ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Deconstructing India’s Employment Démarche

Informalisation of labour is more a matter of political manoeuvring than economic choice.

 

A backlog of 0.24 million unfilled posts in the public sector, as reported by the media recently, has escalated the contention surrounding the National Democratic Alliance government’s claim on job creation. With the public sector being the major contributor in formal sector employment in the country, historically, this backlog of vacancies speaks volumes about the nature of the jobs that the government claims to have created. Over the past decade, an organised sector-driven informalisation of employment has been an issue of concern of development practitioners in India; and this surfeit of vacant permanent posts in the government’s own backyards is indicative of a policy impulse that is supportive of such “informalisation” of labour.

The government, in fact, seems to be in denial that this contemporary trend of informalisation of labour in India is policy-induced. On one hand, by supplanting the traditionally used National Sample Survey Office’s (NSSO) employment–unemployment estimates, with the Employees’ Provident Fund Organisation (EPFO) database of inconsistent quality, the government is trying to sweep some disconcerting evidences under the carpet. On the other, the Prime Minister’s recent comment, “Youth selling pakora outside… and earning₹200 a day also means creation of jobs,” indicates that political rhetoric deliberately uses the terms “informal,” “self”-employed and “entrepreneur” interchangeably to create a notion of informalisation as a “choice” of jobseekers, whereby they voluntarily forego benefits, such as social security, for potentially higher returns from economic activities with the flexibility of smaller size and lesser division of labour. Predominated by (self) employment in subsistence, footloose, low income and low productivity generating livelihoods, informal employment, particularly in the unorganised sector, is far from any entrepreneurship. While the low level of education and skill is used to explain away the unorganised sector informalisation, informalisation (exacerbated contractual or casual employments) in the organised sector, with presumably higher level of education and skill, is perplexing. And more so, when such informalisation occurs in specialised fields, such as academia.

Evidence from developing countries in Latin America and the Caribbean shows that highly skilled workers can voluntarily choose informal employment where there is a premium for education. Whether this can be the case in India, is doubtful. A study on the attitude, anxieties and aspirations of Indian youth conducted by the Centre for the Study of Developing Societies in 2017, revealed that permanency rather than earnings is one of the important determinants of job choice in India. In sync, more than three-fifths of the youth reported a preference for government jobs, and this share barely changed over the last decade.

Driven by the traditional perception that the government is the most secure employer in the country, the pressure of aspiration that the public sector handles has been perpetually high. Consider the recent case where 1.24 million candidates appeared for 90,000 vacancies in the Indian Railways. But this does not seem to conform to the economic principles governing returns to education. One cannot dismiss that a potential factor fuelling this ratcheting aspiration is the vicious cycle of misallocation of personnel and rent-seeking, which has characterised public sector employment in India, historically. At the same time, it also makes the cost of entering the government job market prohibitive. Jobseekers, unable to crack though such a system, are more likely to fall back on informal arrangements. Calling such moves “voluntary” is erroneous. Simultaneously, people-pleasing policies, such as pay hikes through successive pay commissions, have made recruitment an expensive affair for the government itself, particularly for the state governments, who find it difficult to match up to the central government pay-packages with their limited resources. Permanent posts lie vacant. Replacing these with increasing number of contractual or casual recruitment can help governments save their “welfarist” image.

Informalisation of employment is a natural corollary of neo-liberalism. And India is no exception to this. Employment policies driving informalisation cannot be attributed to any particular government. It fits the bill of the neo-liberal states, in general. On one side, it favours the private sector-led growth strategy. From the perspective of businesses, informal employment (casualisation per se) can keep costs down, a factor that is perhaps more important than incremental productivity, in staying competitive. At the same time, it gels well with the principle of fiscal austerity of the neo-liberals. What is more worrying, in this context, is when governments turn a blind eye to these structural changes to evade liabilities. Institutions that do not acknowledge and account for these transitions will fail to mitigate the onslaught of social polarisation that is inevitable with neo-liberalism.

Updated On : 6th Sep, 2018

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