To state the obvious,
India's labour market is segmented and heterogeneous. The
labour force is 650 million. But not everyone in the labour force is in the
work force. We have a work force that's around 470 million. Depending on how
you compute, 90% of them are in the unorganised sector.
Whether it is in agriculture
or outside agriculture, there's a substantial chunk of self-employment in that
90% category. For unorganised sector workers, when it is wage employment,
either the employer is unregistered/informal, or even when the employer is
registered, labour contract is informal. That means we have around 47 million
who are in theorganised sector.
A slowdown hurts everyone,
but it hurts different segments differentially. Had growth occurred at 9%, we would have created 12
million new jobs a year. Growth at 4.4% means those jobs
are not being created and this shows up in National Sample Survey data for 2011-12. This
cuts across organised/unorganised and would have been worse had it not been for
some states growing faster than that 4.4%.
GROWTH YEARS
Job availability is a
function of price. If a person has invested in education, and there is greater
demand for education across all socio-economic categories, expectations are of
higher wages and salaries. It isn't just a question of
fewer jobs.
It is also a question of
salaries below expectations. Once upon a time, for a certain socio-economic
segment, unless you opted for medical or engineering, an undergraduate degree
was regarded as the minimum requirement prior to entering the job market.
Some years after the whiffs
of liberalisation were felt, this changed into an MBA diploma/degree.
Management institutions sprouted like mad. During high growth years between
2003 and 2007, when salaries in high-end institutions went astronomical,
graduates exiting low-end institutes earned around Rs 35,000 per month. Today,
Rs 20,000 would be par. In a perverse sense, new entrants are better off.
Five years ago, had you
obtained a job at Rs 35,000, you assumed glorious growth would continue, not
recognising high rewards come with high risk. Therefore, in heyday of lowinterest rates, you opted for purchasing cars and houses at
ages that would have been unthinkable 20 years ago and now, with high
retail inflation and no savings that bring positive real returns, it has
become impossible to service EMIs.
LABOUR PIE
That 47 million can be sliced
in different ways. Around 20 million work for the government, including PSUs.
Another 10 million work for quasi-government, teachers being an instance.
In such cases, there is job
security. No one is going to throw you out. Such people are intrinsically
risk-averse. Normally, you stay away from capital markets, unless it is mutual
funds. You stay away from speculative real estate transactions.
The money is parked in bank
FDs. During those high growth years, you probably strayed into capital markets
and real estate and burnt your fingers. Back to gold and FDs, the problem being that given
retail inflation, real rates of return are zero or negative.
Finally, we are left with
another 17 million. This is not quite corporate India, strictly speaking.
Labour costs were always high in India. Between 1997 and 2004, there were
competitive pressures to become lean and thin and price of capital declined.
This shifted relative price ratios of capital and labour. Corporate India
consciously outsourced labour functions.
There is a myth propagated to
the effect that unorganised sector has no protective labour legislation
and organised sector is riddled with
protective labour legislation. While this is partially true, it also
simplifies. There is some protective legislation for unorganised sector.
And unless you are a
"workman", as defined under industrial relations legislation, there
is no job security in organised sector, protection being defined as stipulated
notice period and/or benefits.
An additional dimension has
now been added to that outsourcing template, one with an age dimension.
Slowdown and competitive pressures mean more expensive older employees are
retrenched, because of perceptions that younger and cheaper employees can
perform the function equally well.
SLOWDOWN BLUES
This is an increasing
phenomenon in metros, if not urban India. If you lose your job at 45, it is
impossible to acquire new skills, or, in the midst of slowdown, find a new job
with existing skill sets. Independent of post-2007 slowdown, societies like the
US have always been used to people embarking on new careers post the mid-life
crisis.
Since 2004, because of an
assortment of policies, there has been a shift in income from urban to rural
India. The 47 million is primarily urban, almost exclusively so. As long as the
cake was growing, redistribution mattered less. But now, with slowdown, this
urban anger is manifesting itself, not just from the 47 million, but also from
those who would have entered the labour force, but have been prevented.
