IT is widely agreed that India is shining but only for a small minority of around 10%, mostly consisting of the rich and higher middle class in urban areas. Are some segments of workers included in this group? What are the emerging prospects of securing employment for the large mass of the unemployed and new entrants in the labour markets? Is the quality of employment – earnings, regular availability of work, working conditions and elements of social security – of those employed improving? Are the workers’ rights now better guaranteed and institutions struggling for their protection better organized?

Employment, defined as gainful work of any kind, either on the basis of self-employment or hired wage/ salary basis, in production for self-use or for the market in agriculture, industry or services, in the public or private sectors and in the organized or unorganized sector, experienced a steady growth hovering around 2% per annum over a period of 30 years, 1960 to 1990. In itself this is no mean achievement if compared internationally, more so against a relatively low rate of growth of Gross Domestic Product (GDP) of around 3.5% per annum. When compared with the labour force growth of about 2.5% per annum, however, it fell short of providing employment for all and the magnitude of unemployment increased from around 6.5 million in 1961 to about 16 million in 1990 and unemployment rate from 3.6% to around 5% of the labour force.

The rate of employment growth declined sharply to 1.50% during 1990-92 and further to 1.07% during 1993-2000. During 1990-92, GDP growth also fell to a low of 3.4%, but deceleration in employment growth during the rest of the 1990s took place alongside an acceleration in the rate of GDP growth to 6.5%. The employment content of growth, as measured in terms of employment elasticity (ratio of employment growth rate to GDP growth rate), has been declining over the years, understandably for the reasons of technological changes, coming down from 0.61 during 1972-73/1977-78 to 0.52 during 1983/1993/94, but the decline was unusually sharp to 0.16 during 1993-94/1999-2000.

Unemployment rates, measured by various definitions of ‘workers’ – usual status, current weekly status and current daily status – which had shown a declining trend in earlier quinquennial periods from 1977-78 onwards, have increased. For example, according to current daily status criterion, the unemployment rate (unemployed as per cent of labour force), which was around 8% between 1977-78 and 1983, declined to around 6% between 1987-88 and 1993-94, but then increased to 7.32% in 1999-2000.

Thus, on the employment front at least, there was no ‘shine’ during the 1990s. Employment growth dipped, and a higher GDP growth rate did not help in accelerating it. Instead, unemployment increased – by current daily status criterion, it is estimated to have increased from around 20 million to 27 million and by usual status criterion, from 7 to 10 million. Net addition to employment during the seven-year period 1993-2000 is estimated to have been of the order of around 21 million while the labour force grew by about 27 million, thus adding to the backlog of unemployment by six million.

 

 

The employment scene is shining, no doubt, for those who have been able to find jobs in the fast-growing information technology sector. According to Nasscom, IT now employs 770,000 persons and is likely to employ two million directly and another two million indirectly (in IT enabled services) by 2008. Impressive as these figures seem, they have to be seen against the overall size of the labour force of over 400 million. It is also worth noting, as observed by The Economist (21 February 2004), that the IT related employment is concentrated in a few large cites and their satellites such as Noida, Gurgaon, Mumbai, Pune, Bangalore, Hyderabad, Bangalore and Chennai and very few persons of rural and poor background find jobs in this sector due to a lack of requisite skills. A ‘digital divide’ continues and is, in fact, widening.

It is also observed that a large majority of workers are employed in routine jobs with relatively low earnings and little scope for accumulating professional skills. The few performing high-end tasks have, of course, made significant gains from the expansion of the IT sector. Another group which has gained significantly consists of government employees who not only had a large increase in their earnings as a result of the Fifth Pay Commission recommendations, but were also benefited by the recent decision to merge dearness allowance with the basic pay resulting in sizeable increase in perks and benefits and pensions on retirement. The size of this group is, however, shrinking with the government policy of downsizing.

 

 

Recent estimates from the Planning Commission, however, suggest that the process of deceleration of employment growth has been reversed during 2000-2002. During the period June 2000 to December 2002, employment growth has been over 2% per annum with an average of 8.4 million jobs added per year, as revealed by the preliminary results of the 58th Round survey of the National Sample Survey Organization (NSSO). Encouraged by these results, the Planning Commission is now hopeful of achieving the Tenth Plan target of 10 million jobs per year with the realization of the envisaged GDP growth rate of 8%.

Doubts are, however, being expressed about the veracity of these figures, probably because the sudden turn around indicated by them is difficult to explain. Equally, it must be kept in mind that the results of the 58th Round are based only on half yearly surveys and unlike the quinquennial round the sample size is small. Hence, the results should be interpreted with caution. Firm and detailed results based on large sample survey will be available only in the 60th Round which is expected by June 2004. But the more important questions are – where are these additional jobs being created and what is the quality of these jobs? Details about sources of employment opportunities generated are not available at present. But as was indicated by S.P. Gupta, Member, Planning Commission, while releasing the results of the survey on 19 January 2004, most of the new jobs have come from the small-scale sector.

 

 

It is, in fact, reasonable to surmise that most of the new employment that was generated during the decade of 1990s and particularly in recent years, is located not only in the small, but in the unorganized sector. Organized sector employment has experienced a virtual stagnation over the period 1994-2000 showing a growth rate of only 0.56% per annum, mainly in a few sectors – trade, hotels and restaurants, and finance and insurance, even as unorganized sector employment has grown, in fact, at a more rapid rate.

According to estimates provided by the Director General of Employment and Training (DGET), organized sector employment saw an absolute decline of 9.1 lakh during the period March 1997 to March 2002; more than half of it in the manufacturing sector. During a single year 2001-2002, organized sector employment declined by 4.2 lakh. Unorganized sector employment, on the other hand, has shown consistently higher growth than the organized sector. The share of unorganized sector employment which was estimated to be around 93% earlier should, therefore, have gone up and may further increase over the coming years.

It is well-known that quality of employment – in terms of earnings, regularity of employment, work environment and social security – vastly differs between the organized and unorganized sectors. Workers in the organized sector enjoy better wages and salaries, job security, reasonably decent working conditions and social protection against such risks as sickness, injury, disability and death arising out of hazards and accidents at work, separations and old age. Those in the unorganized sector generally have no protection against these risks, have low earnings, often lower than the modest statutory minimum wages and have no regularity, leave aside security, of jobs. An increase in the share of unorganized employment obviously means an overall deterioration in the quality of employment. And the shedding off of jobs by the organized sector and workers rendered redundant in the process of finding refuge in the unorganized sector, implies an absolute fading of whatever little ‘shine’ a small segment of the workforce had in their jobs!

 

 

Even within the organized sector, an increasing number of jobs are appoximating the character of those in the unorganized sector as a result of the increasing labour market flexibility in the wake of globalization. A comprehensive survey of about 1300 firms, scattered over 10 states and nine important organized manufacturing industry groups (consisting of both public and private sectors), undertaken by the Institute for Human Development (sponsored by the Ministry of Statistics, Government of India), shows that between 1991 and 1998 although the total employment increased by over 2%, most of the increase was accounted for by temporary, casual, contract and other flexible categories of workers. Several other studies at micro level also show that flexibility in the labour market increased after the introduction of economic reforms in India, and despite the existence of restrictive labour laws, the firms were able to retrench a large number of permanent workers. In addition, many units were closed, leading to unemployment of thousands of workers.

 

 

Another dimension of deterioration in the quality of employment – in terms of low earnings, irregularity and uncertainty of work availability, poor conditions of work and lack of social protection and vulnerability to the risks and hazards – is seen in the increase in the casualization of the workforce. A majority of the workers, around 53%, still work as self-employed, mostly in agriculture, though their proportion has declined from around 59% in 1977-78 and 56% in 1987-88. Those in regular wage paid or salaried jobs continue to constitute around 14% of all workers for over two decades. This segment of the workforce has regular jobs with security, relatively better earnings and social security and can, therefore, be considered, as ‘feeling good’.

But their proportion is not increasing and there is a likelihood of its decline over the coming years, as most of these jobs are in the organized sector where employment has stagnated or is in decline. On the other hand, the category of casual employment, characterized by all the vulnerabilities and risks – of irregularity and uncertainty of work, low earnings, unfair treatment by employers and lack of social protection – has steadily increased. From 23% in 1972-73, the proportion of casual workers in the total employment increased to 30% in 1987-88 and rose further to 33% in 2000.

That the casual workers are worst placed among the three categories of workers even in terms of the single indicator of income is indicated by the relatively higher incidence of poverty amongst them as compared to the other two categories. In 1999-2000, 55% of casual workers in rural areas and 50% in urban areas belonged to households below the poverty line; the corresponding percentages for the self-employed was 22.5 and 26% and for the regular wage and salary earners 15 and 11%, respectively.

A redeeming feature in the world of casual labour, however, is seen in the trend of rising real wages during the 1990s. Real wages of casual workers in rural areas are reported to have increased at a rate of 3% per annum and of those in urban areas by 3.5% per annum. In rural areas this has been attributed to two factors that have led to some tightening of the labour markets: special wage employment programmes and relatively faster expansion of non-farm activities.

It is, however, to be seen whether these processes will receive continued impetus, particularly in view of the questionable ability and commitment of the government to expand employment programmes and in the absence of a focused policy for rural non-farm sector. Most of the rural poverty and employment programmes have been restructured in recent years. Moreover, some programmes, particularly wage employment programmes, have received lower financial allocation during recent years. For example, from 1999-2000 to 2001-2002 the expenditure on Employment Assurance Scheme and Swarna Jayanti Rojgar Yojana considerably declined, which greatly affected the creation of person-days of employment from these programmes.

 

 

The forces unleashed by technology, liberalization and globalization have adversely affected the rights of workers and their bargaining capacity vis-à-vis employers. On the other hand, there is ascendancy in the managerial rights. While the trade unions have weakened, the militancy of employers is on the rise. There are several factors behind these developments. Unionization was largely confined to the organized sector in which the public sector accounted for two-thirds of employment. But employment in the organized sector, which constituted the base of trade unions, has shrunk. Privatization, downsizing, and resort to contingent and flexible categories of workers have all exacerbated this situation. Although the organized trade union movement witnessed a general decline, there has been an increase in the firm level unions. As a result, the federated and central trade unions have experienced further erosion in their bargaining power.

 

 

The trade unions have been further weakened by the ascendancy of managerial rights and new strategies like out-sourcing, parallel production, and so on. Apart from an aggressive shift in employment from the permanent to temporary, casual and contract employment, there has been a systematic transfer of jobs from the bargainable or unionized category to the non-bargainable or non-unionized category by several tactics such as redesignation of workers. All these developments have not only weakened the collective bargaining machinery, but in a significant number of cases led to agreements between local and plant level unions and employers which have adversely affected the interests and welfare of workers.

For example, the fear of losing jobs has impelled unions to accept cuts in salary, freezes in allowances and benefits, voluntary suspension of trade union rights for a specific period and, commitment to modernization, flexibility and action points to increase production and productivity. The weakening of the workers’ bargaining capacity and rise in the militancy of employers is also captured by a significant increase in the incidence of lockouts and a decline in the incidence of strikes. In the pre-liberalization phase – between 1976 and 1990 – the mandays lost due to strike were 54.9% while mandays lost due to lockouts were 45.1%; the corresponding figures are 39.2 and 60.8% respectively for the post-liberalization phase, between 1991 and 2000. Further, the average duration of lockouts is also considerably higher, roughly 2.5 times those of strikes.

The shift in the ideology of the state from welfarism to the neo-liberal values of market that call for labour flexibility is pushing such reforms through legislative, executive and judicial action. Unable to initiate legislative action because of constraints imposed by parliamentary democracy, the state has resorted to executive action and judicial activism for reinterpreting legal rights of labour in the light of the prevalent values. It is significant that the Parliament has so far not been able to liberalize labour legislation despite the recommendations of the Second National Commission on Labour.

 

 

But since labour is on the concurrent list of the Constitution, some of the states have issued directives to prevent or hamstring inspection of firms for compliance of the labour laws. For example, in Uttar Pradesh the labour inspectors can carry out inspection only after prior consent of an officer of the rank of Labour Commissioner or District Magistrate. Rajasthan and Andhra Pradesh have also reduced the scope of labour inspection, simplified forms and exempted several establishments from the purview of labour inspection.

The judiciary too, after liberalization, has been moving with the times, albeit not in a straight line. The judicial interpretation of law in respect of compensation against death and injury in the pre-liberal regime had created the concept of notional extension of the workplace in order to provide succor to the affected family. More recent judicial interpretations have almost done away with it. Now if a worker meets with an accident on his usual route to the workplace while going to or returning from the workplace, he will not be compensated. Few judgments delivered by the courts have gone in favour of organized labour during last 10 years or so.

 

 

The heaviest blow to collective bargaining and workers’ rights was the recent judgement of the Supreme Court declaring that government employees have no legal and moral right to strike. Although this judgement was delivered for government employees in the context of the strike by the Tamil Nadu government employees, it has far reaching implications for all other category of workers, as the arguments for banning strikes seem equally relevant in their case. It goes without saying that in the absence of the right to strike, collective bargaining will loose its meaning. So far all democratic nations conceded the ‘right to strike’ as a necessary concomitant of collective bargaining and India, too, was no exception.

Although no enactment provided a positive right to strike, the government, the judiciary and the people at large had interpreted the provisions relating to strike in the Industrial Disputes Act, 1947 read in conjunction with immunities provided in the Trade Union Act, 1926 to the effect that Indian workers enjoyed the right to strike. This has also been India’s position at international labour conferences. But the Supreme Court judgment on the right to strike has dealt a severe blow to workers’ right to use strike as an instrument of collective bargaining. Apart from this, the Kerala High court has banned bandhs, the Indian version of general strike and the Calcutta High Court has banned demonstrations in the city.

Even the consumer courts have delivered some judgments which strike at the interests of workers. For example, the telecom union in Orissa and the mathadi workers in Mumbai have been asked to pay damages to cover loss to the consumers. In the latter case the workers were fighting for minimum wages and the consumer in question happened to be one of the largest business houses of the city. The courts are fixing responsibility not only on organizations but also on individual employees, unions or associations’ leaders/activists.

 

 

Thus, the general ideological shift towards ‘neo-liberal values’ in society as a whole, abetted by technological change and new trends in the labour market, have served to weaken the trade unions and considerably erode the rights of workers. A sense of resignation pervades the working class and its leadership. All these make for a situation which forces workers to accept concession bargaining that is increasingly being resorted to in the corporate world today.

From the employment-unemployment scenario outlined earlier, it is obvious that the ranks of the voiceless workers are swelling. Those in the unorganized sector have virtually no bargaining power despite the fact that a large percentage of the membership of some central trade unions comprises workers drawn from among them. In this sector, any attempt at organizing on the part of workers immediately invites managerial reprisals and the leading workers are sacked. Thus, organizing becomes too risky for those who eke out a rather precarious living. The neo-classical figment of a trade-off between work and leisure amounts to an option between work and starvation. No wonder these workers are forced to work for long hours without minimum wages, overtime, casual or sick leave and even maternity leave for women workers. Thus, an increasing number of workers are fated to suffer from extremely poor conditions of work, low wages and no social security.

 

 

It appears that if India is shining for about 10% of its population, the proportion of those gaining from the shine is probably much smaller among the workers, around 5-6% consisting of a segment of government employees and a few occupying high-end jobs in the IT sector and managerial positions in large firms, particularly multinational corporations. If the recent estimates of employment generation on the basis of more reliable data to be available soon turn out to be correct, there may be good news for a vast mass of the unemployed and the underemployed in so far as they can expect better availability of employment opportunities. A sustained increase in job creation at the rate indicated by the limited available data would imply an employment growth that will not only absorb all the addition to the labour force but also result in a reduction in the backlog of employment. There is, however, a big question mark on the qualitative dimensions of the new jobs in terms of levels of earnings, working conditions and social protection.

All available evidence on different aspects of the labour scene suggests a likely overall deterioration in the quality of new jobs. Most of them are expected to be located in the unorganized sector which scores low in respect of earnings and working conditions. Even in the organized sector the trend has been towards increasing casualization, contractualization and informalization in the name of labour flexibility.

The state, even though unable so far to legislate to bring in reduction in the degree of job security and compliance of labour standards, seems inclined towards emphasizing efficiency and investment at the cost of protection of labour. Trade unions, on the other hand, have waned in importance as pressure groups and lost their ‘bargaining’ power, partly on account of their ‘own actions’, but largely as a result of the entrenchment of an all pervading neo-liberal ideology in government policy, economic elite and civil society. Certain pronouncements by the judiciary have further buttressed the trend towards erosion of workers’ rights.

 

 

Given these trends, what is in store for labour in ‘shining’ or ‘likely to shine’ India? There are reasons to believe that there would be more jobs created with accelerated economic growth. There would be some better quality jobs for the few with high professional skills and social mobility. However, most jobs are likely to be low-end ones with low earnings, little upward mobility and limited social security. The organized voice of and on behalf of workers is likely to further weaken, and conventional rights of the workers will get a further thrashing. This appears to be the likely scenario on the labour front in India, at least in the short to medium term. Faster employment growth may result in some tightening in the labour market thus leading to an improvement in economic dimensions of quality of work. But a reversal in the trend of social and political decline of labour that set in over the last couple of decades is unlikely without a conscious, concerted and sustained effort by political groups and civil society.