By Gyan Pathak
Labour force in India has been undergoing structural transformation. It began sometime in the latter half of the Modi’s first term of prime-minister-ship, remained by and large unperceived until the beginning of his second term, but sharply felt when COVID-19 struck the country and general lockdown announced on March 24, 2020. By July end it became known to everyone, which recently published Periodic Labour Force Survey (PLFS) for July 2019 – June 2020 has also recorded. Modi’s four labour codes enacted last year are now expected to be implemented soon, will further speed up the structural transformation, direction of which is yet unknown. It is therefore, India needs to be extra vigilant for any possible backlash in the labour market that may adversely impact both the employers and employees.
The structural change in the labour market has begun due to the ever increasing household distress due to policy experimentation of the Modi government. It began after Demonetization of November 2016 which caused millions of businesses and industries, particularly MSMEs which was employing over 90 per cent of the non-agricultural labour force, to shut down or scale down their production, some upto 75 per cent. Millions of labour force lost their jobs, and the trend continued, since the GDP had been falling sharply which fell to down to 4 per cent during 2019-20 at constant prices. Even by early 2018, the unemployment rate was 45 years high at 6.1 per cent.
This triggered the structural transformation of the labour market. After losing their jobs in the non-agricultural sectors, the labour forced tried something else. Some returned to agriculture and some started their own works. Moreover, the people entering every year in the labour force also added to it since there were fewer jobs in non-agricultural sector. It resulted into reversal of the falling share of agriculture labour for over last two decades. Since many of the labour force started their own works also in non-agricultural sector, their number was also increased considerably, which increased the number of unpaid family workers in their household enterprises.
Similar conditions or unpaid labour also increased in agriculture sector.
Then came the other twist, all in the name of improving the “ease of doing business” by the Modi’s regime and the competitive easing of labour rules by the states, or ignoring the violation of labour rules by the employers. The quality jobs started vanishing from the labour market, and formality even in the formal sectors started growing. Majority of the labour force are being forced by the system to work in informal sector, where they are often not given any appointment or contract letter.
Since they cannot prove their status of their being worker, they cannot access the social security schemes available for labour force. In formal sector, more and more labour are being engaged informally. Works are being outsourced, and in place of regular quality employments, labour force are increasingly engaged as temporary, ad-hoc, or contract labour. All of these, and many more are being done in the name of improving “ease of doing business”. It has been steadily transforming the structure of the labour market even before the pandemic has struck the country last year.
PLFS 2019-20 has recorded the phenomena for the period July 2019 – June 2020. The period covers 9 months of the pre-lockdown and 3 months of post-lockdown period. The surge in the agriculture labour had already started in the pre-lockdown period which was simply multiplied due to strict lockdown in the in April and May. From June 1, 2020, unlocking of the economy started, but labour market remained subdued due to containment measures. Millions of migrant labour force returned to their villages. Labour market structure both in rural and urban areas, and also in agriculture and non-agriculture sector had transformed ate unprecedented speed.
PLFS data also revealed that female labour force participation during July 2019 – June 2020 had increased. Had there been increase in paid labour, it would have been a matter of satisfaction. However, much of the increase was in the sup-optional category of unpaid family workers. The employment rate for unpaid workers in household enterprises in rural and urban areas had increased to 15.9 per cent from 13.3 in the preceding year, but for female workers it was increased to 35 per cent from 30.9 per cent.
Agriculture constitutes about 16 per cent of the GDP, but the increase in the labour force in this sector was 45.6 per cent during July 2019 – June 2020. Almost for the two decades fall in labour force had signaled that the labour force were moving out of this sector to other high productivity and high earning jobs in non-agriculture sector. However, it has been reversed now. Due to non-availability of high earning and quality jobs, a large number of labour have opted for low earning works in the agriculture. It has tremendously increased the burden of labour force in agriculture and rural areas. The PLFS has also found that labour force participation in non-agriculture sector was dwindling very fast, especially in manufacturing and construction.
The labour market structure has been further transformed by the COVID-19 crisis. Employment market has remained volatile. There is a marked preference for automation, digitalization, and higher skill jobs. Higher the education and skill, higher the possibility of getting a job. Lesser educated and low skilled labour force are finding great difficulty in finding jobs for them. Informalisation of jobs have become the characteristics of the time. Formal and quality jobs are reducing.
In this backdrop, the Centre is going to implement the four controversial labour codes, which the Central Trade Unions find anti-labour and pro-corporate. The labour codes would also need certain changes in the labour structure which the employers are obliged to carry out. Obviously, when the codes would be implemented, labour market would be significantly transformed. Which direction it would go? We don’t know, except that our labour force is in great distress, and any transformation without preparation would exacerbate their miserable condition. (IPA Service)