Commentary
on the reports published by CSE, Azim Premji University and World Bank
Sanjay Kumar
Public
reports on important economic and social issues by research institutes, public
policy institutes and the so-called ‘think-tanks’ are increasingly becoming
significant contributors to public discourse. The form of such reports, using
graphics, tables,and boxes on case studies and important points, is meant to
bring out results of the ongoing specialised and academic research in the public
domain for general discussion. Hence, such reports try to create a bridge
between objective knowledge derived through focused research on the one hand,
and public discourse on the other. The underlying assumption is laudable,
because a judicious public policy mix can emerge only out of an informed public
discussion and debate. However, as this commentary will try to show, under the
veneer of research and academic claims such reports also contribute to biases
of dominant ideologies, and hence require critical appraisal.
Two
important reports related to work were published last year. The State of Working India 2018 (SWI) was
brought out by Centre for Sustainable Employment of Azim Premji University. Its
lead author is Amit Basole, head of the Centre. Besides available data and
existing research, the report also draws upon a number of background papers written
specifically for it by academics, journalists and activists. The other report
is the 2019 World Development Report titled The
Changing Nature of Work (WDR2019), published by World Bank, and written by
its staff. Digital versions of both reports are freely available on the
internet. SWI looks at the macro and long term trends in employment and
conditions of work in India during the past two and a half decades. It is an
objective assessment based upon a wide variety of data. It does not fight shy
of controversies.While explaining issues under debate, and presenting arguments
from both sides, it does not hesitate to state its own position unambiguously
with argument and data. WDR2019 is about the ongoing restructuring of
employment due to new technologies like robotics, artificial intelligence, etc.
and possible responses from state institutions to these potentially disruptive
changes. It is a mixed bag. The language is borrowed from capitalist managerial
discourses, it misrepresents radical anti-capitalist arguments, and even some
of the data and studies it relies upon are not dependable and thorough.
What
is Happening to Working Indians: An Objective Appraisal
SWI
starts with an executive summary of main observations and conclusions, that
actually sets up the current context and orientation of the report. It is
followed by six chapters including the Introduction and Conclusion. The four
theme-based chapters are on the nature of the Indian workforce, employment
trends in different sectors of the economy, quality of available employment
from the perspective of workers’ welfare, and continuing caste and gender
disparities and discriminations in Indian working environments.
Two
facts stand out about the current employment scenario in the country. First is
the jobless nature of growth under neoliberal policies sincethe early 1990s,
and secondis the drop in the number of jobs since 2015. Regarding the first
fact the Executive Summary notes that whereas in the 1970s and 80s 3-4 percent
GDP growth led to around 2 percent employment growth, the 1990s, despite a much
faster GDP growth of 7 percent on average,has led to a 1 percent growth in the number
of jobs. The situation became worse after 2013. According to the
Employment-Unemployment Surveys of the Labour Bureau (LB-EUS), the total volume
of employment in the Indian economy shrank between 2013 and 2015. In the face
of unflinching data from the LB-EUSthat the number of jobs in the country is
decreasing, the Modi government did a creative intervention. It simply stopped
the Labour Bureau survey after 2015. So, now there are no official estimates of
the number of jobs in the economy.
The second chapter analyses trends in the Indian
labourforce.The country had 926 million working age people (i.e. those above
the age of 15 years) in 2015, and their number is increasing at the rate of 2.7
percent. Out of this, 50-52% constitute its labourforce, which is made up of
people either in employment, or looking for one. This percentage is called the
labour force participation ratio (LFPR). The ratio of people looking for work,
to the total labour force gives the unemployment rate (UR).
After the Modi government stopped Labour
Bureau surveys, the only estimate of LFPR and UR are from the non-governmentCenter
for Monitoring Indian Economy (CMIE) surveys. The LFPR in 2017 showed a significant
drop to 43.9%. Roughly 40 millions less Indians were employed in 2017 than in 2015.As
against the serious loss of jobs brought out by the CMIE surveys, Surjeet S Bhalla (who till recently was a
member of the Prime Minister’s Economic Advisory Council) and Tirthamonoy Das
claim creation of 13 million new jobs in 2017. SWI systematically debunks this
claim in Box 2.1 by showing that Bhalla and Das actually assume (namely a high
LFPR and a low UR) what needs to be proved.
According to the BSE-CMIE data the
unemployment rate stood at 5.7% in 2018. Such high rates are a relatively new
phenomenon in India. It is widely known that India suffers from underemployment
because the sprawling labour market of the unorganised sector always ‘clears’
the labour supply, including child labour. The new unemployment phenomenon
relates to educated unemployed. Outof 55 million graduate and higher educated
in the labour force, 9 million, i.e. one out of six, are unemployed. Another
feature of the employment scenario in India is a very low 27 percentLFPR for
women compared to other countries in a similar economic bracket. As SWI rightly
notes, ‘while men are openly unemployed, women are not even part of the labour
force.’
Thestructural change in the Indian economy
is the focus of the third chapter titled ‘Where is the Work?’ It frames this
question analyticallyby two processes, which it calls the Kuznets process and the
Lewis process. The former refers to transition from an agriculture based subsistence
economy to an industrial economy. The latter refers to transition from self-employment
and family-based small enterprises to large formal enterprises run on hired
labour. From the point of view of development economics both are desirable as
they imply increase in productivity and the possibility of a legally imposed
welfare regime.
Since independence the proportion of
Indians engaged in agriculture has been declining, yet till the beginning of
this century, their absolute number was increasing with population. Since then the
Indian economy has entered a new phase of declining workforce in agriculture.
During 2005-11, the employment in agriculture declined by 37 million. The number continued to drop in subsequent
years. It was 12.6 million during 2011-15. This slow downhappened mainly
because there are not enough jobs outside agriculture. In the earlier period
the workforce increased by 52 million, and absorbed both new entrants and
people leaving agriculture. In the latter period the work force increased only
by 14 million. Slowly but steadily the Kuznets process is on, but it is also
causing much misery.
The report underlines four important facts
about industrial employment. The share of manufacturing workforce has remained
between 10-13 percent in the past twenty-five years. It is low compared to
other developing countries with similar per capita income. Capital intensity is
increasing in all industries. Labour productivity is increasing, but real wages
are increasing at a much slower rate, which means that the share of wages in
the total output is declining. The fourth fact is that the proportion of
contract workers is increasing, mainly on account of declining proportion of
permanent employees in large enterprises.
Consistent with the fourth fact is another
recent trend. There is a rapid rise in the share of employment in the organised
manufacturing sector, i.e., factories employing more than ten workers. This
share was around 18 percent in 2011, but shot up to 27.5 percent by 2015. One
possible reason the report notes for this is that after the relaxation of
labour laws during the 1990s and after, larger firms have reduced
subcontracting to smaller firms in the unorganised sector, and are doing in-house
manufacturing with contract workers. This means that the conventional operation
of Lewis process is under much strain. As the report says,‘The understanding
that structural change would mean larger enterprises, and larger enterprises
would mean more formal and regulated employment has been challenged on both
fronts: first, because of a dispersal of production from larger to smaller
units, and second, because of the creation of an informal workforce subject to
fewer regulations, within the organised sector.’
A long standing debate in India is about
the effect of labour laws on the size of industrial firmsand the adoption of
technology. It is argued that the existing labour laws which put some
constraints on the hiring and firing of workers encourage firms to remain below
the threshold of ten workers, and to use high technology to avoid hiring additional
workers. Hence, it is argued that these laws are harmful, both from the point
of view of economic efficiency and creation of industrial sector jobs. The
effect is seen in the problem of small number of medium size firms, compared to
both the smaller unorganised sector units, and large enterprises – the problem
of ‘missing firms’.Thisargument which is very common among management consultants,
journalists and even in academia is convincingly disproved by SWI. They cite
studies which show rampant underreporting of number of workers employed by
firms. As per Economic Census in 1981 ‘52 percent of factories employing 10 or
more workers that legally came under the purview of the Factories Act were not
registered under the Act... The ratio went up to 57 percent in 1991, and to 66
percent in 2013’. So the problem of ‘missing’ midsize firms is a bogus problem,
created by weak implementation of labour laws. SWI correctly terms the labour
law debate as ‘Missing Firms or Missing Workers?’
The
next two chapters of the report deal with the quality of work on offer, titled
‘How Good is the Work?’, and economic discrimination on the basis of gender and
caste, titled ‘Who does the Work?’Paucity of space does not permit detailed discussion
on a number of interesting data and conclusions in these chapters. The two
noteworthy features of the quality of work in India are a very low ratio of formal
employment (only 16 percent of wage workers have any written contract), and the
recent trend of large scale hiring of contract workers by large enterprises.
The economic discrimination against women and non-savarna castes shows in lower
wages and segregation. For the same employment type women earn 50-80 percent
less than men. A close correlation persists between a worker’s caste and
remuneration. A dalit is nearly three times more likely than a member of the ‘others’
(including both non-OBC Shudra castes and Savarna castes) to be in low-paying
elementary occupations, and nearly four time less likely to be in high paying
professional jobs.
SWI
focuses mainly on the economic aspects of work in India. However, there are
many other aspects which depend on social and state practices and are directly related
to politics, including class politics. For example, the question of industrial
accidents is urgent, not only in informal enterprises, as shown in the flooding
of a mine in Meghalaya, but also in large enterprises which employ large number
of contract workers. The widespread violation of labour laws, including laws on
minimum wages, trade union activity, and against bonded labour and child labour
is another phenomenon little discussed in literature. One hopes that the Center
of Sustainable Employment will continue the good work initiated with SWI 2018,
and would take some of the other issues related to work in future reports.
Firing
Salvos of Capitalist Class Interest from the Shoulders of New Technologies
TheChanging Nature of Work is ‘a World Bank Group Flagship Report’ for the year
2019. On its front cover it has the painting ‘Making of a Fresco’ by Diego
Rivera, the famous Mexican mural artist, well known for his Marxist leanings,
who was also a member of the Mexican Communist Party. This is ironic. The
report could have gained from discussions and debates on new technologies among
diverse Marxist currents, but avoids them completely.
The
report has seven chapters and an overview. The foreword by World Bank president
Jim Yong Kim, sets the orientation, tone and important assumptions and
ideological blind-spots of the report. About the current state of humanity, it
claims rather blandly that ‘(w)e
are riding a new wave of uncertainty as the pace of innovation continues to
accelerate and technology affects every part of our lives
‘. For working people, the uncertainty is linked to the nature of jobs in the future.
‘Many children currently in primary school will work in jobs as adults that do
not even exist today’. Such new jobs ‘will require specific skills – a
combination of technological know-how, problem solving, and critical thinking
as well as soft skills such as perseverance, collaboration and empathy’. All
these are declared to be essential parts of ‘human capital’ on the basis of
which working people of the future can participate in the emerging economy to
share in its prosperity. It urges developing countries ‘to invest’ in their
people; in education and health, which are building blocks of ‘human capital’.
The report unveils the Bank’s Human Capital Index, which ‘measures the
consequences of neglecting investments in human capital in terms of the lost
productivity of the next generation of workers’. It asks for rethinking ‘the
social contract’, which means finding ‘new ways to invest in people and to
protect them regardless of their employment status’.
All
this presents a practical concern for the future of working people. However,
this is only how the future of technological change and work appears if looked
through the glasses of capitalism and its managers. The cat comes out of the
bag with the statement, to protect people ‘regardless of their employment
status.’ Elsewhere in his foreword Mr Kim states that ‘(t)he days of staying in
one job, or with one company …. are waning. In the gig economy, workers will
likely have many gigs over the course of their careers’. It is interesting that
this reference to the gig economy comes right after the claim that new jobs
would require ‘problem solving skills, critical thinking’, etc., mentioned
earlier. The largest number of gig workers worldwide are with e-commerce
platforms like Amazon, or taxi service providers like Uber. Employees of these
sectors have been protesting against harsh working conditions. The city of
London recently demanded that Uber treat its drivers as its employees, which
among other things implies that they receive at least minimum wage. In what
sense home delivery ‘boys’ and overworked taxi drivers require higher cognitive
skills is debatable. From the point of view of capital they are ideal workers,
because they fit perfectly into the commodity character of labour, to be
bought, used and discarded as and when needed, without any encumbrance. In
labour studies such jobs are termed precarious employment. Not surprisingly,
this term is of little use to World Bank specialists.
The
first two chapters of the report deal with the seemingly objective processes of
the changing nature of work and firms. The remaining five chapters deal with
social policy under headings like ‘Building Human Capital’, ‘Lifelong
Learning’, or ‘Ideas for Social Inclusion’. The report acknowledges that some
of the data it uses in earlier chapters is inconclusive. For example, a graph
on the percentage of jobs at risk from automation from a study done at Oxford
University shows wide variations for all countries mentioned, from 6 to 56
percent for Japan, for example. One is left wondering about the purpose of such
studies. On the other hand, there are other concrete studies of the actual
effect of new technologies on existing jobs. Devika Narayan (who incidentally
has been a part of Critique
collective) has done a detailed ethnographic study of the IT industry in
Bangalore. Some of her conclusions appear in Box 3.3 of the report on the State
of Working India discussed earlier. These are instructive for appreciating the
direction of winds of change in high technology sectors. Regarding recent
downsizing in the Indian IT sector she notes that it is not temporary but
reflective of permanent structural shifts. The new work environment is stressful;
13-15 hour workdays are normal. Following the adoption of Artificial Intelligence
(AI), cloud computing, and data analytics, new areas of jobs are emerging, both
for niche software skills as well as for marketing. These, however, do not
compensate for lost jobs. Further, an internal polarisation is emerging which
also has a social component. Employees with specialised niche skills belong to
elite institutions like the IITs. Graduates from Tier 2 and 3 engineering
colleges with ‘generic’ skills are in low demand.
The
WB report frames the effect of technology on jobs in terms of two related, but
seemingly contradictory processes. Automation replaces labour in production.
Many jobs in manufacturing are likely to be taken over by robots. AI is taking
away jobs requiring cognitive labour of data processing and analysis, and managerial
jobs requiring information access and control. Investment decisions, assessment
of loan applications, disease diagnostics, etc., are increasingly being taken
over by AI algorithms, requiring less humanpower. Even routine jobs like
driving will be taken away by sophisticated sensors married to AI. Innovation,
on the other hand, shows in development of new products and services which
create new kinds of jobs. Trends from advanced economies, where this process
can be assumed to have advanced the most, are towards polarisation of jobs –
expansion of both high paying and low paying jobs, with contraction of middle
level jobs. This fact though is not integrated into the report, and gets only a
cursory mention. The predictions of the US Bureau of Labour for the growth of
different kinds of jobs between 2014 to 2024 are revealing. Computer and
mathematical occupations, with a median wage of 80,000 dollars are projected to
grow at double the rate of other jobs, but the number of people employed will
remain small – about 2.8 percent of the total people employed. Personal care
and services occupations, with median wage of 21,000 dollars will also grow at
the same rate, but will employ about 50 percent more people than in the
computer occupations. Health Care Support jobs having median wage of 26,000
dollars will grow fastest, four times the rate of other jobs. Manufacturing
jobs will shrink. Office and administrative support, sales, and food
preparation and services, all with low median wages will be occupations with
the largest number of jobs.
Occupational
polaristion is one aspect of increasing economic inequality. A comprehensive
report on economic inequality was released by World Inequality Lab in 2018.
This report concludes that in all regions of the world inequality has increased
in the past 35 years, though the rate of growth is not same in different
regions. The World Bank report, on the other hand, makes selective use ofdata.On
the basis of a narrow set of data from Russia is tries to argue that inequality is actually a problem of
perception, rather than a reality. This is a bogus claim.
Income
distribution in any economy has a significant impact on the nature of jobs. In
a country with large inequality a significant proportion of jobs are constituted
by personal services for the well-off. Whereas more jobs for public provision
of goods and services tend to be the norm in countries with low inequalities.
However, like precarity the effect of inequality on the nature of jobs is also
foreign to the concerns of this report.
The
second chapter of the report is on the changing nature of firms. New digital
technologies permit new and faster avenues for market interaction. Ikea sources
its products through a digitally connected global marketplace. Digital
e-commerce platforms provide direct access to consumers at their home. Firms
find it easy to scale up in this atmosphere. The report also notes the tendency
towards monopolisation, so that only a few start-ups in a sector survive. Tax
avoidance by global corporates is also discussed. The location of value
addition in global supply chains is not easy to identify. Corporates use this
loophole to declare their profits in tax havens. One aspect missed by the
report is that digital firms like Uber, dealing in the free flow of data are
actually champions of avoiding not only tax regulations, but any regulation at
all. Clearly, from the point of view of quality of jobs, absence of any
regulation should be of prime concern. The report is silent on this issue.
The
ratio of wages to output has declined everywhere in the past three years. That
is, people who work are getting less and less of what gets produced. This is a
result of the neo-liberal offensive. In this environment, new digital
technologies are giving capital even more pervasive and deeper control over
production processes, market dynamics, and surveillance power through data
capture and analysis. This is turning
new technologies into a powerful weapon of class domination. Hence, new technologies need to be seen not
only in technical, but also in their socio-political contexts. Capitalism
extracts work through the threat of unemployment. Long working hours for one
set of workers, and forced unemployment for the other, are the mechanisms of
this threat. On the other hand it is perfectly consistent with new technologies
that all workers equally and collectively share the burden of necessary work.
This will reduce the number of working hours, as well as remove the threat of
unemployment. Needless to say, this is possible only if workers gain the upper
hand.
Given
the myriad blind spots of the report which are a consequence of its inherently
pro-capital bias, the social policy advocated for dealing with possible
disruption of employment scenario is not surprising. Its main logic is: Please
do not encumber employers with minimum wage, employer-provided health care, or
protection against dismissal. Employers as such are going for automation due to
high labour costs (a claim which is hilarious in the context of developing countries),and
digital platforms are difficult to regulate anyway. The cost of labour market
distortion due to regulation of employment is too high when automation is
readily available. Given the latest developments in information technology it
is much better to move towards direct social welfare support to overcome
potential social unrest. Governments should additionally invest in early
education and health. Once workers are skilled, they will be able to fend for
themselves anyway in the job market. So, this is the panacea of market solution
this report ends up with!
Ideologues
of the World Bank are trained and get paid to paint a non-conflictual picture
of even a distressed capitalism. This is an image of the ‘freedom and democracy’
of marketplace where everyone, capitalists and corporates having control over
humongous means of production, and workers with their parcels of ‘human
capital’, enter freely in commodity exchange. In reality, capitalism is a
battle zone in which workers lose every day. The marketplace is not a
harmonious venue of equality. There can be no equality between super-rich
capitalists jostling around for even more profits, and workers forced to sell
their ability to work because that is the only way they can survive. Rather
than being content with remaining separateand alienated owners of their ‘human
capital’ in competition with other such owners, workers regain their humanity
by collective actions and constituting themselves as a class. This makes their
everyday struggles directly political. Through strikes and other forms of
collective action they force the state to regulate capital and implement
policies to protect them from the most vicious attacks by capital. The future
of jobs will be determined largely by the character of class struggles working
people are able to wage in the coming decades.
Sanjay
Kumar teaches Physics at St Stephen’s College, University of Delhi.
(This commentary was first published in Critique, Vol 6, Issue 1, 2019)
