India’s labour problems: better education and laws can be the answer

Meanwhile, govt needs to strengthen labour-intensive industries too

Akash Vadanan | May 1, 2017


#politics   #law   #Narendra Modi   #Labour   #economy  

Ever since Johannes Gutenberg invented the printing press in 1439 and paved the way for the Industrial Revolution, two new classes of society emerged – the Bourgeoisie and the Proletariat. The former is the business class and the latter forms the labour force. Of course, people familiar with the Marxist theory would need no introduction to it. The reason I bring this to light is that we celebrate International Labour day today, May 1st. However, the cause of labourers and their rights hasn’t been an easy one.

Labour issues under the British rule

India too has faced its share of labour issues. It wouldn’t be too rash to say that exploitation of farmers and wage discrimination between Indians and British counterparts and discrimination in the government services, to name a few, were the prominent reasons that kicked off the path to our freedom struggle. The Factories Act of 1883 intended to reduce the profit margins of Indian textile industries that sold cheap and better quality materials to England which hampered the sales of Manchester and Lancashire textiles; this led to a direct reduction in pay for the labourers in India. In 1929, the Trade Disputes Act was brought into force that effectively deemed strikes illegal in the country but did nothing to take care of workers’ grievances.

No skills, no job

The issues after independence were quite different; mostly to do with lack of opportunity. Finding a job was the biggest of problems for youngsters during India’s socialist era. The country’s true potential came out in full power propelling our economy post liberalisation in 1991.

But with the exponential increase in India’s population, even the LPG – Liberalisation, Privatisation and Globalisation – scheme hasn’t done well in providing for the educated youth joining the labour force. A few months ago, my batchmates from class 12th organised a reunion. Annual reunions are a wonderful occasion to reignite old camaraderie that we shared after a long time. Chatting with each other, we learn about what each of us is doing; overall, it’s a day of fun and folly!

The usually silent WhatsApp group was abuzz with plans on where to meet up and activities to participate. As I was sending out RSVPs to people, I received a text from one friend, “Bro, I’m sorry I can’t make it to the reunion.” And as is the expected reply from my side, “come on man, we never had 100% attendance in class, at least a reunion deserves it!” His reply left me dumbfounded: “Dude, it’s been two years since I graduated and I still don’t have a job! Everyone is working, all of you have great jobs, it’s really embarrassing when someone asks me what I’m doing and I have no answer!”

He isn’t the only person who shares such a plight! Approximately five percent of Indians share his fate. Of course, that is a small percentage, right? To put it in absolute figures, 45 million people in this country face this dilemma. Forty-five million! Of them, 28% are educated. That is more than the entire population of Australia and New Zealand put together! This is a very big cause for concern.

Currently, India’s biggest advantage is its demographic dividend. An estimate of 25 percent of the world’s labour force will reside in India by the year 2025. China had an advantage in this regard from the 1970s and that did wonders for their economy. Now with the average age of an Indian set at 27 years. India is the youngest country in the world and it is only going to get younger. Can we emulate China’s success story? Going by various reports in the media, India may not have that advantage, after all.

There are several reasons to this; one major problem being that our graduates lack the necessary skill sets that will sustain them in the industry. India is losing out to countries such as Vietnam, Bangladesh and Sri Lanka often due to the ‘ease of doing business’ factor, competency issues and the fact that these countries are economically cheaper than the Indian labour force. The current dispensation has seriously started working on this field. While the prime minister’s frequent travel to various countries has helped boost India’s image internationally bringing more job opportunities to our youth, the uncertainty of that lies with the anti-outsourcing policy that many developed nations have taken led by the Donald Trump administration in the US. To become a manufacturing power house like China, India needs foreign support. Till we can find such support, we will have to look for alternatives; the option before the government is to strengthen the labour intensive sectors such as textiles, apparels and footwear industries, which are ten times more labour intensive compared to automobile or even the IT industry.

India is the world’s leading exporter of leather material and this being a labour intensive industry, the current ban on cow slaughter across the country will have a negative impact on the labour force putting more people out of jobs and aggravating an already serious crisis.

Reaching a political consensus

Labour laws are another issue to deal with. We have 44 laws related to labour in India. Each of them developed one step at a time over the last 70 years, some of them predating Independence. Most of our labour laws are 30 years old at least and 85 years old at most. We are seemingly becoming redundant as Young India is governed by archaic laws.

Stringent labour laws in the country that are meant to protect the labourers are often doing more harm than good. In 2015, the NDA-led government made an announcement to simplify the labour laws from 44 to a simpler 4 code system that will simplify issues for both employer and employee! Finance minister Arun Jaitley’s in his budget speech came up with a roadmap to lay asphalt in the journey towards labour coding.

But formalising all our laws into simpler codes will not solve the issue at hand. A more holistic approach lies in strengthening the education sector which will play a greater role in providing jobs for people. We are currently spending less than five percent of our GDP on the education sector, the implications of which are visible to us in the job market today.

Vadanan is a communication officer with Public Affairs Centre, a not-for-profit think tank committed to good governance.

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