Jonas Salks, the inventor of the polio vaccine, said our biggest duty is being good ancestors. This long-term view of success recognizes that anything valuable takes decades, stakeholders require balancing rather than ranking, and weather-of-moment difficulties are painful but less important for our destiny than we think.
Covid’s job market stress is surely not climate change but a passing shower, but one that reveals pre-existing comorbidities. Our two labour market shock absorbers of farm employment and self-employment that have kept unemployment rate between 4% and 9% since 1947 are no longer acceptable to youth who want decent work with decent income. Tackling any challenge needs shared facts, shared reasons, and shared action… let’s look at all three in more detail.
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The shared facts of current labour market data—high-frequency changes in unemployment—have become needlessly controversial because all models and surveys are incomplete. Our massive underinvestment in statistics—the ？55 crore budget of the Central Statistical Office and ？354 crore budget of the National Sample Survey Organization—must be reversed in 2022.
Pending better data, it is useful to accept three broad facts about our labour market: Increasing the size of our economy requires changing its shape; widespread employed poverty makes wages our bigger challenge than jobs; and narrowing the productivity gap between our regions, firms and individuals is as important as raising levels.
Historical imbalances
Arriving at shared reasons is more complicated—where you stand on an issue depends on where you sit. But our inability to find decent work with a decent income for many people is rooted in five historical imbalances that must be reversed.
The first imbalance between the three pillars of Team India—public, private, and non-profit—arose from the 1955 Avadi resolution of the Indian National Congress, declaring socialism as the way forward for the economy, and knee-capped the private sector but had the government running hotels, airlines and liquor stores, and manufacturing scooters, steel and bread. 2021 ends well with the Air India sale, unicorn explosion, and covid-19 civil society response. Hopefully, this lane driving becomes a template for 2022 because the private sector has a trust deficit, the government has an execution deficit, and non-profits have a scale deficit. But all have unique capabilities.
The second imbalance is between the next quarter and quarter-century; fiscal and monetary policy can’t substitute for structural reform. If fiscal deficits could make countries rich then no country would be poor. Monetary policy is useful in the extremely short run but applying it to solve labour market issues confuses real medicine with a placebo, painkiller, or steroid.
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Ending poverty needs a 25-year plan for India@100 that transforms the productivity of our regions (Karnataka and Uttar Pradesh have the same GDP with a 300% population difference), our firms (our largest and smallest manufacturing firms have a 24X difference in productivity), and our individuals (children of the same age and qualifications often have a five-times difference in first salaries based on skills).
The third imbalance lies between education and employability. In 1938, Mahatma Gandhi proposed the massification and vocationalization of education by Nai Taalim but the 1948 Radhakrishnan Committee, 1968 Kothari Committee, and 1986 New Education Policy did not end the false conflict between learning for living/citizenship and learning for earning. The National Education Policy (NEP) 2020 recognizes the trade-offs between quantity, quality, cost and employability and blurs the boundaries.
The fourth imbalance is between centre and state governments. The 299 remarkable people who wrote our Constitution flipped their decentralized view of governance to a strong centre after Partition. Indira Gandhi said that strong states lead to a weak nation; chief ministers like N.T. Rama Rao responded that the central government was a conceptual myth. But cooperative and competitive federalism is the only choice for a continent like India.
The fifth imbalance is between the three obvious factors of production—land, labour, and capital—versus the fourth factor of production of entrepreneurship, innovation and productivity. We don’t have a shortage of land, labour or capital but have a drought in what economists call total factor productivity.
Shared actions for decent work with decent income must end the five imbalances. We should reduce the implementation timeline of NEP 2020 from 15 years to 5 years because it architects five design principles—learning while earning, learning by doing, learning with modularity, learning with flexibility and learning with signalling value.
We should complete the transition of our multiple labour laws to labour codes and truly embrace degree apprenticeships. We should fast track a regulatory mission that rationalizes, decriminalizes and digitizes our 69,000+ employer compliance and 6000+ employer filings. We should devolve more finances and power to the third tier of government (the central budget of ？34 trillion and state budgets of ？40 trillion must raise the ？3.7 trillion budget of 2.5 lakh municipalities and panchayats).
We must have a binding and time-lined glide path to reduce the size of RBI’s balance sheet, shrink our public debt to GDP ratio, and accelerate privatization. We must actively pursue civil service reform because the steel frame has become a steel cage; reduce the number of central ministries, restore the organizational structure to pyramid from cylinder; and create differentiation with specialization. Employers must institutionalize flexible and remote working even though hybrid working is surely worse than purely online or purely physical work.
True meaning of swaraj
While swaraj means independence to most, Gandhi made India aware of its true or original meaning—swa-raj or self-rule. Our political swaraj since 1947 hasn’t always translated into individual economic swa-raj because our economy—driven by a wrong tone-from-the-top—became inadequately, formalized, industrialized, urbanized, financialized, and skilled. Atmanirbhar Bharat reforms during covid come together to provide a powerful thrust to meet Gandhi’s vision of individual self-reliance that recognized poverty as the worst form of violence. Let’s be good ancestors and use 2022 to end the imbalances that sabotage our national prosperity, inclusiveness, and power.
Manish Sabharwal is the co-founder of Teamlease Services.
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