– By Madan Lal Sharma
May Day, falling on the first day of the month of May is observed as Labor Day and also as International Workers’ day. The notion for a ‘workers holiday’ found its genesis in Australia in 1856; after a Stonemason’s victory, April 22nd was “Eight-Hour Day”, a public holiday.1 The idea soon spread around the world and the choice of 1st May became a commemoration by the Second International for the persons involved in the 1886 Haymarket affair in the United States.
Some labor organizations in the US called on strike because they wanted an 8-hour working days. There was carnage in Haymarket Square in Chicago on May 4th; in which near 12 persons died as well as about 100 people were wounded.2 The protesters did not find an urgent result, bBut they gained a successful result slowly; when 8-hour the working days happened to be the standard in many countries around the world. ‘Labor Day’ was therefore selected as a day for rallies, processions and speeches.
Over the years, May Day has become an international celebration of the social and economic achievements of the labor movement. Occasion of the May Day is often used to express solidarity for the labor force at national and international levels by organizing processions and holding rallies. This occasion is also utilized to protest against anti-labor policies by organizing demonstrations, strikes, rallies and other means to lodge protest against discriminatory and partisan policies.
India celebrated the first Labor Day on May 1, 1927. Many Labor Unions participated in this celebration with pageants in ‘Mayday’ all over India. In India, ‘May day’ is commemorated as ‘Labor Day’. It is now frequently a day for processions and parades. On the ‘Labor Day’, many labor organizations in India is taken march and conduct contests for offspring going to labor category. Nevertheless, in current years, the commemoration of this day has obtained a new role, where the workers and trade organizations claim to protection and safety of the labor force and give the financial growth a humane countenance.
Workforce in India
According to a study by Goldman Sachs released in July 2010, a demographically young India will be the largest contributor to the global labor force in the coming decades, and will add about 110 million workers by 2020. The study states that India’s labor force is expanding at a time when many other countries are facing “ageing-related issues” (older populations) and shrinking workforce. India’s workforce growth, it added, will be driven by people in their 30s and 40s, urbanization, and rise in number of working women.
The study entitled India’s Rising Force says: “India will likely provide the largest increase to the global force over the next few decades. Our projections suggest that its force may rise by 110 million this decade. Our projections take into account increases to the force participation rate due to a favourable age structure. Thus, our force projections are higher than those of the ILO (80 million).”3
Besides, increasing urbanization and a large number of women potentially entering the workforce will stoke the trend, the study estimates that an additional 290 million Indians may urbanize by 2030, and a staggering 640 million by 2050. However, it added that to be able to absorb such a large force, especially one that will move from agriculture into industry and services, the Indian industry would need to create 40 million jobs over the next decade.
It also cautioned that to be able to reap dividends from favourable demographics, India will have to overhaul its laws that restrict hire-and-fire policies and invest heavily in education and skills training.
While stating that with the right policies in place, demographics alone may contribute to about 4 percentage points of the annual GDP growth for the next two decades, the study further observed: “If India gets its policies towards demographics wrong, it could potentially lose annually about 1.5 percentage points from our base case of 8 per cent plus GDP growth till 2020.
On the other hand, `good’ policies could push potential annual GDP growth to well above 9 per cent over the next decade.”4
Spurred by such favourable demographics and economic growth, the study predicts that there would be a rise in demand for risky assets. It said the share of equities in household savings could double from 5 per cent today to 10 per cent in 2020, with annual inflows into them rising six times by then, compared to a 2.5-fold increase in bank deposits.
As for consumption patterns, the study said that spending on health and education may increase five-fold in 10 years, compared to 2.5 times on food and beverages.
Similarly, demand for autos and transportation as well as housing and appliances may also increase due to the overall rise in spending.
On the downside, the study stated that such a large workforce will increase demand for commodities at a time when resources are stretched and environment issues have become dominant.
India’s huge population, which was seen as a problem eating into India’s growth is now being touted as its competitive edge. However, experts feel that the demographic advantage might lie with India, but quantity has compromised quality with the majority of its much-hyped pool of young workers largely unemployable, say experts.
Half of its 1.2 billion people are under the age of 25, more than a million are added to its workforce every month and in the next 20 years, it will be home to 25 percent of the world’s new workers. But employability rates vary from just 4 to 30 percent. That means a minimum of three to six months training is a must to make India’s college graduates into employable white-collar workers.
According to one estimate India produces 500,000 engineers every year when the market needs 250,000. So there should be plenty, however, because only one in five of them are employable, India actually has a shortfall of 150,000 engineers.
An Information Technology company setting up shop in India zeroed in on an area in the south of the country, where there was a concentration of 200 graduate colleges, hoping to have plenty of choice. The company found that only 10 percent of the students they interviewed were fit to be hired.5
The lack of quality workers is not restricted to one industry. High growth sectors like information technology, telecom, banking and healthcare face the quality crunch the most. A firm called Aspiring Minds released India’s first employability study on technical graduates last year. The company subjected more than 40,000 engineering and computer science students in 12 Indian states to a standardized computer-based test to measure their employability. What they found was that only 4.22 percent of the engineers were capable of working for software product firms and only 17.84 percent were fit to work for IT services companies, even after six months of training.
The blame for producing a sub-standard workforce is put solely on India’s poor education infrastructure. At one level the education system is heavily regulated, for example, the private sector cannot set up a university, and many argue it needs a good dose of competition. When it comes to private institutes offering management, engineering and other vocational courses, the legislation is ineffective and lax leading to entrepreneurial opportunism and poor quality.
The gaps in India’s education system, however, present a huge opportunity. According to Sabharwal, “the education, employability and employment industry is set to explode in the next 20 years. It is going to be a $50 billion industry; we just have to figure out how to do it.”6
The big-wigs of India’s IT industry, Infosys and Tata Consultancy Services, which hire 30-40,000 people every year have full-time training programs lasting three to six months. According to Sabharwal, Infosys spends about $100 million every year on repairing its new hires and the training expenditure for most companies is between 1 and 5 percent of revenue.
The lack of quality people who are still expensive to hire has forced many Indian companies to bypass local talent. The percentage of Indian staff in large domestic companies, which have business interests abroad, has fallen from 90 to 70 percent. And many foreign companies especially those running call centers and other outsourcing facilities are looking at the Philippines and Thailand as alternatives to India.
Tackling Rural Unemployment
Undoubtedly, the benefits of economic liberalization have ‘trickled down’ to some extent in rural India and have boosted rural incomes. Indeed, rural demand has boosted industrial demand in recent years, but there is a scarcity of jobs in the rural areas. And with 54 per cent of the population living in our villages, there is a huge pressure on land, creating an adverse land-man ratio, which means there is not enough work for young people in the farms.
This lack of adequate work has created much restlessness among the youth in the villages who do not want to work in the fields and are lured by the news of the outside world through mobile phones, the satellite TV and Internet. Rural youth is aware of what is going on in the rest of India, especially the lavish lifestyles of people living in towns. It makes them want to migrate to towns and even undertake travel for hours in order to get paid jobs.
The recent incident in which 18 disappointed young job-seekers died while travelling on the rooftop of a train, which was taking them back to their villages from the small town of Bareilly (Uttar Pradesh), is a glaring example of the kind of desperation the young people are facing. Even for menial jobs like cleaners, washermen, barbers and water-carriers in the Indo- Tibetan Border Police force, there were 100,000 applicants when there were only 416 jobs available. The remuneration was only Rs 5200 per month.7
There are also not enough food processing factories to employ the young people locally. The slowdown in manufacturing since December 2010 to 2.5 per cent is an indicator of the possible further slackness of industrial growth.
This is because all input prices have risen in the last few months. The rising oil prices will affect industry’s fuel cost. There have also been several hikes in the interest rates to combat inflation in the past one year which makes industrial expansion difficult to finance. Only with more factories in the rural areas can the unemployed youth coming out of the villages be absorbed in gainful employment. The situation is volatile today because food inflation has been running at a double-digit level for nearly two years and is enough to drive out people from rural areas to seek jobs in towns.
The unemployment rate is now around 10.1 per cent in the rural areas and 9.4 per cent across the nation, and this means that around 40 to 50 million youth are without jobs. Unless they are given proper training, and higher education, they will not be fit to join the service sector or the manufacturing sector. According to the Bureau, most of the job growth in the manufacturing sector in the recent past has been slow and public sector jobs have not grown at all. Often to retain flexibility, companies have opted for high-tech which is also required to retain the competitive edge. Unless more -intensive industries are set up or -intensive processes are encouraged by government policy, the future will see very slow job expansion.8
This task of educating and training the young entrants to the force cannot be left to the private sector alone and, therefore, the major task of the state governments would be to launch skill training programs and ensure that all boys and girls finish at least their secondary education. It is perhaps not enough to have universal primary education as a goal because to implement it, there will have to be better schools with proper teaching facilities by teachers in classes so as to ensure that the dropout rate is low.
There is a big danger that the unemployed and disgruntled youth may join the Maoist movement or some other type of anti-social activity in the states that are poor and underdeveloped. To keep the youth gainfully employed in the villages, students should be encouraged to complete their education and training. There should be better implementation of Centrally-sponsored training programs for rural youth, and for rural jobs labor-intensive factories in food processing could be set up.
Training can be imparted to the rural youth to start their own small enterprises that can supply parts to factories in nearby towns. Making loans available from banks to youth for starting their business is also important.
The plight of the workforce engaged in unorganized sector is miserable because of low wages, no fixed working hours, no fringe benefits like paid leave, healthcare facilities and PF benefits. Paradoxically, bulk of force is employed in this unorganized sector which defies all laws. There is dire need to take care of this segment of the workforce as well.
*Delhi-based freelance researcher
Notes
- William D.P. Bliss, The New Encyclopedia of Social Reform, Vol. 1, Funk & Wagnalls, 1909, p. 77.
- James Green, “A Storm of Strikes”, in Death in the haymarket: A Story of Chcago, the First Movement and the Bombing that Divided Gilded Age America, New York: Anchor, 2007, p. 163.
- “India will add 110 million people to global workforce by 2020: study”, PTI report in Economic Times, 28 July 2010.
- Ibid.
- Gauri Bhatia, “India’s Huge Workforce Doesn’t Match Up to Its Hype”, CNBC.com, 20 April 2011, available athttp://www.cnbc.com/id/42674126/India_s_Huge_Workforce_Doesn_t_Match_Up_to_its_Hype .
- Ibid.
- Jayshree Sengupta, “Joblessness in rural India”, The Tribune, 28 February 2011.
- Ibid.
