Developing and emerging economies may not exactly be dazzling in the current overall grim global economic climate of joblessness and sluggish growth. But the region has registered rising employment and narrowing income inequalities, relative to their rich counterparts, since the 2007-08 meltdown, says the International Labour Organisation’s World of Work Report 2013. The backbone of this promising story are the middle income groups in these countries, which have expanded from 263 million at the turn of the century to 694 million a decade later. In stark contrast is the shrinking middle class of the advanced world, illustrated, for example, by a 4 percentage point drop in Spain’s middle-income group to 46 per cent between 2007 and 2010. The challenge for the developing world, however, is presented by the sections just above the poverty line. Their numbers have nearly doubled in the span of a decade to 1,925 million. Sustaining whatever modest progress has been made will depend critically on governments preventing such a huge segment from slipping back into the less than $2 a day income level.
India’s Mahatma Gandhi National Rural Employment Guarantee Act has come in for particular mention for ensuring minimum wages for unskilled labour in rural areas, thus enabling a narrowing of income inequality. A highlight in the report is a 20 percentage point rise in the proportion of workers receiving minimum wages between 2004-5 and 2009-10. With elementary education a legally enforceable universal right now, a logical next step would be for the UPA government to give additional thrust to augmenting the skills set of the population in the working age. With some 25 per cent of the population under 25 years of age, India would be better placed to take advantage of the demographic transition of the industrialised world marked by manpower shortages. Indeed, Germany’s readiness to train Indians in engineering and other technologies, as well as in the German language, could open up a win-win scenario for both Berlin and New Delhi. While over 14 million jobs are needed to return global employment rates to pre-crisis levels, a little more than that number are said to have attained working age in 2013. Thus the case to put jobs uppermost on the reform agenda cannot be over-stated. Noteworthy in this context is the ILO’s emphasis on entrenched negative perceptions that public intervention in questions of redistribution and workers’ rights are somehow antithetical to growth. The catastrophic consequences of the post-2008 policies of economic austerity, especially in the Eurozone countries, provide a lasting lesson on the virtues of stimulus-oriented policies for the current times.