While the dues of Kingfisher employees have still not been settled, the billionaire Vijay Mallya with thousands of crores in debt has flown out of the country. The issue of non-payment to the staff of the now defunct Kingfisher Airlines came out in a poignant manner when employees accused Mallya of having blood on his hands! These employees have been left with nothing after the airline folded up while he only expressed regret that Kingfisher couldn’t fly when the oil price has dipped so low. The point is that there is no safety net for hapless employees while employers can game the system to get away.
A hardy perennial of neo-liberal reformists is that exit is only a four-letter word for labour. They advocate a more flexible labour market in which workers are expected to bear the adjustment for ups and downs in business. But what about a safety net to take care of the transition period when they are jobless? What about a fund corpus to take care of retraining them to make them more employable in the sunrise industries? The focus of much discussion on this topic is only changing the 50-odd central labour laws and many more at the state-level to make them more flexible to suit employers’ requirements.
A hardy perennial of neo-liberal reformists is that exit is only a four-letter word for labour. They advocate a more flexible labour market in which workers are expected to bear the adjustment for ups and downs in business. But what about a safety net to take care of the transition period when they are jobless? What about a fund corpus to take care of retraining them to make them more employable in the sunrise industries? The focus of much discussion on this topic is only changing the 50-odd central labour laws and many more at the state-level to make them more flexible to suit employers’ requirements.
The NDA government, for its part, has left it to BJP-led State governments to formulate their own flexible labour laws while stating that it does not have the resources for a safety net. The union minister of labour, Bandaru Dattatreya, told Parliament that “Government of India does not have any proposal for providing any unemployment allowance to the unemployed persons. The country is not in a position to incur huge expenditures involved on the payment of unemployment allowance to the unemployed youth.” He added that some State governments are providing such an allowance out of their own resources.
The reference is to the provisions in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to pay an unemployment allowance in case work cannot be provided. Certain States in the past like Madhya Pradesh, Odisha, Kerala, West Bengal, Tripura and Jharkhand paid such an allowance. What the labour minister was basically arguing is that it is up to State governments and not the Centre to provide such a safety net out of their own resources. This is despite the fact that labour is a concurrent subject in which both the Centre and States are competent to enact legislation.
Clearly, this amounts to a dereliction of responsibility from a government that has attempted a makeover from being riled as a ‘suit-boot ki sarkar’ to a pro-farmer and pro-poor government in its recent budget. Labour is unfortunately not a priority when it is pushing its flagship schemes like Make in India and MGNREGA. If it is indeed to make a success out of encouraging manufacturing in India, it must ensure that there is exit for both labour and capital. While labour is expected to do so without a safety net, the likes of a Mallya must also bear the crunching adjustment of bankruptcy.
The need to be even-handed on this account remains a major lacuna of the reforms process. To the late eminent economist IG Patel, exit was not only for hiring and firing labour. It also entailed allowing the Schumpeterian process of creative destruction to run its course. “Exit has everything to do with big business also; it means that no one is going to say that nobody can take over the Tatas and Birlas or anything like that and that they must be there forever. Then you are not talking of exit policy. You are talking of the same things of which you are blaming labour,” he wrote in one of his articles.
Decades of experience as a policy maker provided Dr Patel with a sense that economic policy is formulated in an “imperfect political and social context.” That the route to the rational is not always direct! In a fractured policy, compromises thus will have to be made. A “dynamic search for the optimum, for the second and even third best based on compromises and buying time” is of the essence of economic life in a democracy like India’s. This is the sort of pragmatism required on the part of the NDA government that is trying to kick-start a stagnant manufacturing sector to create more employment.
So far, nothing much is happening on the ground. Jobless growth is the reality. More than 12 million jobs need to be generated annually to reduce joblessness. What is being created is only a fraction of this requirement. The labour minister has stated that 9.1 million graduate and post graduate degree holders are unemployed. It is from these ranks that frustrated job seekers apply for even the post of a peon. What is the alternative? Being without work does not qualify them for unemployment allowances. And now the NDA government is officially stating that there are no resources for such a purpose!
However, all of this is not to deny the need for simplified and more flexible labour legislation. The suggestions put forward by Arun Firodia, chairman of the Kinetic Group, more than a decade ago deserve fresh attention: He argued that Indian industry needs flexibility to adjust the workforce in tune with the changing demand pattern, which depends on changing fashions, product life-cycles and competition. While adjusting the work force, surely the interests of the workers needs to be protected, he argued.
There is the need for retraining workers for new jobs and upgrading their skills to make them mobile and adaptable to change. Insurance companies can also offer unemployment insurance to cover the period of unemployment. Is the NDA government listening? Without a safety net, the labour unions will not consent to flexible labour laws. This net is needed not just for the Kingfisher employees but all the others who face an unfair bargain for making all the adjustments while fat cat employers get away with impunity.
(N Chandra Mohan is an economics and business commentator based in New Delhi)
