Millennium Post

Rise of the 'working poor'

The overall progress in reducing working poverty is too slow to keep pace with the growing labour force

With the growing trend of a more assorted part of the less-organised services sector emerging as India's biggest source of employment, the job quality is becoming not only poor but also more vulnerable. Interestingly, the trend is noted with concern by the International Labour Organisation (ILO) in its global report that highlighted, among other things, the slow "pace of working poverty reduction" in many economies, including India. The ILO report noted that "overall, progress in reducing working poverty is too slow to keep pace with the growing labour force in developing countries, where the number of people in extreme working poverty is expected to exceed 114 million in 2018 or 40 per cent of all employed people."

In India, the trend is increasingly visible in the randomly growing services sector, which accounts for 54.40 per cent of the country's total GVA or gross value added of Rs.170 lakh crore. GVA is used for measuring gross regional domestic product and other measures of the output of entities smaller than a whole economy while GDP is equal to GVA plus taxes on products minus subsidies. India's GDP from the services sector is estimated at $1.5 trillion. With GVA of Rs.50.43 lakh crore, industry sector contributes only 29.73 per cent. The GDP of this sector is estimated at $561 billion. The agriculture and allied sectors' share of GVA is around 16 per cent. However, statistical estimates of India's GDP and GVA differ. For instance, CIA's economic intelligence wing put the share of the services sector in India's GDP composition in 2017 at 61.5 per cent. Industry accounts for 23 per cent and agriculture 14.4 per cent.

Unfortunately, the growth of the organised sector is nearly stagnating in the country. And, its share of the GDP is actually shrinking. During the last seven years, the fast-growing assorted part of the unorganised services sector is offering poor and unstable quality of jobs. The average income in this sector vary from Rs.6,000 to Rs.9,000 per month. The job is almost entirely unsecured. There is no question of any provident fund, gratuity or benefits for frequent unemployment linked with such jobs. Workers are mostly daily wage earners or part-time service providers although some of the jobs may be of specialised nature — from construction to e-commerce or event management. According to the ILO, vulnerable employment is on the rise.

Globally, the significant progress achieved in the past in reducing vulnerable employment has essentially stalled since 2012. In 2017, around 42 per cent of workers (or 1.4 billion) worldwide were estimated to be in vulnerable forms of employment. This share is expected to remain particularly high in developing and emerging countries, at above 76 per cent and 46 per cent, respectively. The pace of 'working poverty' reduction, too, has slowed down. Despite economic growth, 72 per cent of workers in South Asia, including India, will have vulnerable employment by 2019, ILO predicted.

In fact, the global labour market is witnessing only a weak progress in the area of working poverty. The ILO report says that in 2017, extreme working poverty remained widespread, with more than 300 million workers in emerging and developing countries having a per capita household income or consumption of less than US$1.90 (PPP) per day. Overall, progress in reducing working poverty is too slow to keep pace with the growing labour force in developing countries. Unemployment in developing countries is expected to increase by half a million per year in both 2018 and 2019, with the unemployment rate remaining at around 5.3 per cent. For many developing and emerging countries, however, persistent poor-quality employment and working poverty pose the main challenges. A lot of the jobs being created are of poor quality despite strong economic growth and some 77 per cent of workers in India will have vulnerable employment by 2019.

The report comes amid a jobs debate in India, which many believe is not creating enough jobs even as some 12 million people get added to the labour market every year. The report says by 2019, India will have 18.9 million unemployed people or 9.76 per cent of such population worldwide. Another disturbing trend in India is the government's role in promoting working poverty as large number of new appointments in Class IV and Class III category jobs are being made on contractual basis, offering very poor salaries with almost no contract end benefits, since 2010.

Although the promise of employment generation has always been placed high in election manifestoes of almost all political parties, little attention is paid to such commitments after a political party or political combine comes to power. Historically, the labour department has been among the weakest areas of the government function. Hopefully, the perception of job creation and job quality will change as the 'working poverty' and job vulnerability are becoming a huge issue among labour unions and social scientists in the country. They call for a serious discussion across the country at all levels.

Such a debate is particularly relevant as political parties seem to fail to assess the condition of the current labour market and, instead, promise monthly doles for those trying to make a living out of agriculture and unorganised jobs of a random or tertiary nature, especially in the services sector.

The job guarantee, pension guarantee, unemployment allowance guarantee based on the education and skill levels of the jobless should go hand in hand with the government's social programmes in the areas such as housing and sanitation, education and healthcare for all. They need to be made uniform for all citizens, irrespective of their castes, creed, religion and gender. This is possible if the government follows the model of some of the Scandinavian countries. The salary structure needs to be revamped so that the huge existing gap between the lowest and highest paid is considerably reduced and income rungs of employees cut drastically to make this possible.

(The views expressed are strictly personal)

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