Kunal Naik is from Ganjam district of Odisha. He worked as a waiter from 6 am till 11 pm in a small restaurant in Thrissur, Kerala. His monthly salary was Rs 12,000.
The restaurant, which had been closed for the last two and a half months, has only just reopened. Kunal has seen millions of workers in the country on the run to reach home.
Upon being asked if he wanted to go home, Kunal merely smiled. “There are new Sramik trains to go to Odisha; Don’t you try to go home?” I asked him.
“What will I do there? I come from a state which has been devastated by storms and torrential rains. To survive on farming is just a dream now,” he said. “A large number of workers are returning to villages due to the lockdown but they don’t know what to do. Many companies are looking to reduce their workforce. People who went to their villages are now worried about when they can return to their workplace,” he added.
Towards the end of the conversation, Kunal said, “Bhai, this crisis had started before corona. Many of my friends from my village, who had worked in Perumbavoor and Kakkanad (where most of the migrant workers are concentrated in Kerala) have gone back home”.
Kunal has never seen any reports of India’s rising unemployment numbers or jobless growth. He is also unaware of finance minister Nirmala Sitharaman’s economic stimulus packages. But he knows that the country’s job sector is deteriorating. He can see the changes underway in the construction and service sectors. That is why he is forced to work for 15-16 hours a day to earn Rs 400.
His reply, upon being asked if he could find a job that paid more, was also a reflection of the realities facing the country’s job market. “Before coming to Kerala, I worked for a plastic company in Noida near Delhi,” he said and added that the daily wage was around Rs 700 allowing him to earn Rs 20,000 per month. But, there was no guarantee that he would get the money on time. “Additionally, there is no peaceful work environment in other places. If you complain about workplace exploitation, you would be immediately removed from the job. Company owners know thousands are waiting for a job,” he said.
Kunal’s story provides a glimpse into the uncertainty, exploitation and lawlessness prevalent in the job market which over 42 crore unorganised workers in the country are being subjected to.
It goes without saying that suffering has increased manifold during the lockdown. In fact, unorganised, migrant workers entered the mainstream discourse only after the lockdown!
They had been cleaning dirt, digging cable holes, sweating in factories and providing all the necessary services to the cities all along. But these unorganised workers have been literally invisible, not only to the mainstream media and political parties but even to the organised trade unions in India!
India is growing with jobless millions
Business magazines report that the number of billionaires in India has increased rapidly and that the total number of billionaires in the country has increased to 138 – having added 34 new members to the club in a short period. The country’s Prime Minister and finance minister have proudly announced that India’s economy will rise to $5 trillion over the next five years.
The number of mobile phone users in the country is about 45 crores, and the number of internet users has doubled in five years. Nonetheless, we have seen migrant workers in India, fleeing to their villages, unable to sustain themselves for even a week when the country was put under lockdown!
The growing number of billionaires indicates that income inequality is getting worse and that the ‘trickle down’ effect repeatedly asserted by economists has not worked. On the one hand, the agricultural and industrial manufacturing sectors are experiencing a major downturn and employment in the country’s manufacturing and service sectors has fallen to its lowest level in four decades. Yet, on the other, there has been an unprecedented growth in the number of billionaires.
To understand why this is happening, it is necessary to delve deeper into the economic policies of the country. It is well known that the agriculture sector is India’s largest employer. More than 200 million people are engaged in agriculture-related jobs. At the same time, the agriculture sector’s contribution to the Gross Domestic Product is only 15%.
It may be recalled that India’s agriculture sector was once responsible for 60% of the country’s GDP. The service sector is currently the second most important sector for providing jobs. There are more than 140 million workers in this sector. It should be noted that the service sector contributes 53.66% of the GDP, but is only second in job creation. The third is the industrial sector, with over 110 million workers, and contributes 16% to the GDP.
The notable reduction in the employment capacity of the industrial and service sectors, which contribute most to GDP, increases unemployment on the one hand and increases the concentration of wealth on the other. Over the last decade, the government has been adopting policies that have been promoting this unhealthy trend.
Information Technology (IT), banking and finance are the mainstays of the service sector. However, these sectors have not generated significant employment. India’s manufacturing sector, in fact, produces more jobs, but it contributes less to the economic growth of the country as compared to the service sector. Further variation in the growth rate of the manufacturing sector is reflected in the employment figures. The sharp variations in the industrial production index over the past few years are naturally reflected in the country’s job market. The National Sample Survey report indicates that industrial production fell by 1.2% in 2019 compared to 2018. A sectoral analysis reveals that this decline in growth is attributable mainly to the decrease in mining and primary commodity production.
As the industrial manufacturing sector began to adopt ‘automation’ methods unlike the ‘assembly line’ models, the workforce began to be adversely affected. Studies show that this trend, seen in the last few decades, is reaching its peak. Various studies suggest that, with the new technologies, an employer can save up to 64% of the time needed to complete a job. Turning this global labour time into dollars would mean saving $2.1 trillion from the current $5.1 trillion (which is estimated to be the wage paid globally). There is no better example of how increased automation adversely affects employment. It is a fact that in India, automation in the manufacturing sector is creating a major crisis in the job market.
According to a report released by the Indian Statistical Commission in 2019, unemployment in India is at its highest level in 45 years. NSSO report says that the unemployment rate rose to 6.2% in 2017-18 from 2.1 in 2011-2012. (The central government initially refused to release the report. However, it was made available in the public domain only after the resignation of the acting chairman of the statistical commission P.C. Mohanan and Member J.V. Meenakshi in protest). Various surveys and studies point out that since 2014, there has been a huge decline in employment in the country and that the chances of getting jobs based on educational qualifications are dwindling.
Labor law amendments
‘Ease of Doing Business’ is a mantra put forward by the World Bank and the International Monetary Fund to boost economic growth. These institutions demand that countries reform their labour laws in line with the growth strategy. World Bank Report indicates that 115 countries have revised their labour laws with a view to boosting trade and industry (Doing Business 2020; Comparing Business Regulation in 190 economies, WB Group).
The government of India has also amended 44 existing labour laws in the country, defining four labour codes, incorporating anti-worker provisions. Though it is the country with the largest number of workers in the unorganised sector, these amendments to the law have been passed, completely disregarding the demand to raise the minimum wage. An expert committee headed by Anoop Satpathi had submitted a report to the central government in February 2019 recommending minimum wages of Rs 375 to Rs 447 depending on the region.
However, it is clear that the central government, which focused solely on the ‘Ease of Doing Business’, had no interest in implementing the expert committee recommendations. According to the Minimum Wages Act of 2019 passed by the central government, the minimum daily wage for a worker is Rs 178; i.e, the monthly wage of a worker is only Rs 4,628! This is a complete rejection of the Supreme Court’s ruling that required a minimum wage increase of 25%.
It is important to remember that the increase in prices of food and other consumer products is between 15% and 39% in the same period. The Seventh Pay Commission had recommended to the government that the basic income of workers should be increased from 18,000 to 20,000 in view of the increase in the Consumer Price Index. This too was not taken into consideration by the government.
As mentioned before, the Ministry of Labour has categorised the provisions of the 44 labour laws under four Labor Codes: wages, industrial relations, social security and safety, health and working conditions. The government has introduced new amendments in favour of the companies in the areas of workers’ wages and social security.
The new labour codes make the whole concept of ‘permanent job’ irrelevant; they permit employers to hire anyone for a specified period of time and dismiss them with two weeks’ notice. The new amendments, which would exclude firms employing fewer than 40 workers, could create great tensions in the workforce.
The Apprentice Act of 1961 stipulated a period of one year for an apprenticeship; the amendment of the Act has made it possible for the employer to employ a person as an apprentice for any length of time. The government has completely deregulated the labour sector by enacting anti-worker reforms in the Bonus Act of 1965, The Contract Labour (Regulation & Prohibition) Act of 1970, The Payment of Gratuity Act of 1972, and by repealing the Payment of Wages Act 1936, the Minimum Wages Act of 1948 and the Equal Remuneration Act of 1976.
COVID-19 and the job sector
There is no need to present evidence that the country’s economic, manufacturing and employment sectors were in serious crisis even before the arrival of the COVID-19 pandemic. The slowdown in GDP growth, declining industrial production output, rising unemployment, growing liquidity crisis of banks and non-banking financial companies, and rising foreign debt were driving the Indian economy into a severe crisis.
At the beginning of the year, the Ministry of Health had a clear understanding of the possibility of the virus spreading to the world. Nevertheless, the Indian prime minister thought it fit to organize a rally in Ahmedabad at the end of February to welcome US President Donald Trump. It is important to remember that Gujarat is the fifth worst hit state in India today and the state that has refrained from making information on positive coronavirus cases public.
The nationwide lockdown, which was imposed without warning, has created unparalleled distress amongst the working class and the nation witnessed the largest migration ever since the Partition. All of this happened at a time when millions of unorganised workers were already facing major crises as a result of the collapse of the informal economy. The workers who returned to the villages faced severe poverty.
An additional concern is that the reverse migration may have carried the coronavirus to villages. We have also seen governments fail to provide proper assistance to poor families which had been without any income for three months. Experts say that, even though a variety of concessions were announced in the fifth phase of the lockdown, it will take time to the economy get back on track. In fact, a huge decline in the purchasing power of the population will be reflected in the market and will eventually lead to a major crisis in the manufacturing and service sectors. According to the Center for Monitoring Indian Economy, 2.7 crore young people aged between 20-30 years have lost their jobs due to the lockdown. In April alone, the average job loss among women aged 30-35 years was 3.3 crores. Income loss among young people is a major concern for the consumer goods market.
When the lockdown pushed migrant workers into distress, many state governments were focused on repealing labour laws. States like UP, MP and Gujarat have suspended labour laws for the next three years. The suspension of labour laws will automatically result in the loss of many of the rights that employees have won after long struggles. The three states have similarly repealed labour laws with a few variations. The governments of UP and Gujarat have announced that most of the labour laws will be cancelled for the next 1000 days while maintaining a few basic rules.
One of the major amendments to the labour law is to increase working hours from 8 hours to 12 hours and overtime working hours to 72 hours per week. The governments have provided for companies to recruit or dismiss up to 100 workers as per their requirement without promising any security. This gives employers the right to “hire and fire” according to their interests. The BJP-ruled chief ministers of the three states, justifying such anti-worker amendments and the repealing of the laws, have said that they are “part of the process of attracting foreign companies withdrawing from China to their states”. However, the people who observe the dynamics of the international labour market and industrial sector are well aware that such a move is not likely to happen in the near future.
Work and the workplace: changing perspectives
Fordism, which introduced to the world ‘assembly line’, ‘mass production’ and ‘livelihood wages’ is becoming obsolete in the present. The perception of work and the workplace is undergoing rapid changes with the development of new technologies. Over the past decade, we have witnessed an unprecedented transformation in the global industrial sector. Take 3D printing technology for example. The development of this technology has made it possible to print whatever we need, to suit our preferences, at the ‘corner shops’ of the city. Articles ranging from automobile spare parts to human organs became printable with technological innovations!
The innovations that are about to come over the next decade will completely overturn the ‘industry’ outlook. There is no doubt that this will have a major impact on the manufacturing and logistics sectors. It is also a fact that all these changes have resulted in a complete transformation of the “employment” sectors. While the traditional perception of work gives importance to ‘physical labour’; the new job market emphasise ‘skills’. The importance of ‘skills’ in determining the course of labour markets is so vast that their influence must not underestimate.
Technological changes are also deeply reflected in the job sector. In the division between the “head” and the “hands,” the new technologies make “hands” disappear from the workplace. In Analysis of the Internal Labor Market and Human Labor, Peter Doerringer and Michael Piore describe the depth of the gaps created by the labour market. In the so-called “primary” and “secondary” job market, the “secondary” market workers are less skilled and can be replaced at any moment and are therefore forced to work for lower wages. The International Labor Organization (ILO) is concerned that the newly emerging manufacturing and employment models are ‘excluding’ workers.
New technologies such as Machine Learning (ML), the Internet of Things (IoT), and Artificial Intelligence (AI) obscure the traditional view of work. The rapid changes in technology have completely eliminated humans from many service areas. Technological innovation and globalisation have created major changes in the nature of jobs. They have given employers the power to determine who, where, when and how to work. Job identity and spatial division are redefined in the digital economy.
‘Job’ has become a commodity that can be hired and fired at any moment based on skill and efficiency. The workers need to constantly adapt themselves-in terms of technical skills to changing market demands. Knowledge-based work enables spatial redistribution to differ from its past, but its structural features, which are remotely controllable and centrally managed, remains unchanged in the “virtual” world of employer-employee relations. The changes in the perception of ‘work’ and ‘workplace’ are not just a matter of technological development. It emerges from the crisis of capitalism and its willingness to reform itself. Let’s take a look at how the new economy is functioning globally and how the policy initiatives driving ‘emerging economies’ like India are evolving.
The ‘gig economy’ is a new job market that provides employment on short-term contracts. According to industry statistics, the trend of hiring drivers, personal assistants, delivery boys, cleaning workers and professionals including nursing, medicine, journalism, information technology and even lawyers is on the rise.
One could see from its description, the new forms of employment, known as ‘job sharing’, ‘crowd sourcing’, ‘interim management’, ‘voucher-based work’ and ‘portfolio work’, maintain a very flexible attitude toward employment. According to the World Bank Report (2019), more than 3% of the total workforce globally (about 840 million people) are engaged in jobs based on the gig economy. The number of such workers in India is estimated at 1.5 crores, according to an Assocham report.
The class division created by the emerging gig economy has deeper and more serious implications. Along with the creation of a tiny wealthy class, it divides the labour force into salariat, proficians, working class, precariat, unemployed and lumped precariat. At first glance, this sort of class division may seem natural, but the increase in the number and size of these social groups will be enormous in the coming years. Even highly paid professionals will experience a lot of uncertainty in their careers. Another significant change that is happening with the rise of knowledge-based industries is that the organised working class is dwindling.
Even today, trade unions have little presence in the IT sector. One of the biggest impacts of the gig economy is that the vast majority of the workforce will fall into the volatile workforce known as the ‘Precariat’. This newly formed precariat, which has neither occupational identity nor financial stability, would be the mainstay of capitalism. It is quite predictable that when industrial manufacturing and services sector is undergoing rapid automation the number of unemployed grows rapidly. It is beyond dispute that the world will be confronted with new crises of poverty and social distress when millions of people lose their jobs and livelihood.
Where are the Trade Unions?
The dawn of the industrial era had given birth to organised working class movements. One of the most important contributions of the trade union movements is to restrict working hours to eight hours. Trade unions played a significant role in enabling workers to challenge all forms of labour exploitation. Nearly a century after the formation of the first trade union in the world, as Marx asserted, the working class became the driving force of social and political change.
Today, the fact that only a small section of the total workforce has become an organised working class remains a major drawback. This becomes clear as we look at the size of the organised working class in India. The limitations of trade union activity reveal the fact that 92% of the Indian labour force is unorganised. The organised labour movement, which should have become the driving force of social change, became mere bargaining forces.
This weakness became apparent at the beginning of the 90s, i.e. with the onset of liberalisation. It must also be viewed as the period of the breakdown of the trade union movement. Moreover, the failure of the trade union movements to respond to the neo-liberal economic reforms, environmental crisis and the distress among various social classes eventually led to a decrease in trade union membership itself. The trade union movements in India remained a mere spectator, even as labour laws were revised and repealed and some sectors- IT, SEZs etc.-were declared trade union free zones.
Financial capital, which has been hit by its own structural crisis, is taking on a new role for its survival. Its new look is a platform economy based on Artificial Intelligence and computing power. The capitalist who hires labour for the lowest wage, on a short-term contractual basis determines the price of labour and profits in a new way. The platform economy, in which the platform earns a large percentage of profits from commodity sales, becomes the most powerful means of wealth accumulation. The digital divide is becoming sharper by the day and it makes irrelevant the lowest class of the society.
Algorithm bias makes this digital divide more efficient. Workers in the digital age become a distinct group of people who do not have an occupational identity. The key question for the workers’ movement is how they deal with the worrisome changes in the job sector.
Kunal Naik, mentioned at the beginning of the article, has a smartphone. He bought this Chinese made phone at the price of Rs 2500. After one and a half years of service, the phone’s touch screen stopped working. He has to think thrice before buying a new one. He says that the lockdown has dragged his family back into poverty. According to the government, Kunal is a ‘digital native’ who knows how to handle modern technologies. However, Kunal does not know that he is being relegated to the volatile working class, which economists refer to as ‘precariat’, by knowledge-based industries.
Changing working environments are a great concern. Capitalism ensures its continuance by constantly reforming the labour forces and makes millions of hands unemployed. Worker’s movements that are not ready to reform themselves have nothing to do in the new world. Coming generations are destined to live in the ‘virtual’ world, whether they wish it or not. The future of the working class depends on whether the labour movement has the capacity to address the digital era.
K. Sahadevan is an environmentalist from Kerala. He has been writing on Energy, Economics and Environment for the last few decades. He has authored half a dozen books on different topics and a regular contributor to various journals and newspapers.