Creating a Right to Work
Praful Bidwai
The News International, 16 July 2005
A peculiarly unpleasant situation has arisen in South Asian countries. The more
quickly our economies grow, the faster grows unemployment too. Defying conventional
economic wisdom, high GDP growth increasingly fails to make a dent in poverty,
widespread deprivation, malnutrition or falling sex-ratios. It’s as if the presumed
link between economic development and social progress had completely snapped!
Take India. In the long decades which registered 3 to 3.5 percent GDP rise,
comically termed "Hindu rate of growth" by economist Raj Krishna, employment
annually rose by 2 percent-plus. Although this failed to keep pace with population
growth in the 1950s, it levelled with it by the 1970s—although that didn’t
substantially ameliorate poverty or other social pathologies. Recently, the economy
has grown by 5.5 to 7 percent a year, but job generation has annually increased by a
pathetic 1.2 percent.
In Pakistan too, according to the Economic Survey, unemployment has increased
sharply, from 5.4 percent to 7.7 over the past decade. (This only covers open
unemployment and excludes more widely prevalent under-employment, which is endemic
to South Asia. My economist friend Akbar Zaidi says it’s an underestimate. I also
find it odd that the official unemployment figures for 2004 and 2005 are identical,
to the last decimal!)
The sour irony is that unemployment is higher today—when Pakistan’s economy is
"galloping" at 8.2 percent—than it was five years ago, when GDP growth was 1.8
percent!
This is only partly explained by the sluggish or erratic growth of agricultural
output. In both India and Pakistan, a structural shift towards services and a higher
capital-employment ratio has occurred. The presumed correlation between high/low GDP
growth and low/high unemployment stands ruptured.
We now live in the era of what Mahboob-ul-Haq called "ruthless", "rootless" and
"jobless" growth. This proves with redoubled force one major premise of development
economics: Public Action is needed to eradicate mass-level poverty.
Mere GDP growth cannot help Pakistan or India lick widespread deprivation, income
poverty or unemployment. These are rooted in structural causes, themselves
determined by "pre-modern" social features, including hierarchy, caste and kinship,
compounded by long-standing failures on land reform, assets redistribution, female
literacy, and education. Current growth patterns make the task of fighting
unemployment doubly intractable.
Perhaps the best way of taking remedial Public Action in our circumstances is making
work a fundamental entitlement of the poor and guaranteeing them unskilled
employment in a demand-driven programme. If the state fails to provide employment
within, say, 10 days, it must pay a dole/allowance.
Some Indian states have had experience with employment guarantee schemes.
Maharashtra pioneered one 30 years ago. An Employment Guarantee Act (EGA) has been a
keen demand of many Indian workers’ organisations. On coming to power last year,
India’s United Progressive Alliance pledged to enact an EGA—its single biggest
economic promise.
There is a persuasive case for an EGA in all of South Asia. The Indian experience
here is educative, for both positive and negative reasons. First, the negative ones.
The UPA promised to annually provide "a legal guarantee for at least 100 days of
employment, to begin with ... for at least one able-bodied person in every household",
at minimum wages. But more than a year on, the promise remains unfulfilled. The UPA
tabled a "National Rural Employment Guarantee Bill" last December. This was
outrageously inadequate and negated the very concept of a guarantee.
This Bill severely diluted the UPA’s promise. It restricted it to select rural
areas, without time-bound extension to all villages. Rather than allow
self-selection of beneficiaries, it targeted "below-the-poverty-line" households, a
notoriously slippery category, which excludes millions of poor people.
Self-selection has inherent merit. Normally, only a needy and poor person would want
to perform manual labour.
Under the December Bill, the government could switch EGSs on or off at will—making
nonsense of a right. No minimum wage was specified. The Bill bypassed Panchayati Raj
(semi-autonomous local) institutions. It lacked transparency.
All this shows that a good EGA can be drafted and implemented only if there is a
strong will to resist pressures from conservative policy-makers who think such
things are a waste of resources or an undeserved subsidy.
Another negative factor is the scope an EGA offers for corruption through the
forging of work-rosters—in the absence of guaranteed public scrutiny of the relevant
documents. This is widely reported from certain districts of Maharashtra where the
EGS was pushed in a top-down fashion without consultation or public access to
information.
Similarly, a survey was carried out of the National Food-for-Work Programme—recently
launched in 150 districts (of a total of 650)—under the supervision of Professor
Jean Dreze, the well-known collaborator of Nobel laureate Amartya Sen. It covered
six districts during the just-concluded 52 days-long Rozgar Adhikar Yatra that
travelled through 10 states in a bus. The survey shows that flawed official
procedures lead to massive corruption.
The muster-rolls are fudged. The kutcha rolls are authentic. But the pucca versions
exaggerate the scope of work, number of workers and wages paid. In one case, the
survey found that people who worked for three days had 60 days entered against their
names. In places, workers were only paid half the minimum wage. Many of these flaws
can be rectified by mandatorily placing the muster-rolls in the village panchayat
office.
Now the positive sde. There is much to be learnt from Maharashtra’s experience.
During the severe droughts of the early 1970s, and the 1980s, the EGS saved
thousands of lives. It meant a difference between one and two meals, and increased
food security for lakhs of people. This is itself invaluable.
An EGA is superior to any employment scheme because schemes can be switched off,
create no entitlements, and leave the poor at the government’s mercy. An EGA will
create judicially enforceable obligations, give the poor bargaining power and
promote accountability.
The EGA is essentially a social security measure. Because unemployment is socially
determined, it is society’s duty to provide the means of survival to the
underprivileged who cannot find work for no fault of theirs.
An EGA will produce numerous social benefits—the greatest being protecting people
from hunger and malnutrition. It would infuse incomes into villages, and reduce
migration into cities, besides raising crucial social indicators. It would also
raise aggregate demand, and boost the national economy.
An EGA will give economic independence to women, and promote gender equality. It’ll
create rural assets and revitalise the village economy. All this will change the
balance of power in favour of the poor. It’ll help unorganised workers organise
themselves.
These merits greatly outweigh the costs. These costs could be as low as 1 to 1½
percent of GDP, surely a small price to pay, and only a fraction of what India and
Pakistan spend on the military, or lose through non-performing assets being written
off by banks. (In India, these total Rs 45,000 crores, or double the EGA’s cost.
Unpaid taxes alone total Rs 90,000 crores.)
However, we must not entertain the illusion that our governments will enact an EGA
on their own. They will only do so under public pressure. Civil society must seize
the initiative, educate the public, and agitate for an employment guarantee.
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