Talking growth, not talking jobs

What do we talk about when we talk about growth? What do politicians, policymakers mean to tell the nation when they despair of low GDP numbers or cheer a rising growth rate?

That ought to be at the centre of discussions on the Indian economy, on public policy, the evaluation of extant government practices and on the promises held out by the stellar opposition.

One of the things we ought to be talking about when we speak of growth is, of course, employment. Higher output of goods and services, reflected in GDP, should obviously mean more jobs for people, especially the young.

It is exactly on that relation that the current race between the Congress and the BJP will be fought. The BJP’s prime ministerial candidate promises strong leadership for a disciplined and clean march to growing prosperity.

The worth of the Congress lies in its past performance, in those years of the last decade when India came knocking at the doors of the rich men’s club. That’s when India began to be counted as something of a force along with China, a bulwark against the sliding fortunes of world trade and growth.

What did India’s economic standing mean for jobs and growth in employment?

When the middle-class in cities spoke of growth, it meant the mushrooming of malls, the frenetic screeching of drills and the ungainly sights of iron rebars reaching for the smoggy sky and towns turning into vast construction sites.

But what did that do for job creation? The latest NSSO data may give the Congress something to crow about since it records a rise in employment in the two years up to 2011. But the jobs were mainly in agriculture with some growth in the secondary and tertiary sectors. Since then, there has been a sharp fall in GDP growth.

Growth theories assume that economic expansion will or should lead to an expansion of jobs in the manufacturing and other non-agricultural sectors. So is that happening in India?

Evidence from the NSSO’s 66th round did point to such growth but it also noted an increase in the casualisation of work.

That form of contract or casual work was also noted in a study by the US Department of Labor for the period of India’s high growth. In fact, factory employment went down, and permanent employment dipped as contract work increased.

Now we have Assocham telling us somewhat the same thing. Contract work is increasing and, what is more distressing, it is increasing with fewer benefits for the workforce.

Last year alone contract work increased 39 per cent — not in the informal sector such as construction or in small shantytown enterprises but in the formal sector.

This means automobiles telecom, retail FMC, IT, BPOs, healthcare, education — just the sectors that define the modern economy, that provide the fuel for the growth of consumption and thereby of GDP.

The Assocham survey is tellingly titled: ‘Rise of Permanently Temporary Workers. India’s Workforce Goes Casual’. The wonderfully evocative paradox hides the terrifying possibility of not just life’s randomness but of the means by which to sustain it. Now, even work has become a random option and that is a fact of life.

Assocham tells us that the rise in such permanent impermanence of work owes much to the inflexible labour laws in the country. But it protests too much.

The phenomenon of temporary staffing as it is variously called, is gathering pace even in countries with very liberal or few labour laws. And in the country India dreams of becoming, impermanence of labour is only a step away from its extinction.

In their e-book, Race Against the Machine , MIT professors Erik Brynjolfsson and Andrew McAfee point out that jobs are vanishing in America both on the shopfloor and in the office; robotics is replacing the blue collar worker and now increasing digitalisation will replace the white collar worker.

After studying the top four tech firms in the US — Amazon, Apple, Facebook and Google — they found these firms generated far fewer jobs than one would have thought in light of their combined market capitalisation at the time and far fewer than what the US needed for recovery.

In cutting labour costs, the modern economy cuts its own feet because it reduces jobs and, therefore, consumption demand. That’s in the US. In India, the vast pool of cheap labour, including the growing pool of skilled youth armed with degrees in management, engineering, fashion designing, catering, flying and the media, allows industry to engage contract labour.

And as high-tech and automated technology kicks in, for instance in new private banks that would also like to avoid the headache of unions, the rate at which new jobs — contract, temporary or casual — are available, will fall.

The implications of blue and white collar labour displacement by high-tech are evident in the increasing emphasis of policymakers around the world on wealth creation. GDP numbers may rise on the back of a vast army of a permanently temporary workforce; so would profits for firms that may pay higher wages for the duration of the contract but little by way of social benefits that add to well-being.

But the net effect would be wider disparities not merely in incomes but in well-being as the benefits of rising GDP accrue to fewer wealth ‘creators’.

But so long as GDP grows, will employment numbers really matter?