Economy

Rethinking Migration and the Informal Indian Economy In the Time of a Pandemic

Large-scale reverse migration has opened up a Pandora's box of how we view the role of labour in India's growth trajectory.

Barring abnormal times, which includes current circumstances, the major part of the migrant labour flows in India has mostly been from rural to urban areas.

As senior journalist P Sainath has noted, these include categories of people who migrate on a ‘permanent ‘basis (having no plan to return), ‘seasonal’ migrants (who temporarily return from urban areas to their villages during times of harvest  and then go back to urban centres) and finally, the ‘footloose’ (hired from rural areas by contractors) who move from city to city in search of work and without a final destination. 

This usual pattern of migration, which pushes people from rural  to urban areas  can be described as ‘mobility by default’. The reasons behind this include  growing rural distress with agriculture and inadequate official policies to support the ailing rural economy. The unsustainable livelihoods started a continuing stream of out-migration from the rural economy, both seasonal and as ‘footloose’. Migration also was facilitated by the prevailing familial links between the rural folks and the urban workmen.  

Reverse migration from urban to rural 

The current flow of reverse migration in India, which is from urban to rural, however, falls into none of the above categories describing the usual patterns in the  movements from rural to urban centres. The enormity and suddenness, along with the misery of the people trying to leave urban centres for bare survival, opens up several issues.

However, it will be an understatement to conclude that the inflow of migrants to urban economies had no impact on the latter. The flow provided a reserve army of cheap labour waiting to be hired at wages which could dip lower than the statutory minimum, especially after meeting the demands of the contractor. Jobs provided did not entail further obligations on part of the employers or the state, given that the ‘footloose’ migrants never had any legal status as working population.

With the formal organised industry employing as many as one half or more of employees with a casual or informal status, it proved rather opportune for enterprises in factories, construction sites and other labour-intensive activities to make use of the migrants in their  cost-cutting exercises. Remaining migrants, not absorbed  in the formal or informal work-places, continued as self-employed in capacities ranging from vendors to shop-keepers at low levels of remunerations. On the whole, presence of the rural migrants benefited the urban economy by providing cheap labour to factories and cheap services to households. 

Passive role of the Indian state in relation to migrant labour

The lukewarm responses of the state to above can be evidenced from the large number of related legislations that exist merely on paper. There is the Contract Labor Regulation and Abolition Act 1970, which conferred casual labor with a legal status by providing a mechanism for registration of contractors engaging 20 or more workers. Failing registration, the employer was directly responsible for the employment provided. One can also mention the Inter-state Migrant Workmen Act 1979, the National Disaster Management Act 2005 and the Street Vendors Act, 2014 to regulate street vendors in public areas and protect their rights. More recently ,the Code on Occupation, Health, Safety  and Working Conditions, sought to regulate health and safety conditions of workers in establishments with 10 or more workers, and  replace the 13 prevailing labour laws. The Code was referred to a Standing Committee of the Parliament in July 2019 which  responded positively on a date as recent as February 11, 2020.

Pieces of legislation as above provide an idea as to how those were of no relevance in addressing the current crisis faced by the migrants thrown out from the urban centres, indicative of a minimalist state in the process.

One can raise questions as to what happened to the legal status of migrants as under the Act of 1970? Where are the registered contractors or employers who are responsible for employment status of the migrants in terms of the same law? Also, what happened to the various laws still operative till the Code was to replace those in early 2020? It is thus more than obvious that none of the so-called corrective measures were of any significance in relation to what the migrants have been experiencing since the lockdown began in March this year. 

Pro-active role of state to safeguard interests of capital 

Reflecting the close alliance between big capital and the ruling state, one witnesses the inclinations in official policies to protect the interests of big capital.  An early measure include an advocacy, in the National Commission of Labour (2002), of flexible labour as a panacea for achieving efficient growth. This sanctioned casualization to restore the cost-cutting and wage-productivity nexus. As for the unorganized sector, the Commission advocated social security to be provided by both employers and the state.  A few years later this was followed up by the National Commission on Enterprises in the Unorganized Sector (NCEUS) 2006 which  recommended a number of measures for the unorganised workers which addressed the  low wages (or earnings) and unequal bargaining power. The NCEUS Report was folded up and recommendations ignored, an action which   contrasts the pro-active official role vis a vis the employers  as at present.

Employers, supported by state-level ordinances, unite to further weaken the prevailing labour protection.

At least four states in India, including UP, MP, Rajasthan and also Assam have initiated a process of further downgrading labour rights by passing Ordinances which scraps important labour rights still enjoyed by the regular (ie, not casual) workers in the formal sector. For UP, the measures include the scrapping of all existing labour laws for next three years. In Gujarat, new manufacturing units are to be exempt from the current labour laws over next 1200 days. Rajasthan also follows suit in abrogating  prevailing labour laws in the state. In addition, the Ordinances introduce new rules for working hours by changing the prevailing 8 hour norm to 12 hours per day. As implemented, the change will take away the much struggled labour right achieved by the working class of the world more than two centuries back.

To top it off, the Ordinances ensure that workers will no longer get overtime even if  they continue to work beyond the stipulated 12 hour day. 

Arguments have been advanced by the corporate industry in support of the Ordinances. Those concern the prevailing tendencies for small firms to avoid expansions in order to evade the labour regulations as relate to the large ones. Removal of such restrictions would, as have been argued, encourage the small ones to expand. Also the measures, as claimed, would attract investment by making it easier to manage and cheaper to engage labour.  Using the same argument, industry expects that by improving the competitive capacity, India would  successfully entice foreign investors away from China. Finally, and rather unbelievably, industry also expects that stretching working hours to the 12 hour norm will be labour-saving and as such will be of help in situations where labour is in short supply. It sounds strange to hear about labour shortage in a labour surplus country like India today! Are they fearing the loss of cheap sources of labour with the  decimation of workers as they try the route to their villages in the reverse flow of migrants?

One may just question here if  industry in states mentioned  above are right in claiming that the measures would be able to generate a favourable investment climate by scratching the few labour rights as still prevail in India? While engaging labour may be rendered both easier and cheaper, incentives to invest will also be determined by a large number of other issues (like  state of demand, infrastructure, expectations in the market) none of which can be taken for granted  by moving the Ordinances. 

Finally, it must be recognised that the strict labour discipline invoked by the Ordinances relate only to the formal or the organised sector of industry and services . The formal sector, on an average, employs only 7% of the aggregate labour force and the rest of the 93% remain with the informal sector. Further, since 50% or more of workers in the formal sector are engaged in the capacity of casual or informally employed, it remains that the Ordinance in the four states (or more to follow)  may only catch around 3.5% of  workers  which currently enjoy such labour rights  as  are still there. Can industry justify the Ordinances even by the benefits expected for the prevailing and future investors in those states?

Possibly the measures are being regarded both by the state and by big capital as an opportune strategy in time of the lockdown under  the Pandemic  – specifically, to  further the much sought-after  onslaughts of capital on labour. Issues relating to the jobless informal workers swelling the numbers of the unprecedented reverse migration , all under inhuman conditions , do not  form an agenda in framing such  Ordinances.