanently attached to a particular enterprise and a particular occuaption

 Absenteeism

and turnover Grievances and indiscipline Poor performance

Lack of commitment leads to instability in the workforce and is reflected in absenteeism and high labour turnover. There are several causes for absenteeism and turnover, a few being: Seasonal (need to go back to the village during certain times of the year like harvest season) Personal habits (gambling, alcoholism) Family problems (polygamy, poverty, sickness etc.) Push (unfair company policies and practices) Pull (opportunities for moonlighting or earning a better livelihood informally by going on leave or changing jobs) Factors and customs and traditions (festivals, marriages and other social/family ceremonies)

In traditional industries absenteeism is tackled by badli labour causal basis Some industries give incentives for things like punctuality, regularity to work etc. Some even use counseling to understand the root cause of the problems and tackle it better than before The problem of turnover is handles through allowances and/or awards for long term service in case of blue collar workers For white collar workers the companies have modified their H policies with employee expectations, benchmarking best practices for retention of employees

Persistence of grievances reduces commitment and can also lead to indiscipline

 Low

labour commitment results in poor performance Low labour commitment could be due to the absence of factors which have to do with quality of supervision, company policies, work environment etc. Poor performance is often more a function of will than skill Skill gaps and mismatches are usually apparent and relatively easier to deal with

 Work

culture does not mean worker culture Its the behaviour, value, beliefs and assumptions of all workers, including managers, towards work A good work culture is when work is work ship, the worker is respected, and the workplace is clean in every sense of the word

 Firms

do not operate in vacuum From independence till 1970s, India was the second largest economic power in the entire Asia-Pacific belt The assendancy of other Asian economies, corresponded with the meltdown with Indian economy Indias share in the international trade was 1.5% at the time of independence. Today its 0.8%, a little over half its share in 1950s A comparative table showing the productivity of India has been shown

Parameter

Highest among 47 countries

Lowest among 47 countries

India

Rank of India among 47 countries

Overall productivity GDP (PPP) per person employed in Overall productivity GDP per person employed (US$) Overall productivity growth (%) change of real GDP per person employed

67,354

4849

4849

47

84,657

824

824

47

6,543

-6.912

5.886

Labour productivity (PPP) GDP (PPP) per employee per hour Labour productivity GDP per employee per hour

38.14

2.15

2.15

47

47.37

0.37

0.37

47

Parameter

Highest among 47 countries 72,117

Lowest among 47 countries 128

India

Rank of India among 47 countries 45

Agricultural productivity related to GDP (PPP) per person employed in agriculture Agricultural productivity related GDP per person employed in agriculture Productivity in industry (PPP) related GDP (PPP) per person employed in the industry Productivity in industry related GDP per person employed in industry Productivity in services (PPP) related GDP (PPP) per person employed in services Productivity in services

2017

49,084

138

343

45

80,258

8038

8038

47

97,306

1366

1366

47

87,272

6026

10,010

45

101,641

1695

1701

46

Golden rules of competitiveness 1. Create a stable and predictable legislative environment 2. Work in a flexible and resilient economic structure 3. Invest in traditional and technological infrastructure 4. Promote private savings and domestic investment 5. Develop aggressiveness on the international markets (exports) as well as attractiveness for foreign direct investment 6. Focus on quality, speed and transparency in government and administration . aintain a relationship between wage levels, productivity and taxation

8. Preserve the social fabric by reducing wage disparity and strengthening the middle class 9. Invest heavily in education, especially at the secondary level, and in the lifelong training of labour force 10. Balance the economies of proximities and globality to ensure substantial wealth creation, while preserving the value systems that citizens desire

reflects a combination of following: a) Logic of Competition. b) Logic of employment-income protection. c) Logic of industrial peace.

 In

order to limit industrial conflict in the interest of economic development, countries like India adopted economic development strategies based on the import substitution industrialization(ISI) model. These strategies curbed internal & external competition through licensing regulations & protectionist tariffs to assist local industry. Emphasis was to protect labour in the labour market & capital in the product market.

Focus on promoting efficiency, both in terms of labour market flexibility & labour productivity. Policies & practices to promote these include: Elimination or marginalisation of trade unions. Exemption of export processing zones from national labour legislations. Using selective immigration as a means of ensuring an adequate & flexible supply of labour Competition based on quality & innovation. governments emphasize on skills training to improve workers competencies particularly where labour shortages occur.

 It

represents workers response to employment instability caused by management & labour market imposed hardships on workers. Many developing countries have neglected it 7 realized it when there was highest need but lowest capacity. Hence 20% of the workers in the world have meaningful employment schemes.

 Different

combinations of these logics lead to differences in employment relations patterns like a) egulated protective(India) b) Constrained Competitive(China) c) Deregulated Competitive(Philippines) d) Protective Competitive(Malaysia) The logics of action framework is a useful in understanding the nature & direction of industrial relations systems.

 It

can be traced to period of colonization in the 16th century. It is the economic integration across the globe in terms of free movement of capital, technology, products & people.

 Perceived

benefits of globalization are: Sustained economic growth Free markets with little or no intervention from government, result in the most efficient & socially optimal allocation of resources. It spins competition, increases economic efficiency, creates jobs, consumer prices, increases economic growth and is generally beneficial to everyone.

 It

is benefitting few & hurting many. It is another form of imperialism. It is leading to growing inequalities between the rich & poor, both at the level of individuals & among countries. It is destroying jobs & local communities. It is ruthless, rootless, jobless, fruitless.

The traditional I is not geared up to meet the new market challenges in the face of globalization. Some of the features of the given phenomena are: The institution of trade union is getting weak. Employers are going for unitarism & non-unionism. The institution of collective bargaining is being decentralised & being replaced by unit bargaining, individual bargaining & commercial bargaining. Disinvestment/ Privatisation & V S are accepted facts of I . Changing patterns of Compensation/ ewards management Fixed/Assured time rate wages are replaced by variable/performance-based wages. Well paying, secure, low-productive jobs in organised sectors are replaced by low-paying more insecure productive jobs in unorganised /self-employed sectors.

 It

changes ownership, which may bring out changes not only in work organization & employment but also in trade union organization & trade union dynamics. It changes the work organization by necessitating retraining & redeployment. It affects the rights of workers & trade unions, including job/union security, income security & social security.

These include : Making workers the owners through issue of shares or controlling interest. Negotiating higher compensation for voluntary separations. Safeguarding existing benefits. Setting up further employment generating programmes. Proposals for setting up new safety nets that include not only unemployment insurance but also skills provision for redundant workers.

 In

the sphere of labour laws, it usually results in erosion of the accrued interests of workers & trade unions. The issue often concerns enacting minimal protective measures to ensure that transferred public sector/government employees receive similar protection as is provided in public/government employment.

 Before

globalization, pension schemes usually provided defined benefits. In the post globalization era, it is often restricted to defined contributions. This means, usually, a reduction in pension benefits and an uncertainty concerning future provision of pension benefits due to a)The absence of government guarantees, b)Falling interest rates c) Investment of pension funds in stock markets.

 It

is seen in terms of the shift in consideration of I issues from macro to micro & from industry to enterprise level. When the coordination is at the national level or sectoral level, in the event of industrial conflict, work in the entire industry can be paralyzed. But when the dispute is at the bank level, in the absence of centralized coordination by trade unions, only work in that bank is paralysed and other banks function normally. This weakens the bargaining power of unions.

 Earlier,

I was the concern of three principal actors : workers & their unions, managers/employers, & the government. In the post-liberalization era, consumers & the community plays a significant role, hence the rights of workers/unions take a back seat.

 When

the states have adopted pro-investor policies, the trade unions are declining in power & influence. So, it is important to forge broader alliances with the society, consumers & community their power will dwindle.

 Gradual

withdrawal of the state from its traditional role of actively supporting organized labour. Concern for issues related to competitiveness & flexibility like increase in productivity, cost reduction, modernization, retraining & redeployment. Less emphasis on reinstatement & regularization of dismissed employees.

 In

the privates sector, the new young, and female workers are less eager to join unions. New employment opportunities are shrinking in these sectors.

 In

the post-liberalization period, workers are reluctant to go on strikes because of fear of job insecurity, concern about the futility of strikes. About 60% of the man days lost in the postreform period were due to lockouts & less than 40% were due to strikes. Instead of pressing for higher wages & improved benefits, trade unions are pressing for maintenance of existing benefits & protection & claims over non-payment of agreed wages & benefits.

 The

bargaining power of trade unions is also shrinking. Also, there is a gradual movement away from parity to disparity.