A ‘Reserve Army of Labour’

Investment in India has mostly gone to the more capital intensive organised sector. This has had the dual effect of starving the unorganised sector of investment and of inadequate job creation which forces most workers to work in the unorganised sector at low wages. A large part of the unorganised sector consists of people creating work for them since the system is not generating work for them and because of poverty they have to earn to survive. There is no unemployment allowance which can enable the poor to survive while out of work. They have to work to survive–do head load work, drive a rickshaw or sell pakoras. Further, a vast number of the marginalised do not find work appropriate to their education/training. So, PhDs apply for peon’s job or those with high degrees applied for Railways non-technical jobs or M.BA.s appearing for test for a safaikaramchari job which required them to clean drains. This results in frustration and disappointment in life for a vast majority. The problem is particularly acute in agriculture which is receiving a declining share of public investment since the 1980s. Whatever investment is coming is for mechanisation–more tractors, harvester combines, etc. This is labour displacing. But, the surplus labour is stuck in agriculture since there is little work outside of it, resulting in disguised unemployment. 85% of the farmers cultivate less than 5 acres of land and have low incomes but have to support additional members of the family who do not find productive work.

In effect, neither the organised sector (employing 6% of the work force) nor agriculture (employing 45% of the work force) are generating additional work. Consequently, potential new entrants to the job market every year, numbering about 24 million, are forced to join the non-agriculture unorganised sector, which is a residual sector, where the wages are a fraction of the wages in the organised sector. There is a big differential in wages (for the same work) between the organised and unorganised sector workers.

 In truth the unorganised sector acts like a ‘reserve army of labour’. The organised sector is also increasingly employing contract labour and not permanent workers. Labour is supplied by small companies which hire unorganised workers at very low wages. So, the organised sector workers know that if they lose their job, they will slip into the unorganised sector at a fraction of the salary they get. This fear reduces their bargaining power with the employers and they cannot ask for the wage increase they deserve. This keeps organised sector wages in check and is at the root of the growing inequality between capital and labour. The above also points to technology as an important determinant of unemployment and inequality in India. Technology is leading to mechanisation and automation. Now of course the danger is the increasing use of artificial intelligence (AI). Today, banking can be done via net or machines and requires fewer workers. Earlier in big infrastructure projects like, construction of roads one could see hundreds of people working but now big machines are used along with a few workers. In brief, all sectors of the economy, whether, agriculture, industry or services, are displacing labour as they modernise. This resulted in jobless growth in 2000s and now to job loss growth. Thus investment in modern sectors is not generating enough productive work. People are forced into self-employment and to do what they can.

[Contributed by Arun Kumar, Dr Kumar is Retd Professor, JNU]

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Frontier
Vol 57, No. 23, Dec 1 - 7, 2024