Fiscal policy and fiscal instruments are crucial to the achievement of the goal of ‘decent’ employment, writes K. P. Kannan in one of the essays included in ‘Improving Policy Coherence in South Asia,’ edited by Manas Bhattacharya ( >www.academicfoundation.com ).
For starters, the International Labour Organisation (ILO) sees the notion of ‘decent work’ as summing up the aspirations of all workers: the possibility of doing work that is productive and delivers a fair income in conditions that provide security in the workplace and social protection for their families. “Decent work offers people the possibility of personal development and social integration. It also gives them the freedom to express their concerns, to form unions and to take part in decisions that will affect their lives. It guarantees equal opportunities and equal treatment for all men and women.”
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Kannan is of the view that if fiscal consolidation leads to a compression in government expenditure it could affect the goal of employment in general and decent employment in particular in an economy such as India, which is characterised by a large proportion of the workforce without adequate human capabilities and an overwhelming proportion of enterprises (mostly small and micro) without access to quality infrastructure and critical inputs such as credit. If, in the alternative, reduction in fiscal deficits is sought by a greater mobilisation of taxes and other revenues, then the degree of freedom for the government to spend increases and this could well lead to increased capital expenditure, he notes.
As a macroeconomic indicator, if the first approximation of decent employment is ‘regular work’ what can be disappointing to learn from the essay is that the share of regular work has remained almost unchanged during the past three-and-a-half decades despite an acceleration in growth, and a shift in employment away from agriculture.
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Another essay in the book is about ‘labour markets outcomes and policy changes’ by Ahmad Ahsan, Dipak Dasgupta, and Ashish Narain, where the authors observe that India can enjoy the ‘demographic dividend’ only if 8 million productive jobs are created every year, as against the 6 million jobs achieved per year between 1993 and 2000.
They caution that the quality of jobs will have to be improved rapidly with a focus on improving the earnings of workers through higher productivity and lower underemployment. “At present, the earnings of 102 million workers are inadequate to raise their families out of poverty. Added to this, good jobs have to be created for the new entrants to the labour force to avoid an increase in the ranks of the working poor. Especially important is the need to create good non-agricultural jobs for relatively unskilled workers in rural and urban areas.”
Cost of complexity
While it is common knowledge that our labour laws tend to be complex, what can be shocking is the cost of this complexity in terms of lost job opportunities. Conservative estimates, as the authors aver, are that India failed to create about 2.8 million formal manufacturing jobs due to the Industrial Disputes Act, 1947. Two significant provisions in the Act (relating to the dispute resolution mechanisms, and restrictions to layoff of workers) cost about 45 per cent of all formal manufacturing jobs, the essay rues.
Informative content that can stir a move towards coherence.